Featured Article

Quick commerce is making fast inroads in India

Zomato’s Blinkit leads the quick commerce market in India, having cornered as much as 46% of the market share by GMV, according to JM Financial


Image Credits: Niharika Kulkarni / NurPhoto / Getty Images

Even as quick commerce is slowly fading in many markets and several heavily funded startups have folded shop in the past two years, India is emerging as a striking outlier where the model — of delivering items to customers in 10 to 20 minutes — appears to be working.

India’s quick commerce market has witnessed a staggering tenfold growth between 2021 and 2023, fueled by the sector’s ability to cater to the distinct needs of urban consumers seeking convenience for unplanned, small-ticket purchases. Despite this rapid expansion, however, quick commerce has only captured a modest 7% of the potential market, with a total addressable market (TAM) estimated at $45 billion, surpassing that of food delivery, according to JM Financial.

The quick commerce players — Zomato-owned Blinkit, Swiggy’s Instamart and YC Continuity-backed Zepto — can reach an estimated 25 million households, who are likely to spend an average of 4,000 to 5,000 rupees ($48 to $60) per month, according to Bank of America.

The top players are expected to expand their reach to 45 to 55 cities within the next 3 to 5 years, up from the current 25 cities, BofA added. Regular customers of quick commerce platforms typically order three to four times per month, with retention rates as high as 60% to 65%. Top users, however, make even more frequent transactions, ranging from 30 to 40 times per month, BofA analysts wrote in a note Monday.

“Quick commerce model had its own challenges in Europe and USA but in India, especially in top markets, product-market fit development was led by users liking the experience when things are delivered faster to them at doorstep,” the analysts wrote. “These users don’t want to go back to local corner stores and spend 10 to 15 minutes/fuel extra. The usage started from top cities like Bengaluru, Delhi-NCR, Kolkata etc and then has moved to even smaller cities like Indore, Pune, Rajkot etc.”

Zomato’s Blinkit leads the quick commerce market in India, having cornered as much as 46% of the market share by GMV in the quarter that ended in December, according to a separate analysis.

Swiggy’s Instamart follows with a 27% share; newcomer Zepto has quickly gained ground, securing 21% of the market; and Bigbasket’s BB Now trails with a 7% share, brokerage firm JM Financial said. Reliance Retail–backed Dunzo, which pioneered the quick commerce model in India, has virtually ceded its entire market share to competition.

“With more than 10 active players, the space was very competitive a couple of years back,” JM Financial wrote of the quick commerce market in a recent note. “It appeared that an intense phase of multi-year cash-burn would soon follow. However, contrary to expectations, several players including some well-funded ones folded early in their endeavour. While some faced funding challenges, a few others were affected by structural issues such as lack of product market fit, inability to solve the hyperlocal complexity, inability to build a robust end-to-end supply chain and … failure to create a strong brand recall.”

As quick commerce players vie for a larger slice of the market, the success of their ventures hinges on the development of efficient supply chains. Companies are making substantial investments in dark store operations, streamlining inventory management and establishing direct partnerships with FMCG manufacturers and farmers. By circumventing traditional distribution channels, these firms aim to enhance product quality, expedite delivery times, and boost overall operational efficiency, industry analysts said.

Dark stores, the backbone of quick commerce operations, have significantly expanded their product offerings, now carrying over 6,000 SKUs per store, a substantial increase from the 2,000 to 4,000 SKUs they housed just a few years ago. In contrast, traditional neighborhood kirana stores, which are ubiquitous across Indian cities, towns, and villages, typically stock between 1,000 and 1,500 items, according to JM Financial. Large modern retail stores, on the other hand, offer a much wider selection, with 15,000 to 20,000 items available to customers.

There has also been a noticeable surge in average order value among quick commerce players, which has risen to up to 650 rupees ($7.8) from the previous range of 350 to 400 rupees. This increase in average order value sets quick commerce apart from kirana stores, where customers typically spend between Rs 100 and Rs 200 per transaction.

Image Credits: JM Financial

While the convenience offered by quick commerce is undeniable, profitability remains a concern for investors. Blinkit — which Zomato acquired in 2022 — aims to achieve adjusted EBITDA break-even by the first quarter of fiscal year 2025, while Zepto has set its sights on EBITDA profitability in 2024. Swiggy’s Instamart is also focusing on profitability, with the parent company indicating that the peak of investments in the business is now behind them. Swiggy turned its food delivery business profitable last year.

Many of these players are trying to improve their margins by increasingly looking beyond the grocery category. All the top three players today sell consumer electronics items, a category that makes about half of the sales on Flipkart and Amazon India by GMV, according to people familiar with the matter. (So it should not come as a surprise that Flipkart is weighing entering the quick commerce market by as early as May this year.)

Additionally, advertising revenues currently account for around 3% to 3.5% of quick commerce platforms’ total revenue and could easily reach 4.5%, primarily driven by direct-to-consumer platforms, BofA said. These platforms are also exploring private label strategies in certain categories, it added.

Consumer survey by JM Financial. Image Credits: JM Financial

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo