One additional stream that’s likely to complement the core revenues and speed up the path to positive unit economics, is advertising revenue.
Speed thrills, and how. Just six months ago, the opportunity for quick commerce was estimated at $30 billion by 2030, up from $6 billion in 2024. That has now been raised to $40 billion. The catchment, which was not so long ago estimated at about 25-30 million households spending nearly Rs 4,000-5,000 a month, has now been expanded to about twice that number with the spend doubling. Even tier-2 cities now can get the service, albeit for a smaller assortment.
Getting everything delivered at one’s doorstep at lightning speed is so compelling that even e-commerce leaders like Flipkart, which took their time foraying into the space, have now done so. Apprehensive that q-comm players like Zepto and Blinkit will eat into their shares, fashion platforms like Myntra and Nykaa have also joined the fray.
There’s pressure now on the entire ecosystem to shorten delivery timelines, not just for food but for other products too. Should Amazon India, which is reportedly looking to launch a q-comm service, Amazon Tez, resort to heavy discounting and promotions, it would prompt others to follow. But, given how venture capital continues to back q-comm, the competitive intensity is expected to stay elevated. Zepto, for instance, was able to get $1.3 billion from investors in no time at all.
While Blinkit and Zepto have a clear lead in the space, analysts say it is unlikely either of them will command a disproportionate share of 50-60%. They believe the split could be more equitable among five to six players.
The number of stock keeping units (SKUs) offered by q-comm platforms such as Blinkit and Zepto, has increased sharply over the last few quarters to more than 20,000 in some micro markets. Newer entrants like Flipkart Minutes are pushing the envelope to offer products such as mobiles phones and electronic gadgets just as it does on its mainstream platform.
India is among the few markets in the world that has lapped up q-comm. It’s growing into a symbiotic relationship with something for both e-retailers and buyers. For households the convenience of the service appears to be outweighing the costs especially with the increasingly large assortments to choose from.
For e-commerce players, which have found it hard to gather hyperlocal insights after their goods got off the distributor network, this is now a way to collect data on granular consumption patterns. For D2C brands, q-comm is an excellent channel to cater for large markets without building a wide distribution network.
With q-comm, the distribution is flattening giving retailers more visibility and helping them target customers better, especially the affluent lot whose purchases can push up the average order value (AoV). Blinkit’s AoV today is about Rs 660. This is important for q-comm players trying to make a reasonable profit after taking care of the many costs — warehouses, dark stores and delivery services. The changing shape of the supply chain helps e-retailers compete more effectively while eroding the distribution advantages that consumer staples firms have enjoyed. General trade, which includes traditional kiranas, accounts for over 90% of FMCG sales in India. However, q-comm is unlikely to penetrate rural India where the FMCG firms have strong distribution networks.
One additional stream that’s likely to complement the core revenues and speed up the path to positive unit economics, is advertising revenue. Once, the consumer base of the q-comm players reaches a certain size, makers of a host of consumer goods including D2C players, will see value in advertising on the platform. The higher frequency of transactions, the room for targeted advertisements and the ability to correlate ad spots with sales would be of immense use.
The rise of online grocery formats will undoubtedly hurt business at mom-and- pop stores as also modern trade. Players like DMart have acknowledged it’s already doing so in urban markets. The concerns about the future of kiranas are being voiced in government quarters though no formal formal steps to curb the spread of q-commerce have been initiated so far. One report estimated that $1 billion worth of sales may have been lost by kiranas to q-commerce in 2024, largely in the metros. For their part, q-commerce companies have pointed out that the jump in their deliveries can be attributed to the bigger number of SKUs, not necessarily all items of grocery.
To be sure, the tussle will go on. In the meantime, it appears to be an inflection point for q-comm with the growth trajectory moving sharply upwards.
Source: financialexpress
