The promise of deliveries within 10 minutes is the new mantra of Indian grocery startups to entice tech-savvy customers, sparking a boom in “quick commerce” but at the same time increasing anxieties about road safety as bike riders scramble to meet tight deadlines.
Competition is now strong in India’s $600-billion grocery retailing industry, inhabited by the likes of Amazon India, Walmart’s Flipkart, and Indian billionaire Mukesh Ambani’s Reliance Industries. SoftBank-backed Blinkit and its rival Zepto are racing to hire staff and open stores in their bid to grab a share of the market by offering the convenience of delivery in 10 minutes, far lower than the hours, or days, competitors take.
The basic plan of these start-ups is to pack groceries within a few minutes at so-called dark stores, or small warehouses in densely populated neighbourhood buildings, and send bike riders to nearby locations with about seven minutes to spare.
It’s a threat to the larger players, and since the customer has gotten used to 10 minutes, those companies offering 24-hour deliveries will be forced to reduce their timelines.
As activity grows, research firm RedSeer says India’s quick commerce sector, worth $300 million last year, will swell 10-15 times to touch $5 billion by 2025. Blinkit and Zepto, started by two 19-year-old dropouts from Stanford, have caught consumers’ fancy, satisfying cravings for food and impulse shopping, as well as urgent needs for daily supplies.
The peerless convenience of rapid deliveries is evident in Europe and the United States, where companies such as Turkey’s Getir and Germany’s Gorillas are expanding fast, but India’s accident-prone roads make quick commerce a dangerous business. According to a former road secretary, “Ten minutes is very sharp and if there was a (road safety) regulator, it would have said this couldn’t be a company’s unique selling point.”
Blinkit calls its service “indistinguishable from magic” and says it wants to become a $100-billion business. Zepto has been valued at $570 million and has set its eyes on becoming a $20-billion company. It is already backed by investors such as US-based Glade Brook Capital.
The instant delivery market is a $50-billion opportunity, India’s largest offline retailer, Reliance Retail Ventures Ltd., said this month when it invested in Dunzo, another Indian startup that runs a 19-minute delivery service.
But, unlike most foreign companies that charge $2 to $3 a delivery, deliveries by Indian startups are mostly free in a nation with a population of 1.4 billion potential customers. With free delivery, the business is unlikely to be viable, and with a delivery fee that makes it viable, the market size is likely to be small. For now, Indians are hooked.