FY23 will be the year where Quick Commerce will change the competitive landscape - and put a lot of pressure on all the incumbents. 

According to a recent study, “The current size of the Quick Commerce industry is $0.5 billion and estimated to grow to $5.5 billion by 2025. That’s more than a 10X growth within the next 3 years. 

Today the Quick Commerce industry largely caters to the grocery space mostly in Tier I cities. In the short period of time that it has operated it has already delighted users with its convenience. Most of the players run between 60-200 dark stores (cloud warehouses) within a city. The idea is to open stores geographically spread out so that most of the pin codes are serviceable within the 10-30 minute mark, typically catering to customers in a 2-3 km radius from the dark store. 

With all the Tier I cities in India already covered - the Q-commerce operators will now look at replicating that model in Tier II and Tier III cities. 

The model is estimated to capture up to 50 percent of the online grocery market. But grocery is just the start of it. At the core of the concept is that brands move their inventory closer to the customer. 

Today the inventory purchased by the dark store operators is restricted to between 3,000–5,000 SKUs. They carry only those products that have a proven demand by the consumers. 

Can Quick-Commerce Work for Non-Grocery Categories?

In FY23, along with grocery - the mainstream categories of e-commerce (electronics, fashion, footwear, and others) will adopt the same concept from Q-commerce and move their inventories further closer to the customers. Most large scaled brands in India, for their e-commerce businesses, have their inventory sitting in 15-20 warehouses. These are either their own warehouses or those owned and operated by marketplaces and/ or third-party logistics/ warehouse companies. Keeping all this inventory across all these warehouses is expensive. Getting the inventory distribution wrong leads to large amounts of cash getting stuck. 

Now imagine that they have to double or triple the number of warehouses - and manage to move the right amounts of inventory to all these newer warehouses. It’s going to happen - but the brands will need tools to predict the right inventory at the right warehouses - keeping into account local demand and tastes and seasonality. 

The reward for getting the distribution model right is huge. Brands will bet on it this year. Customers will demand it. Already, next-day delivery seems slow. Maybe you don’t need a t-shirt in 10 minutes. But 4 hours sounds like an acceptable timeline - no? 

Instant Gratification - has always been the holy grail of E-commerce - and it’s closer than you think. 

Quick Commerce despite being fairly new, the number of players in the Quick Commerce segment is growing aggressively. Startups of all sizes are jumping onto this bandwagon, as are investors. Perhaps the most noteworthy example is that of Zepto – a relatively quiet name that suddenly took the quick commerce world by storm and secured $60 million in funding for its 10-minute e-commerce delivery service. Soon, bigger names announced similar services – including Blinkit (formerly Grofers), SwiggyInstamart, Dunzo (backed by Reliance), Ola Dash, and BigBasket BB Now. Some believe the 10-minute delivery model is the future, some think of it as a passing fad, while others believe it will simply become another option in the growing gamut of e-commerce services. Regardless of how it plays out, it is definitely a path worth exploring.