Featured Article

Can quick commerce leapfrog e-commerce in India?

India’s 2023 e-commerce sales of $60B to $65B were less than half of China’s Singles Day sales


Image Credits: Niharika Kulkarni / NurPhoto / Getty Images

Even as quick commerce startups are retreating, consolidating or shutting down in many parts of the world, the model is showing encouraging signs in India. Consumers in urban cities are embracing the convenience of having groceries delivered to their doorstep in just 10 minutes. The companies making those deliveries — Blinkit, Zepto and Swiggy’s Instamart — are already charting a path to profitability.

Analysts are intrigued by the potential of 10-minute deliveries to disrupt e-commerce. Goldman Sachs recently estimated that Blinkit, which Zomato acquired in 2022 for less than $600 million, is already more valuable than its decacorn food delivery parent firm.

As of earlier this year, Blinkit held a 40% share of the quick commerce market, with Swiggy’s Instamart and Zepto close behind, according to HSBC. Flipkart, owned by Walmart, plans to enter the quick commerce space as soon as next month, further validating the industry’s potential.

Investors are also showing strong interest in the sector. Zomato boasts a valuation of $19.7 billion despite minimal profitability, processing around 3 million orders a day. In comparison, Chinese giant Meituan, which processes more than 25 times as many orders daily, has a market cap of $93 billion. Zepto, which achieved unicorn status less than a year ago, is finalizing new funding at a valuation exceeding $3 billion, according to people familiar with the matter.

Consumers are buying the quick commerce convenience, too. According to a recent Bernstein survey, the adoption was highest among millennials aged 18 to 35, with 60% of those in the 18 to 25 age bracket preferring quick commerce platforms over other channels. Even the 36+ age group is adopting digital channels, with over 30% preferring quick commerce.

UBS’ estimate for the Indian market. (Image: UBS)
Image Credits: UBS (screenshot)

While India’s rapid urbanization makes it a prime target for quick commerce, the industry’s unique operational model and infrastructure needs could limit its long-term growth and profitability. As competition intensifies, the impact of quick commerce is likely to be felt more acutely by India’s e-commerce giants. But what makes India’s retail market so attractive for quick commerce players, and what challenges lie ahead?

The opportunity for quick commerce in India

India’s e-commerce sales stood at $60 billion to $65 billion last year, according to industry estimates. That’s less than half of the sales generated by e-commerce firms on China’s last Singles Day and represents less than 7% of India’s overall retail market of more than $1 trillion.

Reliance Retail, India’s largest retail chain, clocked a revenue of about $36.7 billion in the financial year ending in March, with a valuation standing at $100 billion. The unorganized retail sector — the neighborhood stores (popularly known as kirana) that dot thousands of Indian cities, towns and villages — continues to dominate the market.

“The market is huge and, on paper, ripe for disruption. Nothing done so far has made a material dent in the industry. This is why any time a new model shows signs of functioning, all stakeholders shower them with love,” said a seasoned entrepreneur who helped build the supply chain for one of the leading retail ventures.

In other words, there’s no shortage of room for growth. 

Modern retail share of total grocery spend in India remains much lower than most other large countries and HSBC believes it will likely remain so as customers migrate directly from unorganized to quick commerce. Image credits: HSBC.
Image Credits: HSBC (screenshot)

One of the factors behind the quick commerce’s fast adoption is the similarity it has with the kirana model that has worked in India for decades. Quick commerce firms have devised a new supply chain system, setting up hundreds of unassuming warehouses, or “dark stores,” strategically situated within kilometers of residential and business areas from where large numbers of orders are placed. This allows the firms to make deliveries within minutes of order purchase.

This approach differs from that of e-commerce players like Amazon and Flipkart, which have fewer but much larger warehouses in a city, generally situated in localities where rent is cheaper and farther from residential areas.

The unique characteristics of Indian households further contribute to the appeal of quick commerce. Indian kitchens typically stock a higher number of SKUs compared to their Western counterparts, necessitating frequent top-up purchases that are better serviced by local stores and quick commerce rather than modern retail. Additionally, limited storage space in most Indian homes makes monthly bulk grocery shopping less practical, and customers tend to favor fresh food purchases, which quick commerce can easily accommodate.

According to Bernstein, quick commerce platforms can price products 10% to 15% cheaper than mom-and-pop stores while maintaining about 15% gross margins due to the removal of intermediaries. Quick commerce dark stores have rapidly expanded their SKU count from 2,000 to 6,000, with plans to further increase it to 10,000 to 12,000. These stores are replenishing their stocks two to three times a day, according to store managers.

Battling e-commerce

Zepto, Blinkit and Swiggy’s Instamart are increasingly expanding beyond the grocery category, selling a variety of items, including clothing, toys, jewelry, skincare products and electronics. A TechCrunch analysis finds that the majority of items listed by Amazon India in its bestsellers list are available on quick commerce platforms.

Quick commerce has also become an important distribution channel for major food brands in India. Consumer goods giant Dabur India expects quick commerce to drive 25% to 30% of the company’s sales. Hindustan Unilever, the Indian arm of the U.K.’s Unilever, has identified quick commerce as an “opportunity we will not let go.” And for Nestle India, “Blinkit is becoming as important as Amazon.”

While quick commerce doesn’t need to expand beyond the grocery category, which itself is more than a half-trillion-dollar market in India, their expansion into electronics and fashion is likely to be limited. Electronics drive 40% to 50% of all sales on Amazon and Flipkart, according to analyst estimates. If quick commerce can crack this market, it will pose a significant and direct challenge to e-commerce giants. Goldman Sachs estimates that the total addressable market in grocery and non-grocery for quick commerce companies in the top 40-50 cities is about $150 billion.

However, the sale of smartphones and other high-ticket items is more of a gimmick and not something that can be done at a large scale, according to an e-commerce entrepreneur. 

Blinkit selling high-end smartphones and the PlayStation 5, as shared by its founder and chief executive on social media.

“It doesn’t make any sense. What quick commerce is good at is forward-commerce. But smartphones and other pricey items tend to have a not-so-insignificant return rate.… They don’t have the infrastructure to accommodate the reverse-logistics,” he said, requesting anonymity as he is one of the earliest investors in a leading quick commerce firm.

Quick commerce’s current infrastructure also doesn’t permit the sale of large appliances. This means you cannot purchase a refrigerator, air conditioner, or TV from quick commerce. “But that’s what some of these firms are suggesting, and analysts are lapping it up,” the investor said.

Falguni Nayar, founder of skincare platform Nykaa, highlighted at a recent conference that quick commerce is primarily taking share from kirana stores and would not be able to keep as much inventory and assortment as specialty platforms that educate customers.

The quick commerce story in India remains an urban phenomenon concentrated in the top 25 to 30 cities. Goldman Sachs wrote in a recent analysis that the demand in smaller cities likely makes it difficult for fresh grocery economics to work.

E-commerce giant Flipkart will launch its quick commerce service in limited cities as soon as next month, seeing an opportunity to woo customers of Amazon India. The majority of Flipkart’s customers are in smaller Indian cities and towns.

Amazon — increasingly scaling down on its investments in e-commerce in India — has so far shown no interest in quick commerce in the country. The company, which offers same-day delivery for some items to Prime members, has questioned the quality of products from firms making “fast” deliveries in some of its marketing campaigns.

A recent India consumer survey by Bank of America (BofA)
Image Credits: BofA Global Research (screenshot)

As brands increasingly focus on quick commerce as their fastest-growing channel and more consumers embrace the convenience and value proposition of 10-minute deliveries, the stage is set for a fierce battle between quick commerce and e-commerce giants in India.

More TechCrunch

Fisker is just a few days into its Chapter 11 bankruptcy, and the fight over its assets is already charged, with one lawyer claiming the startup has been liquidating assets…

The fight over Fisker’s assets is already heating up

A hacker is advertising customer data allegedly stolen from the Australia-based live events and ticketing company TEG on a well-known hacking forum. On Thursday, a hacker put up for sale…

Hacker claims to have 30 million customer records from Australian ticket seller giant TEG

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Elon…

Tesla makes Musk best-paid CEO of all time and Fisker bites the dust

Dot is a new AI companion and chatbot that thrives on getting to know your innermost thoughts and feelings.

Dot’s AI really, really wants to get to know you

The e-fuels startup is working on producing fuel for aviation and maritime shipping using carbon dioxide and other waste carbon streams.

E-fuels startup Aether Fuels is raising $34.3 million, per filing

Fisker was facing “potential financial distress” as early as last August, according to a new filing in its Chapter 11 bankruptcy proceeding, which the EV startup initiated earlier this week.…

Fisker faced financial distress as early as last August

Cruise, the self-driving subsidiary of General Motors, has agreed to pay a $112,500 fine for failing to provide full information about an accident involving one of its robotaxis last year.…

Cruise clears key hurdle to getting robotaxis back on roads in California

Feel Therapeutics has a pretty original deck, with some twists we rarely see; the company did a great job telling the overall story.

Pitch Deck Teardown: Feel Therapeutics’ $3.5M seed deck

The Rockset buy fits into OpenAI’s broader recent strategy of investing heavily in its enterprise sales and tech orgs.

OpenAI buys Rockset to bolster its enterprise AI

The U.S. government announced sanctions against 12 executives and senior leaders of the Russia-based cybersecurity giant Kaspersky. In a press release, the Department of the Treasury’s Office of Foreign Assets…

US government sanctions Kaspersky executives

Style DNA, an AI-powered fashion stylist app, creates a personalized style profile from a single selfie. The app is particularly useful for people interested in seasonal color analysis, a process…

Style DNA gets a generative AI chatbot that suggests outfit ideas based on your color type

Rates of depression, anxiety and suicidal thoughts are surging among U.S. teens. A recent report from the Center of Disease Control found that nearly one in three girls have seriously…

Khosla-backed Marble, built by former Headway founders, offers affordable group therapy for teens

Cover says what sets it apart is the underlying technology it employs, which has been exclusively licensed from NASA’s Jet Propulsion Laboratory.

A new startup from Figure’s founder is licensing NASA tech in a bid to curb school shootings

Spotify is introducing a new “Basic” streaming plan in the United States, the company announced on Friday. The new plan costs $10.99 per month and includes all of the benefits…

Spotify launches a new Basic streaming plan in the US

Photographers say the social media giant is applying a ‘Made with AI’ label to photos they took, causing confusion for users.

Meta is tagging real photos as ‘Made with AI,’ say photographers

Website building platform Squarespace is selling Tock, its restaurant reservation service, to American Express in a deal worth $400 million — the exact figure that Squarespace paid for the service…

Squarespace sells restaurant reservation system Tock to American Express for $400M

Featured Article

Change Healthcare confirms ransomware hackers stole medical records on a ‘substantial proportion’ of Americans

The February ransomware attack on UHG-owned Change Healthcare stands as one of the largest-ever known digital thefts of U.S. medical records.

19 hours ago
Change Healthcare confirms ransomware hackers stole medical records on a ‘substantial proportion’ of Americans

Google said today that it globally paused its experiment that aimed to allow new kinds of real-money games on the Play Store, citing the challenges that come with the lack…

Google pauses its experiment to expand real-money games on the Play Store

Venture firms raised $9.3 billion in Q1 according to PitchBook data, which means this year likely won’t match or surpass 2023’s $81.8 billion total. While emerging managers are feeling the…

Kevin Hartz’s A* raises its second oversubscribed fund in three years

Google is making reviews of all your movies, TV shows, books, albums and games visible under one profile page starting June 24, according to an email sent to users last…

Google is making your movie and TV reviews visible under a new profile page

Zepto, an Indian quick commerce startup, has more than doubled its valuation to $3.6 billion in a new funding round of $665 million.

Zepto, a 10-minute delivery app, raises $665M at $3.6B valuation

Speak, the AI-powered language learning app, has raised new money from investors at double its previous valuation.

Language learning app Speak nets $20M, doubles valuation

SpaceX unveiled Starlink Mini, a more portable version of its satellite internet product that is small enough to fit inside a backpack.  Early Starlink customers were invited to purchase the…

SpaceX debuts portable Starlink Mini for $599

Ali Rathod-Papier has stepped down from her role as global head of compliance at corporate card expense management startup Brex to join venture firm Andreessen Horowitz (a16z) as a partner…

Brex’s compliance head has left the fintech startup to join Andreessen Horowitz as a partner

U.S. officials imposed the “first of its kind” ban arguing that Kaspersky threatens U.S. national security because of its links to Russia.

US bans sale of Kaspersky software citing security risk from Russia 

Apple has released Final Cut Pro for iPad 2 and Final Cut Camera, the company announced on Thursday. Both apps were previously announced during the company’s iPad event in May.…

Apple releases Final Cut Pro for iPad 2 and Final Cut Camera

Paris has quickly established itself as a major European center for AI startups, and now another big deal is in the works.

Poolside is raising $400M+ at a $2B valuation to build a supercharged coding co-pilot

The space industry is all abuzz about how SpaceX’s Starship, Blue Origin’s New Glenn, and other heavy-lift rockets will change just about everything. One likely consequence is that spacecraft will…

Gravitics prepares a testing gauntlet for a new generation of giant spacecraft

LTK (formerly LiketoKnow.it and RewardStyle), the influencer shopping app with 40 million monthly users, announced on Thursday the launch of a free direct message tool for creators to instantly share…

Influencer shopping app LTK gets an automatic direct message tool

YouTube appears to be taking a firm stance against Premium subscribers who attempt to use a VPN (virtual private network) to access cheaper subscription prices in other countries. This week,…

YouTube confirms crackdown on VPN users accessing cheaper Premium plans