Evolution of Quick-commerce 10-Minute Delivery Companies: Is 10-Minutes only a marketing strategy?

In an era where time is of the essence, the rise of ??-???????????? ???????????????? ?????????????????? has revolutionized the way we shop online and have changed the way people buy groceries and products.

The quick commerce market in India is valued at around?$2.8 billion, according to a 2024 Redseer report. The meteoric rise of quick commerce in India was mainly after the Covid-19 period which had increased the consumption on online delivery apps.

With India’s rising urban population and rising disposable incomes, the demand for convenient, on-demand shopping solutions are a need of the hour. The Q-commerce platforms understood the need and have harped on this trend and relentlessly executed instant product deliveries in a 10-20 minutes delivery frame.

Although, the Quick commerce companies claim to the market their delivery time as fast as 10 minutes, that is not the case actually. It is Like Maggie in "2 minutes" which needs much more than 2 minutes. It creates a brand perception and sense of emergency among customers and excites them to buy the product. This Rise in Quick-commerce market has surpassed the growth of E-commerce in last 2 years.

Category-diversification as well as understanding their target customers’ purchase patterns by using machine learning algorithms and AI & accordingly customizing the selection & experience for them.

Almost all leading platforms reported record sales on days like the Cricket World Cup (CWC), New Year’s Eve, Valentine’s Day and Indian premier league (IPL). Along with running event promotions on TV, OTT and Websites, platforms ensured availability of the appropriate selection on these days (e.g. India team jerseys on CWC final, rose & bouquet on Valentine’s Day, IPL team jerseys on IPL match days) as people don't want to miss any moment by thinking of something that can be done from outside.

The principles that guide Quick-commerce businesses are centered around:

1. Convenience: Providing seamless ordering and delivery experience, without the need to get out of the room for buying it.
2. Variety & Product information: Large variety of products available with detailed product information as well as not need to bargain with the shopkeepers.
3. Customer satisfaction: On time delivery in good package, good customer support, no time wastage to go out and return mechanism.

Consumer expectations centered around instant gratification, especially with the aspect of "Speed", made the whole business model more competitive.

With Big players like: Blinkit, Swiggy Instamart, Zepto and Dunzo

Zomato’s Blinkit leads the quick commerce market in India, having cornered as much as 46% of the market share, followed by Swiggy’s Instamart with a 27% share and Zepto securing 21% of the market share, according to JM Financial. Reliance Retail–backed Dunzo, which pioneered the quick commerce model in India, has virtually ceded its entire market share to competition.

The business model which sets the foundation of quick commerce involves faster turnaround times (TAT), coupled with low margins and higher delivery costs which leads to excessive cash burn for companies. Therefore, to survive in the competitive landscape, the companies must have necessary resources to keep running on negative EBITDA for years till this model shapes up into a sustainable proposition.

The pressure of faster turnaround time (TAT) & high operations cost, make this model more risky.

For the majority of Quick Commerce entities, the Average Order Value (AOV) currently stands at approximately INR 600-650 from the previous INR 350-400, with a gross margin hovering around 15% to 18%. However, operational expenses notably surpass revenues. Estimates suggest that Quick Commerce companies are incurring losses ranging from INR 25 to 45 per delivery. This business is high capital intensive business and to sustain that companies need good supply chain networks.

Many of these players are trying to improve their margins by increasingly looking "beyond the grocery category". All the top three players Like Blinkit, Swiggy & Zepto today sell consumer electronics items, a category that makes about half of the sales on Flipkart and Amazon in India.

Additionally, advertising revenues currently account for around 3% to 3.5% of quick commerce platform's total revenue and could easily reach 4.5%, primarily driven by direct-to-consumer platforms.

The Main and the most important part of the companies: The gig workers, in this race of delivering within 10 to 15 minutes, the working conditions, health and safety of the riders and delivery partners remain majorly ignored & compromised.

The Quick-Commerce has many things to offer as well as many problems also the company who can deal with this will win the battle in this industry.

Burning more cash is a trend in this industry to sustain but the funding source is drying up as investors are moving more towards profitable business investment and this could lead to failure in this business model.

Time will tell which Quick-commerce business will sustain in the long run by tackling with the business model. They can work on promoting high-order value SKUs, Procuring directly from the FMCG companies, sourcing from local farmers, and charging distance delivery fees which will be important for their sustainability.

While the outlook is promising, it will be interesting to observe the consistency in Quick-commerce companies and companies who will be able to build a profitable customer-centric model.