Quick Commerce – Beyond growth, its basic nature is changing

The real story about Quick Commerce in India is not about how it is growing, but how it is structurally changing. Quick Commerce is now becoming a 3-tiered model; with less focus on speed of delivery beyond the metro clusters.

Quick Commerce was the Hannibal in retail

If you were to take a historical analogy, quick commerce entered India like Hannibal disrupted the Roman Empire. What is more interesting is that the Romans learnt a lot about war from Hannibal and eventually applied that against him. By the time Scipio Africanus defeated Hannibal, the Roman empire had learnt the best of war strategy from the brilliant Hannibal. After the death of Hannibal, the Western Roman Empire survived for another 650 years, while the Eastern Roman Empire survived an additional 800 years till 1453. The question is; who will be the Romans in retail.

What existing quick commerce players are doing?

For a long time, quick commerce was a clustered phenomenon in urban centres. When you had a concentrated and powerful market in an urban cluster, it was easy to set up dark stores, map demand patterns and organize delivery in under 15 minutes. However, the quick commerce players like Blinkit, Zepto, and Instamart are realizing that the urban market is rapidly getting crowded. Hence, they are looking at smaller cities for growth, with the result that quick commerce has now expanded to 477 cities in India. However, the strategy of burning cash and buying market share, which worked in urban clusters, will not work in more dispersed non-urban markets. Capital is also a challenge!

What the deep digital balance sheets are doing?

When you talk of deep digital balance sheets, you are obvious talking of Amazon India and Flipkart (owned by Wal-Mart). Amazon and Wal-Mart are the 2 top-ranked companies by sales revenues at around $720 billion each. They are both immensely profitable, so it gives them a deep balance sheet to fund expansion. Their strategy in India has been two-fold. The first part of their strategy is essentially non-urban. Amazon and Flipkart are focusing on delivering goods and services to the semi-urban and rural population, where the focus is less on speed and more on reliability. The second focus of the strategy is better control over supply chain, which is key to non-urban delivery.

Physical retailers are also not lagging behind

If quick commerce players managed speed within clusters; Amazon and Flipkart are managing the supply chain (especially procurement) a lot better. Then there are the players like Reliance Retail (20,100 stores), Vishal Retail (820 stores), DMART (500 stores) etc. These players are adopting a third kind of approach. The focus is, once again the non-urban market; but by making physical stores double up as fulfilment centres. Which of these strategies will appeal to people? Hard to say, but one thing is certain that quick commerce, as we know it, will change drastically in the coming years. It will be about spread, logistics, and supply chains; than merely about rapid delivery!