By Kunal Doley
Just picture this. You are in urgent need of grocery. You flip open your smartphone, open an app, choose the items you require and order. And voila, your order reaches your doorstep in minutes—a massive difference in turn-around time when compared to what conventional online grocery platforms tend to offer.
Welcome to the world of quick commerce (q-commerce), also sometimes called ‘express delivery’, where online platforms promise to deliver items— mostly groceries—within minutes of ordering. Quick commerce focuses on smaller quantities of fewer items that can range from groceries and stationeries to over-the-counter medicines and personal hygiene products.
At present, traditional e-commerce players deliver items within two to three days and update orders on a day-to-day basis. But quick commerce is changing all that—making deliveries as quickly as in 10 minutes and offering real-time tracking of items.
Not surprisingly, the space is gaining enormous traction, especially in the post-pandemic era when consumers are looking for services that can meet their daily requirements in a shorter period. Online platforms—both industry heavyweights and new players—are realising the potential, and many are even calling quick commerce the next game-changer of e-commerce.
The buzz
Recently, Grofers changed its name to Blinkit. The online supermarket was already promising its customers delivery in just 10 minutes. The latest rebranding exercise only seems to suggest that it will now deliver products in the blink of an eye. “Once upon a time, a few months ago, we started on a journey to build the future of commerce with 10-minute delivery of most of the stuff our customers need in their daily lives. Today, we already process over a million orders a week, across 12 cities in India. And this is just a start,” founder-CEO Albinder Dhindsa said in a blog recently.
According to industry observers, Grofers has been trying to keep pace with its closest rival BigBasket with whom it was discussing a possible merger until about three years ago. After raising $200 million in series F funding led by SoftBank in 2019, Grofers got fresh ammo a few months ago when Gurgaon-based food delivery firm Zomato made an investment of about $100 million. The investment is understood to have valued Grofers at $1 billion, giving it the status of a unicorn.
Meanwhile, there have been reports that Tata-owned BigBasket is also developing its quick commerce product ‘BBNow’, which will focus on grocery delivery within 10-20 minutes. Slated to launch early next year, the reports also said that BBNow will be available on Tata’s upcoming super app TataNeu alongside other offerings such as 1MG and CureFit.
However, a BigBasket official termed the reports as industry speculation and refused to comment on the quick commerce space for now.
On-demand delivery platform Swiggy, too, announced earlier this month that it will invest $700 million in its express grocery delivery service Instamart. Launched in Gurugram and Bengaluru in 2020, Swiggy Instamart is now serving customers across 18 cities, and doing over 1 million orders per week. In the last few months, Swiggy Instamart has on-boarded more than one seller-run dark store every day. By January 2022, it will make deliveries in 15 minutes by having the network of dark stores very close to most of its customers, the company said.
“At our current growth trajectory, Instamart is set to reach an annualised GMV run rate of $1 billion in the next three quarters. With our food delivery business trending at a $3 billion annualised GMV run rate, and Instamart’s super-charged growth, we’re very excited about our convenience mission coming to life in a very big way,” says Swiggy CEO Sriharsha Majety.
Meanwhile, Walmart-owned Flipkart is also reportedly planning to scale its 90-minute hyper-local delivery service— Flipkart Quick—to 200 cities by the end of 2022. First launched in Bengaluru in 2020 amid the pandemic, Flipkart Quick enables online shoppers to get essentials like fresh fruits, vegetables, and other groceries as well as electronics and more delivered right to the doorsteps safely in under 90 minutes. Currently, the service is available in Bengaluru, Delhi, Gurgaon, Noida, Hyderabad, Pune, Lucknow and Mangaluru.
“Flipkart Quick is backed by in-depth market research, analysis of demand and consumer behaviour and is built to widen accessibility as well as cater to varied needs of the consumer. We have leveraged our technology capabilities and robust supply chain to present a hyperlocal solution that not only offers a seamless shopping experience to our consumers but also ensures the accessibility of high-quality products,” says Sandeep Karwa, vice-president, Flipkart.
“The innovative location mapping solution enables us to pinpoint customer locations with higher accuracy thus ensuring speedy delivery of fresh fruits and vegetables at consumers’ doorstep,” he adds.
However, the Flipkart official did not comment on whether the company has any plans for the quick commerce space —that is, to further bring down the turn-around time of 90 minutes.
The market
According to a recent report by consulting firm RedSeer, the quick commerce sector in India is expected to grow 10-15 times in the next five years to become a $5 billion market by 2025. Currently, it is estimated at $30 million. “Market growth will be driven by rising adoption of quick-commerce among convenience seeking and customers with unplanned ordering behaviour,” said the report, adding: “Covid-led change in purchase behaviour will promote growth of quick commerce as replacement of kirana purchase.” Apart from this, expansion to multiple cities in metro and Tier-1 (top 48 cities) from current level of six cities will also be one of the top growth drivers for the expected rise in the quick commerce market in the country, the report titled ‘Quick Commerce: A $5 billion market by 2025’ notes.
The Indian quick commerce market offers two main opportunities including consumables (fresh, staples, packaged foods, beverages, home care and personal care, over the counter medicines, alcohol, tobacco, pet supplies) and adjacent or long-tail categories (flowers, gifts, books, small electronics, etc).
According to RedSeer, the quick commerce penetration within the online consumables market is around 7% and expected to grow to 12-13% by 2025. Currently at $3.8 billion, the online consumables market is expected to grow exponentially and is expected to reach over $30 billion by 2025, of which around 50% will come from metro and Tier-1 cities, the report says.
However, this is only the tip of the iceberg. The RedSeer report found that 20 million households are addressable by quick commerce in India. About 13% of the online transacting households are ‘quick commerce’ addressable and they spend $50 billion on top-up and unplanned purchases, the report notes. The drivers of this growth have been the growing number of unplanned purchases in urban households, shifting consumer preference towards convenience and instant deliveries and generational habits shifting towards shorter purchases and need for quick, on-demand services, it adds.
Q-commerce has helped brands boost their discoverability and reach by catering to the immediate needs of a widespread clientele, says Rajiv Kumar Aggarwal, founder and CEO of StoreHippo, an enterprise-grade SaaS-based e-commerce platform that offers e-commerce solutions to B2B and B2C businesses.
“Once accustomed to the quick delivery time and ease of shopping, customers turn loyal and rely on the brand for their everyday essentials shopping. With average weekly retention of over 50%, q-commerce is bringing constant and consistent revenue for brands week over week,” he says, adding: “Q-commerce is a win-win for customers as well as merchants. While customers get a variety of products at their doorsteps the q-commerce brand owners are assured of constant revenue growth.”
Fresh ammo
Besides industry heavyweights, new players have also entered the space to make it more exciting. For instance, quick commerce has been the core of Bengaluru-headquartered Dunzo’s operations, and this has enabled the delivery app to serve an array of demands of the customers. Especially, at the time of Covid, Dunzo witnessed a soaring demand for daily essentials and the customers were accessing its platform daily to meet their requirements.
“We believe that the purchasing behaviour of the customers is changing with the ease of accessibility and hassle-free process and this trend will definitely give a great push to the quick commerce market in the coming years,” says Kabeer Biswas, CEO of Dunzo.
Started by Biswas along with Ankur Aggrawal, Mukund Jha and Dalvir Suri in 2015, Dunzo operates through a mobile app that connects users to the nearest delivery partner for local deliveries. The startup saw a ~400% growth in demand for daily essentials over the past year. This year, it launched Dunzo Daily with which it has been able to offer a robust selection of stock-keeping units (SKUs) based on consumer demand and drive store and delivery efficiency with a full-stack model that runs via a dense network of micro-warehouses. “This ensures that users get their daily and weekly essentials delivered to them within 19 minutes of placing the order, every time,” says Biswas.
Google-backed Dunzo is well funded in its operations and has been focused on creating prudent financial efficiencies. “We were the first Google investment in India and have since then raised multiple rounds with participation from Google, Lightrock, Lightbox and more. We hit an annualised GMV of $200M in 2020,” adds Biswas.
Another q-commerce startup Zepto promises delivery of groceries in 10 minutes flat. “The way we achieve that is through a network of highly optimised, micro fulfilment centres that are built from area to area,” says Aadit Palicha, co-founder of Zepto.
Zepto recently announced its $100-million Series C fundraise. Y Combinator’s Continuity Fund led the round, with participation from new and existing investors, including Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, and more. This Series C round comes just 45 days after the company announced its $60-million fund-raise in November. “We’ve been using that capital to expand coverage across the country; to hire people as fast as possible and to curate brand campaigns that we’re running across all the different metro cities right now. Today, we are live in Mumbai, Bangalore, Delhi, Chennai and Hyderabad. We will also be live in Pune soon. We’re also growing at a crazy rate, about 180 to 220% every month,” adds Palicha, who started Zepto with Kaivalya Vohra earlier this year.
How they do it
The q-commerce sub-vertical in the online grocery market was an offshoot of the Covid-19 pandemic that disrupted the supply chain. How the model works is that q-commerce platforms set up micro-warehouses, now termed as ‘dark stores’, located closer to the point of delivery, and restrict stocks at these stores to a focused set of under 2,000 high-demand items, as against the traditional formula of well-stocked, large-format warehouses that are located on the outskirts of towns and cities.
Dunzo, for instance, works on the express delivery model where “the idea is to ensure the right inventory and proximity of micro warehouses to consumers, and the design of these centres”, explains Biswas of Dunzo. “The average time taken to travel 1 km in Indian cities is 6-7 minutes. The pick, pack, and ship process at a micro warehouse takes place in about two-and-a-half minutes after a customer places an order. Thereafter, the delivery partner picks up the package and gets it across to the customer,” he says.
The focus of the q-commerce segment is to set up location-based micro warehouses/sub-stores to enable the shortest possible time for delivery, says Aggarwal of StoreHippo.
“Usually, q-commerce platforms work as a service aggregator wherein they tie up with local stores. When the order is placed by a customer, it is automatically routed to the nearest merchant or the warehouse. This enables quick and smooth deliveries,” he adds.
For Zepto, fulfilling grocery delivery in 10 minutes is a combination of some highly specific locationing logic and positioning of micro fulfilment centres.
“Right now, we’re in a position where we’ve been able to crack the experience of 10-minute delivery at scale; we’ve gotten deliveries done in a median time —in about eight minutes and 47 seconds. We are also seeing that delight factor, across all the different social media platforms in, pretty much all major metros in India,” says Zepto co-founder Palicha.
Once accustomed to the quick delivery time and ease of shopping, customers turn loyal and rely on the brand for their everyday shopping. With average weekly retention of over 50%, q-commerce is bringing constant and consistent revenue for brands week over week
— Rajiv Kumar Aggarwal, founder and CEO, StoreHippo
We believe that the purchasing behaviour of the customers is changing with the ease of accessibility and hassle-free process and this trend will definitely give a great push to the quick commerce market in the coming years
— Kabeer Biswas, CEO, Dunzo
Right now, we’re in a position where we’ve been able to crack the experience of 10-min delivery at scale; we’ve gotten deliveries done in a median time—in about 8 minutes and 47 seconds
— Aadit Palicha, co-founder, Zepto
Q-COMMERCE EXPLAINED
Quick commerce (q-commerce), also sometimes called ‘express delivery’, refers to online platforms that promise to deliver items—mostly groceries—within minutes of ordering
At present, traditional e-commerce players deliver items within two to three days but quick commerce platforms make deliveries as quickly as in 10 minutes and offer real-time tracking of items
Q-commerce platforms set up micro-warehouses, also termed as ‘dark stores’, located closer to the point of delivery
They restrict stocks at these stores to around 2,000 high-demand items, as against the traditional formula of well-stocked, large-format warehouses located on the outskirts of towns and cities
Q-commerce platforms also work as service aggregators wherein they tie up with local stores. When the order is placed by a customer, it is automatically routed to the nearest merchant or warehouse