Missing link: Quick Commerce in India – Amazon and Walmart left behind
In India, QC delivers groceries, socks and even cell phones within minutes. Amazon and Walmart have missed out on the trend. The game is not yet decided.
An Indian Quick Commerce Dark Store with motorcycles belonging to the delivery drivers. The public is not allowed in.
(Image: Pratima Harigunani)
Note: Eine deutsche Variante dieses Artikels ist ebenfalls verfĂĽgbar.
It's a crisp winter Saturday afternoon. I am watching a magic show on TV. Just when the magician is about to pull a rabbit out of his hat, I feel the urge to munch something. I pick up the phone and order a bag of chips from a Q-commerce app. It's hardly a few minutes, I have barely put my phone back on the table, when I hear the beep. The delivery boy is already here!
True to the quick-delivery promise. And my bag of chips (With some air) is in my lap before the rabbit is out of the magician's hat (out of thin air). By the way, I live in India, but not in a million plus inhabitants city, my town counts less than 100.000 people. Some would call this level of service real magic. In India, right now, we prefer to anoint it as Quick Commerce (QC).
Videos by heise
Yes, the phenomenon is real and staggering. The last few months have seen lightning-speed instant delivery players pop brightly in the retail landscape: Blinkit, Zepto, Swiggy Instamart, BigBasket etc. Some are off-shoots of food delivery giants (like Zomato-acquired Blinkit and Swiggy's Instamart), some are new to the party, and some are about to jump in the pool (Ola, Flipkart Minutes, Satvacart, Jiomart). Nonetheless, the suddenly-surging QC industry is a rabbit-hole worth sliding into. How are these apps teleporting stuff to doorsteps in a blink? And will they stick around?
The Supply Game
First QC trials in India started in select cities in 2018. The sector took off in a major way during the COVID19-pandemic.
Operationally speaking, a QC back-end feels like a real-life version of that TV show where a kid had a magic pencil that could make anything he drew, come to life instantly, as rightly described by Manoj Gupta, Vice President for IT at Restaurant Brand Asia (formerly known as Burger King India). This e-commerce model hinges on the number and location of dark stores/ghost stores. Those are small supermarkets spread over 200 to 400 square metres, optimised to carry a wide range of inventory, but not open to the public. They only exist so delivery drivers can pick up items. These dark stores are supported by larger motherhouses and have to be close to areas with a high density of mid and high income potential customers.
And while your traditional supermarket's layout is designed to waste your time by leading you as far into the store as possible, making you pass as many items not included on your original shopping list as possible, dark stores are different: Their layout is optimised for speed.
According to the Business Research Company, India's QC market is slated to grow from 100 billion Euro in 2024 to 125 billion Euro in 2025 to 307 billion Euro by 2034. Some estimates show that, in India, this market's size was about 2.9 billion Euro in 2024, and could reach close to ten billion Euro by 2029.
Another difference is that their stock is limited to a small selection that is highly rotational. Certain items or packaged sets of items may even be curated for a single cricket match only.
Inventory management is a crucial part that makes the three-minute-feat possible. The ERP (Enterprise Resource Planning) and other IT systems of these companies cannot function with off-the-shelf software any more. "QC is all about delivering something in a heart-beat, so the back-end has to be lightning-fast when pulling information, too. It has to be end-to-end integrated from procurement to warehousing to sales to deliveries to CRM (Customer Relationship Management) – and really swift", observes Presence 360, a provider of back-end software, including ERP.
The Money Game
Most orders are placed by young, working, convenience-oriented Indians, and often comprise unplanned purchases. The Average Order Value (AOV) is about 600 Rupees, equivalent to circa Euro 6.60. Additional revenue comes from advertisement in the order apps and from fees (delivery fees, handling fees, platform fees, small order fees). QC platforms also earn marketplace commissions and warehousing services income (earned from suppliers), vis a vis other retail formats (both online as well as offline) that lean heavily on product margins offered by the brands/suppliers.
On the cost-side levers, research reports note a sharp decline in per order expenses for dark stores, mid-mile and warehousing, delivery etc. Real estate costs – as of now – are not a big dent on the wallets, as dark store rentals tend to be cheap. After all, they can be set up in back alleys or basements of industrial/commercial buildings, since the store does not tend to public walk-ins. Customer acquisition costs are also not high, as QC is highly complementary to the food delivery market.
But a new dark store can call for an upfront investment of around eight to nine million Rupees (88,000 to 100,000 Euro), which covers capital expenditures towards racks, freezers, chillers, surveillance cameras, and ICT infrastructure. Vinay A V, Senior Director of Retail Media Business at the machine learning company Moloco, assesses how, in the early stages, platforms attempted to source product directly from nearby Kirana (Grocery) stores: "However, this had scalability issues and limited assortments. By shifting to dark stores, QC platforms could provide a wider selection of products, benefit from economies of scale, and improve profitability. Introducing a franchise model for dark stores further accelerated the scalability of these platforms."
