From the ambition of two 19-year-old Stanford University dropouts to get groceries delivered to people in minutes, which eventually took shape in the form of the fast trading platform Zepto, to Grofers’ much-touted rebranding to Blinkit, which coincided with the company’s transition to high-speed delivery of groceries and other necessities – quick trade has been the talk of the town for the past year or so. Indian consumers are also slowly embracing the idea. New Delhi-based pro Ishmeet Singh is now using Quick Commerce apps to shop for everyday groceries.
“The large selection and super-fast delivery help me get last minute items. The no minimum order option helps me get an item or two without the hassle,” says Singh. “If I can get everything at home, I prefer that to going to the supermarket,” argues Singh. Apoorva Sharma from Noida agrees: “As a professional who works late and is too tired on Sunday to lift a finger, quick commerce apps are a lifesaver. I order about every other day, depending on my mood. ”
The concept of quick trade, or delivering groceries and convenience items to customers in less than 30 minutes, may have seemed bizarre to many at first, but service is clearly gaining momentum. Kaivalya Vohra, Zepto’s co-founder and CTO (Chief Technology Officer), says the platform is not only popular with Gen Z and Millennials, but is being embraced by a wide variety of customer groups. “The (user) segments are pretty broad in terms of age and gender. Our largest customer segment would be 26-35 years old, but 18-25 years old is quite large. Also 36-45 years is pretty big. When we came out a year ago, the question was, do people need stuff that fast? I can wait, I don’t need things so fast… that was the talk. That’s no longer the question. I think it’s pretty clear that as a value proposition, it’s exciting and valuable enough,” Vohra said happiness india.
The first adopters of quick commerce were usually those consumers who were already well accustomed to the idea of online shopping. “Word of mouth has now attracted people who have never bought groceries online. The first order is usually a small order. Over time, customers convert their entire shopping cart to quick commerce and at that stage, AOVs (average order value) and frequency doesn’t matter,” says Vohra. As for the growth of the segment, the scope is immense as quick commerce is severely under-performed .
“If you take all of the quick commerce together and figure out what the daily or monthly GMV (gross merchandise value) might be, and you divide it by the target segment and grocery spend, the quick commerce might be just 5% to 6% of that. Overall, most customers still have to get used to it. Quick Commerce will grow tenfold in the next one or two years in the big cities alone. So there is still a lot of room for growth,” says Vohra.
In view of the clear affinity of consumers for fast trading, the question now arises as to whether the business model will last in the long term, according to Vohra. The economics of Quick Commerce typically depend on a mix of two metrics: getting customers to eventually convert their entire cart to Quick Commerce, and growing dark stores to reach a certain number of orders per day where the rent and other fixed costs rise covered.
“It’s a function of those two things. Once that happens, AOVs and such start to make sense,” explains Vohra, who claims that many of Zepto’s dark stores have started generating cash. “Our cash burn decreases every month. We have multiple years of track record,” says Vohra at a time when tech startups are increasingly laying off employees to contain costs amid a deepening funding winter. Zepto last raised $200 million in funding in May led by Y Combinator Continuity at a valuation of approximately $900 million.
