The Quick Commerce Boom !

The Indian retail landscape is undergoing a seismic shift, with quick commerce platforms like Zepto, Blinkit, and Swiggy Instamart redefining consumer behavior in Tier-1 cities. During festive seasons like Diwali, the promise of 10-45 minute deliveries becomes irresistible to urban shoppers, offering unparalleled convenience and time savings.

Quick commerce saw a 30-40% growth in 2024, driven by aggressive discounts, app notifications, and fast delivery services. But while these platforms celebrate their success, local brick-and-mortar stores, once the heart of festive shopping, are grappling with declining footfall and revenues.

This article explores the dynamics of quick commerce’s rise, its impact on traditional retail during Diwali, the unsustainable financial strategies these platforms employ, and how Tier-2 and Tier-3 markets are adapting to ensure their survival.

Problem 1: Tier-1 Brick-and-Mortar Stores Hit Hard During Diwali

A Festive Dilemma for Local Stores

For years, Diwali has been the most lucrative period for brick-and-mortar retailers. However, the 2024 season painted a different picture. Interviews with local shopkeepers in Tier-1 cities reveal the following concerns:

• Declining Footfall: Many reported a 20-30% drop in sales compared to previous years.One shop owner lamented, “People prefer ordering online even for last-minute essentials. They rarely visit our shops anymore.”
• Deep Discounts by Quick Commerce Platforms: Zepto and Blinkit capitalized on Diwali fever by offering steep discounts on groceries, festive sweets, and household items, pulling customers away from physical stores.

The Role of Consumer Behavior

• Convenience Over Tradition: With hectic urban lifestyles, shoppers value speed and ease over the cultural tradition of visiting markets for festive shopping.
• Impulse Buying on Apps: Platforms strategically send notifications and bundle offers to prompt last-minute purchases.Example: Zepto recorded a 15% spike in festive goods sales during the Diwali week.

While customers revel in this convenience, local shopkeepers face dwindling revenues and inventory challenges, struggling to compete with platforms offering door-to-door service.

Solution 1: Are Quick Commerce Platforms Sustainable?

The CAC Challenge

Quick commerce platforms may appear to dominate the market, but their business model raises questions about sustainability. To capture a growing urban customer base, companies like Zepto and Blinkit have adopted aggressive strategies:

• Customer Acquisition Costs (CAC): Platforms offer free deliveries, cashback, and heavy discounts to attract first-time users.Statistical Insight: Zepto and Blinkit collectively spent over ?800 crore on CAC in 2024.
• Operational Expenses: Maintaining warehouses, hiring delivery staff, and ensuring 10-minute deliveries add to their financial strain.
• Low Profit Margins: While sales volumes are high, profit margins remain razor-thin due to operational costs and discounts.

The Burning Money Dilemma

Industry experts believe quick commerce is still in its growth phase and far from profitability. As these platforms chase user loyalty, the long-term viability of their models depends on reducing operational costs or increasing delivery charges—both of which could alienate consumers.

Problem 2: The Divide Between Tier-1 and Tier-2/Tier-3 Markets

Tier-1 Markets Struggle with Disruption

In Tier-1 cities, brick-and-mortar stores struggle to adapt to the rapid rise of quick commerce. Their challenges include:

• Lack of digital adoption.
• Difficulty competing with discounts and delivery speeds.
• Urban consumers prioritizing convenience over traditional shopping experiences.

A Different Story in Tier-2 and Tier-3 Cities

In contrast, Tier-2 and Tier-3 markets are thriving by embracing technology and blending it with their traditional retail practices. These stores benefit from:

• Stronger Community Ties: Smaller cities maintain a sense of loyalty towards local stores.
• Lower Competition from Quick Commerce: Platforms like Zepto have yet to penetrate these markets deeply.

Solution 2: How Tier-2 and Tier-3 Stores Are Adapting

Tech Adoption Among Local Stores

Many Tier-2 and Tier-3 retailers have started using technology to bridge the gap:

• WhatsApp Business: Retailers send personalized festive offers directly to customers.
• Delivery Partnerships: Local stores partner with delivery services to ensure doorstep delivery.
• Digital Payments: Widespread adoption of UPI and mobile wallets makes transactions seamless.

Success Stories

• In cities like Indore and Surat, small businesses saw a 12% growth in festive sales by using social media and local delivery networks.
• Retailers are also leveraging e-commerce platforms to expand their customer base while maintaining their offline presence.

The Resilience of Community Retail

While Tier-1 cities face disruption, the adaptability and community-driven nature of Tier-2 and Tier-3 stores ensure their survival and growth in a rapidly changing retail ecosystem.

Conclusion: Towards a Balanced Retail Ecosystem

Quick commerce is undeniably shaping the future of urban retail, especially in Tier-1 cities. However, its long-term success depends on financial sustainability and coexistence with traditional retail.

Brick-and-mortar stores, particularly in Tier-2 and Tier-3 cities, demonstrate that the right blend of technology and community engagement can create a thriving retail ecosystem. By embracing digital tools and innovative delivery methods, they can compete with quick commerce platforms while maintaining their cultural and community relevance.

Call to Action

For a balanced retail future, policymakers, platforms, and businesses must focus on empowering local stores to integrate technology. This approach will ensure that convenience and tradition coexist, benefiting consumers and retailers alike.