“Quick commerce is the fastest growing channel for us now online,” Suresh Narayanan, chairman of Nestle India, told ET. “I will not say it’s overtaken the regular platforms. But in the last quarter, more than half of the growth in ecommerce came from quick commerce,” he said.
Narayanan said the sales channel has become a sustainable proposition for consumers. “Of course, it’s fiercely competitive,” he said. “The sheer convenience of consumers getting what they want in a short period of time saves them the burden of doing pantry shopping.”
Britannia CEO Rajneet Kohli said the uptick through quick commerce is more prominent in certain categories.
“If I have to put it in very, very simple terms, it’s quick commerce that’s leading, followed by ecommerce,” he told ET. “There is a clear uptick that’s happening on the quick commerce side. And very much so in certain categories.”
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So, is it a matter of time before quick commerce catches up with the likes of Flipkart and Amazon? Perhaps not. Because now is a time when new users are hard to come by for quick commerce companies as they struggle to expand beyond the top cities.
“Quick commerce growth has already started to slow down,” said Hari Menon, CEO of BigBasket. “This is typical of high-growth businesses when they start and settle down soon. That’s already happening,” he said.
Menon said food companies benefitted the most from quick commerce. “Sales of food on quick commerce is significantly higher than non-food (personal care, beauty, general merchandise, etc),” he said. “What sold in food was snacks, beverages, ready to eat/cook, pet food, etc. Hence companies like Britannia and Nestle grew well on quick commerce platforms.”
The ratio between BigBasket’s next-day or same-day delivery service and quick commerce in terms of business is currently about 68:32, Menon said.
Quick commerce is the fastest-growing channel for many new-age direct-to-commerce or online shopping-focused brands, too, but it is nowhere close to surpassing traditional ecommerce channels.
Suhasini Sampath, cofounder of FMCG upstart Yogabar, said Amazon and Flipkart contribute about 70% of its online sales.
“Quick commerce for us plays a more important role in kind of getting feedback from product launches,” she said. “But as a channel, it still only contributes to about 10% of our overall sales.”
Sampath, though, said there has been no slowdown for Yogabar in terms of sales growth through quick commerce despite discounts drying up and as platforms facing a slowdown in terms of new user addition.
Swiggy Instamart does about 450,000 orders in a day on average with an average order value of about Rs 400, a person in the know told ET.
Nexus Venture Partners-backed Zepto does about 300,000 orders in a day, a senior company executive said.
Blinkit delivered 31.6 million orders in the quarter ended December 2022, according to Zomato’s financial statement, with an average order value of Rs 524.
Swiggy did not comment on specific queries sent by ET about its daily order volumes but said that Instamart has proven to be a great sales channel for established consumer brands.
“Today, Instamart is fast becoming one of the largest online distribution channels for many of the country’s leading CPG/FMCG brands,” a Swiggy Instamart spokesperson said. “Specially designed tools, including brand pages and other ways for them to display multiple products and exciting new launches, have helped legacy brands with their objective of engaging with consumers, driving awareness, and maximising reach and sales on Instamart.”
Aadit Palicha, cofounder and CEO of Zepto, did not specifically comment on their daily order volumes or GMV, but said the company is one of the fastest-growing internet companies in the country.
“This model has deep product market fit and the market is massive, so it is not a surprise at all,” he said. “Some of the brands that we work with, a year from now will see the quick commerce channel to be bigger than modern trade.”
ET had reported on January 5 that Instamart’s new user addition had slowed down significantly after crossing the 300,000 mark.
Industry executives point out that beyond the top cities, which have high population density, it is difficult for dark stores to turn profitable.
Investors are also shying away from investing in high-cash burn businesses amid tightening macroeconomic conditions.
As quick commerce companies have been finding it hard to attract new users, they are trying to increase the spending of existing users who have signed up. ET reported in December last year that companies have been nudging users to place more items in a single order in order to increase average order value.
Companies have also been expanding categories, adding products in beauty and personal care, pharmaceuticals, and pet care, among others.