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Zomato's Blinkit races towards rapid commercial dominance in India

TechBrunchBy TechBrunchMarch 12, 20244 Mins Read
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Despite the gradual decline of quick commerce in many markets and the collapse of several heavily funded startups in the past two years, India remains a notable outlier where the model remains vibrant. It's emerging.

India's quick commerce market is set to grow by a staggering 10 times between 2021 and 2023, driven by the sector's ability to cater to the distinct needs of urban consumers seeking the convenience of small, unplanned purchases. We have achieved great growth. However, despite this rapid expansion, QuickCommerce has captured only 7% of the potential market, with a total addressable market (TAM) estimated at $45 billion, according to JM Financial, and It is said to be outpacing the delivery market.

Zomato's Blinkit is leading the quick commerce market in India, capturing a whopping 46% market share on a GMV basis in the quarter ended December, according to a new analysis.

According to brokerage firm JM Financial, Swiggy's Instamart follows with a 27% share, followed by newcomer Zepto, which rose quickly to secure 21% of the market, followed by Bigbasket's BB Now with a 7% share. . Reliance Retail's Dunzo, which pioneered the quick-commerce model in India, has lost virtually its entire market share.

“A few years ago, the space was highly competitive with over 10 active players,” JM Financial wrote about the quick commerce market in a recent note. “It looked like a multi-year phase of intense cash burn would soon follow. However, unexpectedly, several players, some of them with deep pockets, quit their efforts early on. Some companies faced financing challenges, while others lacked product market fit, were unable to resolve localized hyper-complexity, and had robust end-to-end 4) the inability to build a strong brand. Recall.”

As quick commerce companies compete for a larger slice of the market, their business success depends on developing efficient supply chains. Companies are investing heavily in running dark stores, streamlining inventory management, and establishing direct partnerships with FMCG manufacturers and farmers. By bypassing traditional distribution channels, these companies aim to improve product quality, shorten delivery times and increase overall operational efficiency, industry experts say.

According to JM Financial, the dark store, which is the backbone of its quick commerce business, has significantly expanded its product lineup and now has more than 6,000 SKUs per store, a significant increase from 2,000 to 4,000 SKUs a few years ago. By contrast, traditional neighborhood kirana stores, found throughout India's cities, towns, and villages, typically stock 1,000 to 1,500 items. Modern large retail stores, on the other hand, offer customers a much wider selection, with 15,000 to 20,000 products available.

There has also been a notable rise in the average order value for quick commerce players, rising to around Rs 500 (approximately $6) from the previous range of Rs 350-400. This increase in average order value sets Quick Commerce apart from kirana stores. , customers typically pay between Rs 100 and Rs 200 per transaction.

While the convenience that quick commerce brings is undeniable, profitability remains a concern for investors. Blinkit, which Zomato acquired in 2022, aims to achieve adjusted EBITDA breakeven by Q1 of FY2025, while Zepto is targeting EBITDA profitability in 2024. Swiggy's Instamart is also focused on profitability, with the parent company saying: The peak of business investment has passed.

However, the long-term sustainability of the quick commerce model remains to be seen. Profitability may prove difficult for some players due to intense competition and the constant need for heavy investment in technology and supply chain. Additionally, the concentration of demand in urban areas may limit the market's growth potential, with smaller cities and rural areas presenting unique challenges in terms of population density and consumer behavior.

And this market could attract players with even more money. TechCrunch reported last week that Flipkart is considering entering the quick commerce market as early as May this year.



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