The Rise of Quick Commerce in India
In recent years, India has witnessed a significant shift in shopping habits, particularly with the rise of quick commerce platforms. These services allow consumers to order groceries and other essentials and receive them at their doorstep within minutes. As the demand for rapid deliveries grows, companies are expanding their offerings and entering new markets. However, this rapid growth comes with challenges, including profitability concerns and regulatory scrutiny.
The Surge in Quick Commerce Demand
The quick commerce sector has exploded in popularity, especially in metropolitan areas. Consumers are increasingly turning to platforms that promise 10-minute delivery times for a variety of products. From breakfast staples like milk and eggs to snacks and electronics, quick commerce platforms are becoming a one-stop shop for many. Analysts predict that the average order value (AOV) on these platforms has risen significantly, from around ₹300-350 to ₹450-600. This increase indicates that consumers are not just using these services for basic groceries but are also purchasing higher-value items. Companies like Zepto are even testing the waters with 10-minute food delivery through dedicated apps.
The convenience offered by quick commerce is undeniable. Shivaraj Jayakumar, a practice leader at Praxis Global Alliance, notes that about 30% of online sales for fast-moving consumer goods (FMCG) have already shifted to quick commerce platforms. This trend shows no signs of slowing down, as consumers increasingly prioritize convenience in their shopping experiences.
Challenges Ahead for Quick Commerce Companies
Despite the rapid growth, quick commerce companies face several challenges. One major concern is profitability. Many players in the sector are investing heavily to scale up operations and enter smaller cities. However, these markets may not yield high returns on investment. As companies expand, they may encounter regulatory hurdles. Trade groups have raised concerns about potential violations of foreign direct investment (FDI) norms and the impact of quick commerce on small kirana stores. The Indian commerce and industry ministry has begun meetings with quick commerce firms to address these issues and understand their business models better.
Moreover, while the quick commerce sector is projected to surpass $6 billion in sales by 2024, the profitability of these companies remains in question. For instance, Swiggy and Zepto have reported significant losses in recent quarters. As they venture into tier two and three cities, the challenge of maintaining profitability will become even more pronounced.
The Role of Younger Consumers
The influence of younger consumers, particularly Gen Z, is reshaping the quick commerce landscape. This demographic is known for its impatience and desire for instant gratification. As a result, companies are eager to capture this market segment, which can significantly increase their customer base. Industry experts believe that consumption patterns are changing. Younger consumers are more likely to embrace quick commerce, leading to a broader selection of products available for rapid delivery. Companies are responding by expanding their offerings beyond groceries to include electronics, fashion, and kitchen essentials.
For instance, Myntra has entered the quick commerce space, recognizing the potential for rapid delivery in the fashion sector. If even a small percentage of fashion sales transition to 10-minute delivery platforms, it could pose a challenge for traditional e-commerce models. As more brands join the quick commerce trend, the competition will intensify, and companies will need to innovate continually to meet consumer demands.
Observer Voice is the one stop site for National, International news, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.