Rural Commerce – How quick commerce is falling into its own trap

Quick commerce was built on a simple principle. A concentration of people in a small area needed quick services. Dark stores was the answer and quick commerce become a famous urban phenomenon. Now that is becoming its very limitation.

How quick commerce grew in India?

In India, quick commerce was about an amazing promise. Your food and groceries will be delivered to your household in less than 20 minutes. However, that had logistical limitations. It was only possible where there were large urban clusters like Mumbai, Delhi, NCR, Bengaluru, Hyderabad, Pune etc. The model of quick commerce would struggle in a situation where customers are sparsely distributed over a much larger area. In that case, the economics of dark stores and quick commerce would not work. That is a reason quick commerce has been a very limited urban phenomenon in India.

Enter rural commerce in a big way

Funding support for rural commerce platform started as a government initiative but there are an increasing number of PE players also getting into rural commerce. Most of them realize that quick commerce players like Instamart, Blinkit, and Zepto have covered most of the busy urban clusters. The low-hanging fruit is already out of the way. Now it is only the tougher market that they will have to break into, and with the kind of cash they have already burned, that looks unlikely. The focus is shifting to rural commerce, where quick delivery is not as critical as reliable delivery. The dark store model will not work in rural commerce and it has to be more of a multi-tiered model with more stakeholders.

Rural commerce – the Rozana and VilCart stories

When Rozana recently bagged a ₹290 crore funding from Bertelsmann, Fireside, Spark and others; it was a big ray of hope. Rozana will be concentrating on a much bigger Gangetic belt and cover 21,000 villages. The focus would be reliable supplies and not speed. It has empanelled over 35,000 women partners for last mile delivery solutions. Take the case of VilCart, which offers supply chain solutions to rural retailers. The chain will link rural retailers, with SMEs, manufacturers, and customers. VilCart has also secured funding from NAV Ventures and Impact Asia. Clearly, PE funds are seeing limited visibility for urban quick commerce, if they are not able to move beyond urban clusters.

How rural commerce is reinventing the game?

There are several ways in which the rural commerce approach is distinctly different from the quick commerce approach. Firstly, rural commerce is more about reliability than about speed. Secondly, rural commerce makes physical retailers part of the ecosystem, unlike quick stores that actually displaces them. Thirdly, there is a lot more reliance on women and the community in managing the supply chain in rural commerce. Fourthly, while quick commerce needs high-value baskets to survive, rural commerce can handle more frequent small carts too. With the ONDC, there is a level playing field. Rural commerce is just making reliable commerce a reality for vast tracts of rural India.