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Evolution and Impact of Quick Commerce in India
Context:
Quick commerce (Q-commerce) first gained prominence during the COVID-19 pandemic, offering under-lockdown consumers a way to receive essential goods swiftly. However, beyond its initial utility, Q-commerce has continued to shape shopping behaviours, particularly in urban India, by redefining convenience and speed in digital retail.
How Quick Commerce Works?
- Q-commerce, a subset of e-commerce, focuses on delivering products to consumers’ doorsteps within 10 to 20 minutes.
- This is made possible through a network of dark stores and distribution centres.
- Unlike traditional retail stores or supermarkets, dark stores are dedicated warehouses designed exclusively for fulfilling online orders, ensuring proximity to customers for rapid delivery.
- A key advantage of Q-commerce over traditional retail is its reliance on mobile apps, which leverage customer data to enhance shopping experiences.
- Platforms use data analytics to manage inventory efficiently, predicting demand trends based on seasonality, demographic shifts, and purchasing behaviour.
- For instance, they can anticipate when to stock up on specific products based on changing consumer preferences.
Benefits for Brands
- According to a study by the Centre for Transportation and Logistics at IIM Ahmedabad, Q-commerce benefits retailers by increasing brand visibility due to its widespread reach.
- India’s availability of low-cost, employable manpower has been crucial to the sector’s growth.
- Another key advantage for brands is the economies of scale that Q-commerce platforms provide.
- For example, individual companies distributing frozen products might need to invest in costly freezers for Kirana stores, whereas Q-commerce platforms streamline such requirements through centralised distribution.
Changing Consumer Preferences
- A survey by NeilsenIQ reveals that 41% of urban consumers prefer modern trade, while 25% opt for general trade, 22% for e-commerce, and 12% for Q-commerce.
- Meanwhile, Deloitte reports that major FMCG brands have witnessed a two-fold increase in Q-commerce’s share within their total e-commerce sales, now comprising around 35% of their online revenue.
- Deloitte’s 2024 consumer survey indicates that quick commerce is favoured over traditional e-commerce for purchasing food and beverages due to impulse buying and immediate needs.
- In contrast, traditional e-commerce remains the preferred choice for home, beauty, and personal care products, which tend to be planned purchases.
- Modern trade continues to dominate across product categories, primarily due to the availability of larger pack sizes, better prices, and attractive discounts.
- One major consideration in Q-commerce is the minimum cart value required for free delivery.
Market Growth and Competition
- The Indian Q-commerce market is currently valued at $3.34 billion and is projected to grow to $9.95 billion by 2029, according to Grant Thornton Bharat.
- The sector recorded a 76% year-on-year growth in FY 2024.
- A report by financial services firm Motilal Oswal states that as of Q1 FY 2025, Zomato-owned Blinkit leads the market with a 46% share, followed by Zepto at 29% and Swiggy Instamart at 25%.
Challenges for Traditional Retailers
- Despite its rapid growth, Q-commerce has faced backlash from traditional retailers and FMCG distributors.
- Organisations such as the All-India Consumer Products Distribution Federation (AICPDF) have lodged complaints with the Competition Commission of India (CCI), accusing Blinkit, Zepto, and Swiggy Instamart of engaging in anti-competitive practices.
- The primary concerns include predatory pricing and deep discounting.
- Distributors allege that Q-commerce platforms set product prices below landing costs to drive traditional retailers out of business, only to increase prices later to recover losses.
- The AICPDF also points out that these platforms benefit from venture capital and foreign direct investment, giving them an unfair advantage.
- Additionally, platforms are accused of leveraging app data to implement differential pricing based on factors such as a customer’s location, device type, and purchase history.
