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India’s quick commerce sector, led by platforms like Blinkit, Zepto, and Swiggy Instamart, has witnessed a meteoric rise, accounting for over two-thirds of online grocery orders and 10% of total e-retail spending in 2024, according to a report by Flipkart and Bain & Company.
This surge comes amid intensifying competition and mounting financial losses for industry players, raising questions about the sector’s long-term sustainability.
Explosive Growth and Market Trends
The quick commerce industry reached a gross merchandise value (GMV) of $7 billion in 2024, marking a staggering jump from $1.6 billion in 2022. The report projects that the sector will continue to expand at an annual growth rate of over 40% until 2030, driven by increasing demand across multiple categories, geographies, and customer demographics.
Once primarily focused on groceries, quick commerce platforms now generate nearly 20% of their revenue from electronics, mobile phones, general merchandise, and apparel, signaling a shift toward a more diverse product portfolio.
Despite rapid growth, quick commerce companies face significant operational and financial challenges. The viability of these platforms beyond major metropolitan areas remains uncertain, with 85% of GMV in 2024 originating from India’s top six cities.
Key hurdles include:
- Lower order density and purchase frequency in smaller cities, which could strain unit economics.
- Tougher competition from e-commerce giants like Flipkart, Myntra, Amazon, and BigBasket, all of which are launching their own rapid delivery services.
- Shrinking profit margins as players battle for market dominance and scramble to secure premium dark store locations.
Industry reports echo similar concerns. A study by venture capital firm Blume Ventures highlighted that quick commerce firms might struggle with a limited total addressable market (TAM), slower growth in monthly transacting users (MTUs), and increasing competition from established e-commerce brands.
Sustaining the Growth Momentum
With competition intensifying and profitability remaining elusive, companies are rethinking their supply chain strategies. The Flipkart-Bain report suggests that for sustained growth, quick commerce firms must:
- Optimize delivery models, balancing ultra-fast fulfillment with sustainable unit economics.
- Expand dark store networks, shifting towards larger facilities that can accommodate a wider range of stock-keeping units (SKUs).
- Enhance operational efficiencies, leveraging data analytics to refine demand forecasting and inventory management.
Profitability Still a Distant Goal
A recent BofA Securities report warns that losses for quick commerce operators in Q4 (January-March 2024) are likely to surpass those of Q3 (October-December 2023), adding pressure on platforms to fine-tune their business models. As India’s quick commerce industry continues to evolve, companies must navigate a delicate balance between rapid expansion and financial sustainability, ensuring that convenience doesn’t come at the cost of long-term viability.
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