What is Quick Commerce?
Quick Commerce is the latest evolution in retail, offering delivery of essential goods within 10–30 minutes. Unlike traditional e-commerce, which can take days, Quick Commerce is all about speed and convenience. It primarily focuses on everyday items like groceries and personal care products but is rapidly expanding into other categories like fashion and electronics. In India, platforms like Blinkit, Swiggy Instamart, Zepto, and Big Basket are leading the rapid growth of Quick Commerce.
But what exactly makes Quick Commerce so revolutionary? How will it impact the broader retail industry, and what opportunities does it present for brands? Let’s explore these questions while also delving into Quick Commerce’s operational challenges, future predictions, and the strategies businesses can adopt to succeed in this rapid-fire space.
1. How Big is the Opportunity?
The Quick Commerce opportunity in India is massive and rapidly growing. In fact, India’s Quick Commerce market is expected to grow 15x by 2025, reaching over $5 billion. This growth is largely driven by shifting consumer behaviors and increasing demand for faster deliveries. The global pandemic, which pushed consumers to online channels for safety, helped solidify this trend, especially for essential items like groceries, personal care products, and household goods.
While groceries make up the majority of orders on Quick Commerce platforms, other categories are growing fast. Fashion, electronics, and even healthcare products (e.g., over-the-counter medicines, and wellness goods) are increasingly becoming available on Quick Commerce channels. Analysts predict that by 2025, 20-30% of Quick Commerce orders will fall outside the groceries and essentials category.
According to market reports by RedSeer and Boston Consulting Group (BCG), the growth potential of Quick Commerce is unparalleled:
– User Penetration: Currently, Quick Commerce’s user penetration stands at 1.8% (as of 2024). However, this figure is set to rise to 4.0% by 2029 as more consumers experience the convenience and value it offers.
But why has Quick Commerce caught on so fast in India, a country known for its price-sensitive consumers? A major factor is the urbanization of Indian cities, increasing smartphone penetration, and the growing middle class. Consumers in metro cities, especially Gen Z and Millennials, are willing to pay a premium for speed and convenience, marking a shift in buying behaviour from traditional price-focused shopping to value-based purchasing, where time-saving has become a crucial factor.
Factors leading to Consumer Behaviour Change:
India’s consumer landscape is rapidly evolving. Historically, Indian shoppers were highly price-sensitive, focusing on discounts, deals, and bulk purchasing. However, Quick Commerce has ushered in a change. More urban Indian consumers are prioritizing convenience over price, especially among younger demographics.
- Urbanization & Busy Lifestyles: Cities like Mumbai, Delhi, Bangalore, and Hyderabad are home to millions of busy professionals and families. For these households, time-saving is crucial. Quick Commerce appeals to those who want to eliminate the hassle of in-person shopping or waiting days for online deliveries.
- Tech-Savvy Consumers: The rise of Gen Z and Millennial consumers, who are digital natives, is another driving factor. These tech-savvy individuals use mobile apps for nearly all their shopping needs and expect fast, seamless service. With smartphone penetration expected to reach 84% by 2025, the adoption of Quick Commerce will only grow further.
- Immediate Gratification: Quick Commerce taps into the consumer desire for instant fulfillment. Whether it’s getting milk in the morning or a charger in the afternoon, consumers have become accustomed to receiving products almost immediately.
- Pandemic-Induced Habits: The COVID-19 pandemic further accelerated this shift. With people confined to their homes, the demand for quick delivery of essentials skyrocketed. Even post-pandemic, the convenience of Quick Commerce has stuck, becoming the new normal for many urban households.
Key Players Driving the Market
Several platforms are currently dominating the Quick Commerce space in India, each offering unique propositions and competing for market share.
– Blinkit: Formerly known as Grofers, Blinkit made a pivot in 2021 toward Quick Commerce and rapidly expanded its network of micro-fulfillment centers. Blinkit currently operates in 30+ cities and delivers a wide range of products, from groceries to home essentials.
– Zepto: Zepto is one of the fastest-growing Quick Commerce startups, having raised substantial capital and scaling quickly across metros like Mumbai, Delhi, and Bengaluru. Founded in 2021, it has achieved massive success by promising delivery within 10 minutes, setting a benchmark for the industry.
– Swiggy Instamart: Instamart, a subsidiary of Swiggy, operates as a rapid delivery platform for groceries and everyday essentials. As one of the leading food delivery services, Swiggy leverages its existing infrastructure of 500+ stores to help it cover 30+ cities in India.
– Amazon Fresh & Flipkart Quick: E-commerce giants like Amazon and Flipkart have also entered the Quick Commerce fray with Amazon Fresh and Flipkart Quick, respectively. Both platforms utilize their robust logistics and supply chain infrastructure to offer fast deliveries. Expect these players to further ramp up their focus on this segment, especially in urban areas where they already have strong market penetration.
– BigBasket Now: Making a full transition from slotted deliveries to quick commerce, Tata-owned BigBasket is expecting $1 billion of their expected $1.5 billion in sales to come from BigBasket Now. This shift will help them keep their current customers and help acquire new ones.
2. How Does a Brand Get Behind the Quick Commerce Wave?
Quick Commerce offers tremendous opportunities, but for many brands—especially smaller or regional ones—it can seem like an exclusive club dominated by giants like Amazon Fresh, Flipkart Quick, and Swiggy Instamart. However, with strategic approaches, even local players can tap into the Quick Commerce wave.
– Registration and Entry Barriers: Major platforms tend to partner with larger, established brands due to their ability to meet demand at scale. These brands can register through B2B channels, but smaller businesses often face restrictions. However, the Quick Commerce landscape is evolving, and some smaller brands have managed to enter the ecosystem by striking favourable deals or leveraging strategic regional partnerships.
– Influencing Quick Commerce Channels: One key way smaller brands can get on board is by building a strong local presence first. If a brand performs well in its own region, it can leverage this reputation to gain access to Quick Commerce platforms, starting with specific local markets.
The other approach is to grow the brand’s visibility on open platforms like Amazon and Flipkart and its’ own D2C channel. The fact is that as the brand gets traction, the Quick Commerce channels are likely to invite or be open to onboarding the brands.
This approach has worked for regional brands offering unique FMCG (Fast-Moving Consumer Goods) products that larger, national brands may not provide. Once successful locally, these brands can look to expand gradually across other regions – which gives them access to other markets as well
– Hacking the Quick Commerce System: Brands may also look for exclusive deals with Quick Commerce platforms to secure better terms. This could involve offering exclusive products or collaborating on promotions that cater to specific market demands. For instance, a smaller brand might negotiate higher commission fees or priority listings by aligning their offerings with local preferences or high-demand periods such as festivals.
3. POA after the First PO: Managing Quick Commerce Orders Efficiently
Securing a purchase order (PO) from a Quick Commerce platform is just the beginning. The real work lies in the execution, as Quick Commerce demands streamlined operations, rapid fulfillment, and strategic supply chain management. Brands must be prepared for a fast-paced environment where efficiency is critical.
- PO Frequency: Quick Commerce platforms generate frequent purchase orders, often daily or even multiple times a day, due to the fast-moving nature of inventory. Brands must ensure they have the operational capacity to meet these demands consistently. To do this, they need a solid inventory and logistics strategy that allows them to restock efficiently across multiple cities.
- Managing Shipments to Hyperlocal Hubs: Unlike traditional e-commerce models, Quick Commerce requires brands to supply a network of micro-warehouses or hubs across cities. This creates additional logistical challenges, as brands need to ensure that inventory is available at the right hub at the right time. Working with local distributors can help brands move products closer to these hubs, minimizing delivery times and keeping the process seamless.
- Economics and Inventory Planning: The razor-thin margins on which Quick Commerce platforms operate mean that inventory planning must be highly precise. Brands need to rely on predictive analytics to forecast demand and avoid overstocking or understocking. Overstocking can lead to wastage, while understocking risks product shortages, leading to missed sales opportunities.
- Driving Demand and Standing Out: To thrive in the competitive Quick Commerce ecosystem, brands must create demand for their products. This can be done through in-app promotions, discounts, and exclusive deals. Collaborating with category managers on Quick Commerce platforms can help brands improve their visibility, but the key is offering something that differentiates them from competitors. For instance, seasonal promotions or localized product offerings can be effective strategies.
4. Operational Issues: What to Expect
As enticing as the Quick Commerce market may be, it comes with its share of operational challenges. The fast turnaround and consumer expectations for quality and speed can lead to friction points that brands need to address proactively.
- Product Rejection and Quality Control: Quick Commerce platforms have stringent quality control processes in place. Products that do not meet these standards risk being rejected, and frequent rejections can lead to penalties. Brands may find themselves deprioritized in future listings or lose out on prime promotional slots. Ensuring consistency in product quality and packaging can mitigate this risk.
- Appointments with Quick Commerce Managers: Securing meetings with Quick Commerce category managers can be challenging, as they often oversee large portfolios of products. Brands must make a compelling case to secure their support, demonstrating strong sales potential and a clear value proposition. A well-prepared pitch highlighting product uniqueness, consumer demand, and the brand’s ability to meet logistical challenges can improve the chances of success.
- Support from Quick Commerce Channels: While Quick Commerce platforms provide logistical and marketing support, the level of assistance often depends on the brand’s performance and overall visibility on the platform. High-performing brands are likely to receive more attention, with access to better promotional tools and faster resolution of operational issues. For smaller brands, it’s critical to show strong initial results to build a case for additional support.
5. Leveraging Quick Commerce Portals for Insights
Each Quick Commerce portal offers a unique set of features that brands can leverage to improve their Quick Commerce platforms offer various tools and data analytics that can help brands refine their strategies and improve performance. Learning how to leverage these tools effectively can be the difference between surviving and thriving in the Quick Commerce ecosystem.
- Sales Analytics: Brands have access to real-time sales data, demand forecasts, and customer insights via Quick Commerce portals. By analyzing these metrics, brands can adjust their inventory and marketing strategies accordingly. For instance, understanding which products perform well in specific regions can help brands fine-tune their stocking and promotional efforts.
- Promotions and Visibility: Quick Commerce platforms offer promotional tools such as in-app advertising, sponsored listings, and featured product slots. Optimizing these promotions is crucial for improving product visibility. Brands that invest wisely in these tools, targeting specific customer segments or geographies, are more likely to see higher sales conversions.
6. Inventory Planning in Quick Commerce
Unlike traditional e-commerce, where brands may only have to manage inventory in a few warehouses, Quick Commerce requires brands to stock products in hundreds of -dark stores across cities. This can be daunting for those used to managing fewer locations.
- Expanding Warehouse Coverage: Brands must have a clear understanding of demand patterns across different cities. Stocking inventory in every dark stores across the country can be costly and inefficient, so brands need to balance availability with logistics costs.
The number of dark stores that the Quick Commerce Channels have is already large and growing rapidly. As of mid-October 2024, the count is as follows:
Blinkit (650+)
Zepto (500+)
Swiggy Instamart (600+)
Big Basket Now (400+)
A product like Tensight, which helps you with the visibility of inventory across Quick Commerce locations + check pincode availability and pricing + optimize performance marketing at a pincode level becomes a great analytical tool to have.
Regional demand data can help pinpoint high-priority locations for stocking and minimize the risk of stockouts.
- Forecasting Challenges: Incorrect stock forecasts can lead to significant issues. Overstocking leads to wastage, especially with perishable goods, while understocking results in lost sales opportunities. To mitigate these risks, brands must rely heavily on historical sales data and real-time consumer trends to forecast demand accurately.
7. Why is Marketing Complicated on Quick Commerce?
Marketing on Quick Commerce platforms presents unique challenges, as visibility doesn’t always align with stock availability. Here’s how brands can navigate these hurdles:
- Ads Without Inventory: Quick Commerce platforms sometimes run ads for products even when inventory is low or out of stock. This misalignment can hurt return on ad spend (ROAS) and waste marketing dollars. To avoid this, brands must synchronize their marketing campaigns with inventory levels to ensure that promoted products are always in stock.
- Working with Specialist Agencies: Marketing on Quick Commerce platforms requires expertise. There are very few specialist agencies, like Tenovia, that understand the nuances of Quick Commerce marketing and can help brands optimize their advertising spend. These agencies can assist in campaign targeting across keywords, pincodes, and times of the dayand maximizing the return on promotions through data-driven insights.
Checkout our Drools case study on Zepto Marketing using Tensight - ROAS Expectations: Achieving high ROAS on Quick Commerce platforms can be difficult due to the high costs associated with fast delivery and maintaining hyperlocal operations. While ROAS may be lower compared to traditional e-commerce, with the right strategy—such as targeted promotions or regional advertising—brands can still achieve solid returns on their marketing investments.
In conclusion, Quick Commerce in India represents a vast and rapidly growing opportunity, but it also demands careful planning, strong logistics, and a deep understanding of how Quick Commerce platforms operate. Brands that can navigate this space effectively will be well-positioned to capture a share of this emerging market.