The Curious Consultant - December Edition
The Consulting Club at Manipal
Facilitating the transition for graduates to a future in management consulting through case-solving practices and more.
Welcome to the Final Edition of The Curious Consultant for 2024!?
This month, we explore the rapid rise of quick commerce and how it’s revolutionizing consumer behavior and supply chain strategies. We delve into the world of mergers and acquisitions (M&A), uncovering the strategic moves and ripple effects that define corporate consolidation. We tackle valuation—the art and science behind determining a company’s worth in ever-evolving markets, and lastly an In-depth case study on MobiKwik’s IPO.
Join us as we unpack these trends and share actionable insights to help you stay ahead in the competitive world of consulting. Thank you for being a part of our journey this year—here’s to knowledge, growth, and impactful solutions in 2025!
Rise of Quick commerce in India
What is Q-commerce?
Quick commerce is the next step in the evolution of eCommerce and as the name suggests it's all about speed. Quick commerce generally means consumers can expect delivery within one hour of placing an order.
In 2024 the?modern consumer journey?demands speed. From takeaway food to online shopping deliveries the sooner a customer has their purchase in their hands the better. With this in mind the arrival of quick commerce (or q-commerce) is something that shouldn't come as too much of a surprise. If you can order a takeaway in under an hour then surely consumers should be able to order other things super fast!?
How do q commerce companies operate?
Quick commerce companies operate through a network of strategically placed dark stores—small warehouses or retail spaces used exclusively to fulfill online orders. These dark stores, located within 10-15 minutes driving distance of neighborhoods, stock a limited selection of frequently purchased items, enabling quick retrieval and packing in under five minutes. When a customer places an order through an app, the system manages and tracks the order while automatically assigning it to a delivery partner. Advanced dispatch systems ensure efficient assignment, while route optimization engines plan the fastest delivery paths, considering real-life factors like traffic and distance. Customers can track their order in real time, share special instructions, reschedule deliveries and provide feedback, ensuring a seamless and transparent experience.
What’s behind the quick commerce market boom in India: Key growth drivers
Traditionally?four things?drive the need for speed and convenience; they are busy lifestyles, smaller households, urbanisation and aging populations. But the pandemic accentuated these needs even further particularly in terms of commerce delivery. Today the prevalence of?remote working?means consumers are less likely to drop into a store. So convenient commerce delivery is more sought-after than ever.
With smartphones enabling easy access to services, today’s buyers expect seamless and rapid deliveries, which Q-commerce fulfills with unparalleled speed.
The COVID-19 pandemic acted as a catalyst, driving consumers to adopt contactless and online delivery services. These platforms quickly became a part of daily life for Indian households by offering both safety and convenience during challenging times.?
At the core of quick commerce is the on-demand economy, which operates on efficiency and real-time data. Unlike traditional supply chains, Q-commerce ensures record-speed deliveries by leveraging AI-powered algorithms, robotic automation, and cloud platforms. These technological advancements streamline order fulfillment, enhance inventory accuracy, and maintain high service quality even under heavy demand. Companies like Zepto, Blinkit, Swiggy Instamart, and Dunzo are continuously raising the bar, fostering fierce competition in the market to achieve faster deliveries and better customer experiences.?
Integration with existing industries is another pillar of Q-commerce's success. By collaborating with grocery stores, D2C brands, and restaurants, these platforms improve last-mile delivery and operational efficiency. Additionally, quick commerce generates revenue through targeted advertising, while its 24/7 service model and competitive pricing—enabled by bulk purchasing and economies of scale—make it attractive to a wide customer base. Backed by significant investor interest, with a current market size of $2.8 billion, quick commerce is set to become a disruptive force, reshaping the retail industry and redefining convenience for consumers.?
Quick-commerce risks: A lot can go wrong when everything arrives in 10 minutes
The quick commerce industry is facing mounting challenges that threaten to slow its once-explosive growth. Trouble in other high-growth sectors like online education and fintech has led to faddish overinvestment in quick commerce, resulting in structural imbalances. For the broader economy, this trend has contributed to the creation of low-quality work amidst a jobless recovery. India, with only 1% of the world’s vehicles, records the highest number of road accident fatalities. While quick commerce fleets are increasingly dominated by slower-moving electric two-wheelers, instant delivery remains the cornerstone of the industry, further compounding traffic and safety concerns.
Significant gaps in the industry remain such as ensuring that riders earn at least the minimum wage and addressing the lack of collective bargaining opportunities. Despite improvements, delivery personnel face immense stress from strict timelines, raising concerns about their well-being. Traditional retail supply chains, sidelined by the rise of q-commerce, are pushing back, even demanding antitrust investigations to level the playing field.
The decline of traditional supermarkets is another symptom of the q-commerce boom. Reduced footfall has forced retailers like DMart and Big Bazaar to rethink their business models as they grapple with revenue losses.
Meanwhile, the economic divide deepens, as quick commerce services remain largely inaccessible to low-income groups due to their higher costs and limited penetration in non-urban areas. For businesses, profitability is an ongoing challenge, as maintaining dark stores and ensuring lightning-fast deliveries incur high operational expenses. Sustainability concerns are also rising, with increased packaging waste and transportation emissions adding to environmental pressures. While quick commerce has revolutionised consumer convenience, these challenges underscore the complexities of maintaining its rapid growth.
Case study: How Blinkit Cracked the world of quick commerce
When Zomato acquired Blinkit in?2022?to enter the quick-commerce space little did anyone know that this “grocery-delivering” business would become?more valuable?than Zomato’s own food delivery business. With a valuation of roughly $13 billion and a market share of 46%,Blinkit has disrupted India’s 23,000cr quick commerce industry.
The company’s revenue has increased 3x within just a year from 2023(800cr) to 2024(2300cr) and is expected to break even in the first quarter of 2025!
Founded in 2013, Blinkit pivoted to "instant delivery" during the COVID-19 pandemic, capitalizing on the demand for fast, contactless shopping. By leveraging technology, data analytics, and customer-focused innovation, Blinkit rapidly expanded its market share and attracted significant investment. ?
What makes Blinkit so appealing to customers ?
Blinkit has quickly become a favorite among customers due to its ultra-fast delivery, often within 10-15 minutes, providing instant access to everyday essentials. The platform offers a wide range of products, including groceries, fresh produce, dairy, snacks, and personal care items, regularly updating its inventory with seasonal and new offerings to serve as a convenient one-stop shop. It’s user-friendly app further enhances the shopping experience with real-time order tracking, multiple payment options, personalised recommendations, and notifications for promotions, flash sales and holiday discounts, creating a customer-centric approach that encourages loyalty and repeat business.
Marketing strategies:
1. Targeted Digital Advertising and Performance Marketing : Blinkit uses data-driven, targeted digital marketing to reach specific customer segments through platforms like Facebook, Instagram, and Google. By analyzing user behavior, preferences, and purchase history, it tailors ads that speak directly to potential customers, offering personalized product recommendations and time-sensitive promotions. Performance marketing helps Blinkit track ROI and adjust campaigns in real-time for maximum effectiveness.
2. Social Media Marketing : It collaborates with influencers and celebrities, especially in the lifestyle, food, and fitness sectors, to promote its services. These partnerships help build brand credibility and reach a wider audience through authentic recommendations. Additionally, Blinkit maintains an active presence on social media, posting relatable content like memes, customer reviews, and seasonal promotions to engage with users and create a humanized, fun brand image.
3. Referral Programs and Word-of-Mouth Marketing : Blinkit has implemented effective referral programs to encourage existing customers to invite friends and family. These programs offer rewards like discounts or free deliveries for both the referrer and the referee. This word-of-mouth marketing strategy helps Blinkit organically grow its customer base and incentivizes loyal customers to promote the brand within their social circles.
4.AOV game :BlinkIt’s AOV of ?650 is way higher compared to competitors who are stuck at ?400 to ?500 range. The secret is in the app’s positioning. While everyone is getting creative by adding more “Amazon-like” options on the app, it has played with customers’ psychology with their super bold initiatives like getting an iPhone or PS5 in 10 minutes. The idea is simple: Create buzz → Position as a “One Stop” marketplace → Get more customers + Get current customers to order more.
*( AOV stands for?Average Order Value. This is an eCommerce metric that indicates the average amount a customer spends during each transaction.)
Main reasons for their growth:
1. Rapid Delivery Model (10-15 Minutes) : Blinkit revolutionized the grocery delivery space with its hyperlocal, quick-delivery model. By focusing on delivering groceries and essential items within 10-15 minutes, Blinkit differentiated itself from traditional e-commerce platforms. But what makes them so confident in assuring super quick deliveries?
Dark Stores?– Its?2.5k to 4k sq. ft. stores?located within?a radius of 1.5-3km?of our homes. One dark store can have up to?6,000 SKUs - 4X?of your nearest Kirana Shop. Fun fact: For every ~40 dark stores within the city, there’s one?10X bigger?mother warehouse on the outskirts?(20k to 175k sq. ft. big).
Blinkit has the highest number of dark stores compared to its peers. Plus, it has done a killer execution as a dark store’s location decision involves taking in factors like—Average household income ,infrastructure & peak traffic and Population density
2. Pandemic catapulted their growth: The pandemic reshaped consumer habits, driving a dramatic surge in online grocery delivery as people sought to minimize exposure to the virus. Blinkit seized the moment, offering contactless, hyperlocal deliveries within 10-15 minutes, meeting the urgent needs of customers during lockdowns and beyond. The crisis also expanded it’s customer base, as first-time users turned to its easy-to-use platform for safety and convenience, many of whom became loyal customers post-pandemic. Prioritizing health, Blinkit implemented strict sanitization protocols and contactless delivery, building trust through reassuring campaigns that resonated with a health-conscious audience.
3. Strong Technology and Data Analytics :Blinkit's ability to manage inventory efficiently and optimize routes for delivery is backed by robust technology. The platform uses advanced data analytics to predict consumer behavior, manage stock levels, and ensure that deliveries are made on time. This tech-driven approach helped streamline operations and improve customer satisfaction, which contributed to the company's growth.
4. Strategic Partnerships and Deep Funding: Blinkit secured significant investment from venture capitalists, which helped it scale rapidly. The funding allowed it to expand its presence across multiple cities, improve its infrastructure, and enhance its customer service. The company also formed strategic partnerships with local retailers and suppliers to ensure a diverse and consistent product offering, which made the platform attractive to a wide range of customers.
Blinkits’ market share has not been the highest forever. It was 32% in 2022. And in this same period, Instamart’s share fell from 52% and Zepto’s increased from 15% to 28%. But one unfair advantage lies in the parent company.Zomato is the biggest food delivery app with a?56%?market share and?100M+ monthly active users —?3X?what Blinkit has. So even getting 5% of Zomato’s monthly active users as new customers, could bring a?33% rise to the app’s current user base. Zomato has done an integration at the bottom of the app so that users can access Blinkit within a blink. Zomato has deliberately kept the 2 apps different because the company knows that?super brands > super apps?in India. So, there’s no point leaving the brand effect Blinkit has created in 10 years.
Ethics and transparency: The company places a strong emphasis on clear communication, ensuring that customers are fully aware of pricing, delivery charges, and discounts before checkout, avoiding any hidden costs. By offering genuine discounts and focusing on product quality and authenticity, the platform works with trusted suppliers to ensure high standards, especially for perishable goods like fruits, vegetables, and dairy. Data privacy and security are top priorities, with strict protocols in place to protect customer information and full transparency regarding its use. Moreover, the company is committed to sustainability through eco-friendly packaging, route optimization to reduce carbon emissions, and supporting local farmers. Their social responsibility initiatives, including food donations to communities in need, reflect a deep commitment to ethical practices and a sustainable future.
Key takeaways for consultants :
1.Adaptability to Market Shifts Blinkit’s shift from standard grocery delivery to instant delivery (Q-commerce) during the pandemic demonstrates the importance of adaptability. Consultants should advise clients to develop flexible business models that can quickly respond to changes in consumer behavior, technology, and market disruptions, ensuring long-term growth and relevance.
2.Leverage Technology and Data for Efficiency Blinkit's use of data analytics to optimize routes and predict demand has been key to its success. Consultants should stress the importance of integrating technology into business operations to improve decision-making, streamline processes, and enhance customer experiences. Using AI, machine learning, and automation can boost efficiency and profitability.
3.Customer-Centric Innovation Drives Loyalty Blinkit’s focus on fast, hyperlocal delivery and personalized experiences highlights the need for customer-centric innovation. Consultants should guide clients to design products and services that address customer pain points, enhance convenience, and build loyalty by consistently exceeding expectations.
4.Strategic Marketing and Brand Positioning Blinkit’s brand success is built on speed, convenience, and affordability, reinforced by targeted digital marketing. Consultants should advise clients to create a strong, coherent brand message, use data to understand preferences, and develop impactful marketing campaigns that resonate with their audience, ensuring trust and long-term brand success.
References:
A Comprehensive Guide to Mergers and Acquisition Strategy
Mergers and Acquisitions (M&A) have become pivotal tools for companies aiming to achieve rapid growth, gain competitive advantages, or diversify their portfolios. Mergers involve the combination of two companies into one entity, while acquisitions refer to the purchase of one company by another. Together, these strategies enable organizations to achieve objectives that would be difficult or time-consuming to realize organically. However, an effective M&A strategy requires meticulous planning, precise execution, and a clear understanding of the involved dynamics. This article outlines the types of mergers, provides an overview of M&A, and delves into the essential components of a successful M&A strategy, drawing from leading industry insights.
Types of Mergers
Understanding the types of mergers is crucial for selecting the appropriate approach to meet strategic objectives. The primary types of mergers include:
Each type of merger comes with its unique set of opportunities and challenges, making it essential for companies to assess their strategic fit before proceeding.
Understanding M&A: Benefits and Challenges
M&A activities are pursued to achieve several benefits, such as:
Despite these benefits, M&A processes face challenges like overvaluation, cultural clashes, prolonged integration timelines, and misaligned strategic objectives. A successful M&A often aligns with a company's long-term strategic goals, emphasizing operational efficiencies and innovation (Bridgepoint Consulting).
Key Components of M&A Strategy
Best Practices for M&A Success
Challenges in M&A
M&A processes often encounter hurdles such as:
Conclusion
An effective M&A strategy is a blend of vision, precision, and adaptability. Companies must prioritize thorough due diligence, cultural alignment, and post-merger integration to unlock the true value of their investments. By adopting best practices and learning from industry insights, organizations can navigate the complexities of M&A and achieve sustainable growth.
References
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Understanding Valuation??
Imagine you own a lemonade business. Your setup includes a tent worth ?20, a table worth ?30, and a jar worth ?30. The total cost of your setup is ?80. Now, if someone offers you ?82 to buy your business, is it a smart decision to sell?
Let’s break it down. Your lemonade business earns ?100 a year in profit. If you sell it for ?82 today, you gain that amount immediately but lose the ?100 profit you could make every year going forward.
To sell your business without a loss, you need to consider two factors:
Here’s where the bank’s interest rate helps. Suppose the bank offers a 9% annual interest rate. To make ?100 per year by investing the sale money in the bank, you need to calculate how much upfront investment would yield that return.
The formula is simple: ?100 = 9% of X → X = ?100 / 0.09 = ?1,111.
This means, to sell your business without financial loss, you should ask for more than ?80 + ?1,111 = ?1,191.
This basic example demonstrates how valuation works. Though simplified, it shows the importance of considering both the cost of assets and the potential future earnings of a business when deciding its value.
Three Styles of Calculating Valuation
Several methods are used to determine the value of a business, stock, or asset. Let's explore three common styles, starting with the first:
1. Multiple Valuation
Before diving into this method, let's understand an essential concept called the P/E Ratio (Price-to-Earnings Ratio).
The formula is:
P/E Ratio = Share Price / Earnings Per Share (EPS)
This ratio shows how much investors are willing to pay for each rupee of earnings. For example, if a company's P/E ratio is 10, investors are ready to pay ?10 for every ?1 the company earns.
To calculate profitability, we focus on earnings per share (EPS), which is the net profit divided by the number of outstanding shares. For simplicity, let's assume share price reflects profitability.
How does multiple valuation work?
Identify companies that are similar to yours based on:
Industry group: Are they in the same business as yours?
Geography: Are they operating in the same region?
Size: Are their operations comparable to yours in scale?
Find the average P/E ratio of these companies. For example, if similar companies have P/E ratios of 12, 15, and 18, the average P/E is 15.
To estimate its value, multiply your company's earnings by the average P/E ratio.
For example:
If your lemonade business earns ?1,000 annually and the average P/E ratio is 15, the valuation is:
?1,000 × 15 = ?15,000
Important Consideration
This example assumes that all comparable companies have similar P/E ratios, which isn't always true. If one company has an inflated P/E ratio due to overvaluation, it can distort the average. In such cases, using the median instead of the average provides a more reliable result, as the median minimizes the impact of extreme values.
This method is widely used because it's simple and reflects market trends. However, it relies heavily on the availability of comparable companies with accurate P/E ratios.
For more complex real-life scenarios, we use the Ev/Sales ratio to achieve better results. The EV/Sales ratio compares a company's Enterprise Value (EV) to its annual sales (revenue). This metric indicates how much investors are willing to pay for each rupee of a company's sales, providing insight into its valuation relative to its revenue. If you want us to explain how EV/Sales is calculated and used, let us know in the comment section.
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2. DCF valuation
Imagine you're planning to buy a lemonade business. You expect it to generate ?100 every year for the next 5 years. But here's the catch: ?100 today isn't worth the same as ?100 five years from now because of inflation and risk. This is where Discounted Cash Flow (DCF) valuation comes in.
How Does It Work?
Step 1: Predict Future Cash Flows
Think about how much profit the lemonade stand will make every year. For simplicity, let's say it's ?100 annually for 5 years.
Step 2: Choose a Discount Rate
This is like asking, "What return am I happy with, considering the risk?" Say you decide on a 10% discount rate.
Step 3: Discount the Cash Flows
Use this formula for each year:
PV=(CASH FLOW/((1+DISCOUNT RATE)^n))
For Year 1: ?100 / (1.1)^1 = ?90.91
For Year 2: ?100 / (1.1)^2 = ?82.64, and so on.
Step 4: Add It All Up
Sum the discounted cash flows and include a terminal value (estimating cash flow beyond Year 5).
Why Does This Matter?
DCF helps you decide whether the business is worth the price. It's like asking, "Am I paying too much for what I'll earn in the future?" Understanding this makes you one step closer to valuing businesses like a pro!
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3. Cost Approach
Imagine you’re setting up a lemonade stand. To get started, you buy:
The total setup cost is ?80. If someone wants to buy your business, how much should you charge? This is where the Cost Approach Valuation helps!
How Does It Work?
Step 1: Calculate the Cost of Building It from Scratch
The buyer asks, “How much would it cost me to set up a similar lemonade stand today?” The answer is ?80 for the materials.
Step 2: Adjust for Depreciation
If your table and jar have been used for a year, their value might drop. Let’s say they’re now worth ?70 in total.
Step 3: Add Unique Value
Your lemonade stand might have a prime location or a loyal customer base. These add extra value. Maybe the location adds ?20.
Final Valuation
The cost to rebuild (?70) + location value (?20) = ?90. This gives the buyer an idea of what they’d pay to replicate or replace your business.
Why Use It?
The cost approach is straightforward and works well for businesses with tangible assets. It’s like asking, “What’s the price tag if I had to rebuild this from scratch?"
Case Study: MobiKwik’s IPO – A Strategic Leap in the Indian Fintech Landscape
Introduction
In December 2024, MobiKwik, one of India’s leading fintech companies, made a significant move in its journey by going public. This IPO was not just a financial milestone for the company but also a litmus test for the Indian digital payments ecosystem. It highlighted the challenges and opportunities within the fintech industry, shaped by rapid technological adoption and regulatory scrutiny.
The IPO Journey
For MobiKwik, the IPO was more than a fundraising event; it was a moment to prove its resilience in a fiercely competitive market. Known for its digital payment solutions and financial services, MobiKwik set the IPO price band at ?265 to ?279 per share, aiming to raise ?572 crore and valuing the company at $250 million—a sharp drop from its 2021 private valuation of $924 million.
Despite this reduced valuation, investor interest was immense. The IPO was oversubscribed 120 times, with bids worth $4.7 billion. On its debut, MobiKwik’s shares surged 85%, affirming strong investor confidence and valuing the company at $474 million.?
Behind the Numbers: Valuation Insights
Let’s dive into why MobiKwik’s valuation dropped and what influenced its pricing strategy.
1. Financial Performance
After years of heavy investments in customer acquisition and infrastructure, MobiKwik reported its first annual net profit of ?14 crore in FY 2023-24. However, the ?6.6 crore loss in the June quarter of 2024 highlighted ongoing challenges in achieving consistent profitability.
2. Market Context
Operating in a competitive environment with giants like Paytm, Google Pay, and PhonePe, MobiKwik’s journey was no cakewalk. Despite this, India’s digital payments market is projected to grow at a 20% CAGR, with transaction values set to nearly double by 2028-29.
3. Regulatory Challenges
Increased scrutiny over data security and compliance added a layer of caution, influencing investor sentiment and the valuation process.
4. Strategic Pricing
By adopting a realistic valuation compared to 2021, MobiKwik’s management ensured strong demand during the IPO, boosting investor confidence and paving the way for a stellar listing performance.
The Human Element: Leadership and Decision-Making
MobiKwik’s leadership showcased foresight and adaptability by going public amidst fluctuating market conditions. Prioritizing investor trust over inflated valuations, they aligned their goals with market realities. This pragmatic approach underscored their commitment to sustainable growth rather than chasing short-term gains.
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Challenges Faced
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Impact of the IPO
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Lessons Learned
Content By:
ManComm: Aadi, Saniya, Pradyot, Harsh and Shashwat
WorkComm: Samarth, Karthik, Varun, Yash
Thank you for reading!??
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