instant grocery: Quick commerce on a slow burn – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-editorial/quick-commerce-on-a-slow-burn/articleshow/90526046.cms

Synopsis

The value perception limits the scope of charging delivery fees. But premium services for, say, peak time orders could eventually become a revenue stream. The service offering has to be differentiated for a shifting client base and app ergonomics, and personalised promotions need to keep pushing convenience shopping. Warehousing efficiencies can be improved through tie-ups with kirana stores.

Quick commerce is in the news for the venture capital pouring into a business spawned during the pandemic in which delivery of goods, typically groceries, is accomplished within minutes of an online order being placed. It is also drawing regulatory attention over the safety of delivery partners.

Reliance Retail is the latest to begin trials of instant grocery delivery that has been tested to varying degrees by BigBasket, Blinkit, InstamartFlipkart and Zepto. In play is interest by the Tatas, Zomato, Swiggy, Ola and Walmart. A cumulative war chest of over $1 billion has reportedly been readied for what could, by some estimates, be a $5 billion opportunity in three years.

At this point, quick commerce is cash burn. The path to profit needs to go beyond funding, implementation and the selling proposition. Margins are low and analytics holds the key to a rising assortment of higher-value products. Hyperlocal dark stores need data-driven solutions to control inventory management costs, which now eat away almost all the profit on a basket order.

The value perception limits the scope of charging delivery fees. But premium services for, say, peak time orders could eventually become a revenue stream. The service offering has to be differentiated for a shifting client base and app ergonomics, and personalised promotions need to keep pushing convenience shopping. Warehousing efficiencies can be improved through tie-ups with kirana stores.

Most players moving in laterally are relying on either their client acquisition funnel or their developed supply chains. Quick commerce for now remains a niche segment in select high-density metropolitan pockets, thereby limiting its potential. And somebody has to find a way to make profits in this game.

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