Zepto and Blinkit are rapidly changing the shopping game in India, outpacing giants like Amazon and Flipkart. Zepto, for instance, has skyrocketed from zero to ₹10,000 crore in sales in less than three years and is on track to surpass DMart, a 22-year-old retail giant, in just 18 months.
According to the data shared by FinnFlow on the social media platform X, online grocery delivery app Zepto and Blinkit are killing Amazon and Flipkart — not Kirana shops!
Q-Commerce A Serious Competitor
Interestingly, while Amazon recently launched a campaign downplaying the quick commerce (Q-commerce) industry, it’s also in talks to acquire a stake in Swiggy Instamart. Similarly, Flipkart has shown interest in acquiring Zepto. This highlights that, despite their dismissive stance, these e-commerce giants see Q-commerce as a serious competitor.
Kirana Stores Unaffected
What’s fascinating is that while Amazon and Flipkart feel threatened by Q-commerce, local kirana stores remain largely unaffected. Traditionally, consumers would see a product, desire it, and then go to the market to purchase it. E-commerce shortened this process to a few days. But Q-commerce has taken it a step further, delivering products within minutes, catering to the impatient nature of many Indian consumers.
This speedy service has changed consumer behavior, shifting the focus from ‘value’ to ‘convenience.’ Consumers now see Zepto and Blinkit as faster alternatives to Amazon and Flipkart, without abandoning their trusted local kirana stores.
Challenges Of Q-Commerce
However, Q-commerce does face a significant challenge: reaching all locations. In commerce, businesses usually excel at two of three aspects—speed, variety, and accessibility. Kirana stores are quick and accessible but lack variety. E-commerce offers variety and accessibility but takes longer to deliver. Q-commerce excels in speed and variety but struggles with accessibility due to operational costs.
Zepto and Blinkit have smartly focused on their target market rather than trying to overcome this operational challenge. They’ve identified three segments of Indian consumers:
1. India 1: The top 15% with high disposable income.
2. India 2: The middle 30% who primarily spend on needs, not wants.
3. India 3: The remaining 55% who struggle to meet daily needs.
But even with these changing dynamics, Q-commerce has 1 insurmountable hurdle that they simply cannot solve—reaching all locations.
In a commerce business, there are 3 main aspects
— quickness, variety, & accessibility
At once, a business can only fulfil 2 of these 3 aspects. pic.twitter.com/SfT2YlSlfr
— FinFloww (@FinFloww) August 12, 2024
While India 3 relies heavily on kirana stores, and India 2 still frequents them, India 1 has shifted to prioritizing convenience over cost. This segment, concentrated in urban areas, is willing to pay a premium for faster service. For Q-commerce, 80% of sales come from Tier 1 cities, even though e-commerce is growing in Tier 2 and 3 cities.
Q-commerce targets these high-value urban consumers, offering quick deliveries of a wide range of products. This focus on speed and convenience has alarmed Amazon and Flipkart. Q-commerce is expected to capture 32% of the online retail market by 2030.
Also Read: Zepto Launches ‘Shagun Ka Lifafa’ This Rakshabandhan
Although there are concerns about the sustainability of Q-commerce due to high operational costs and lower margins, companies like Zepto are already showing profitability. About 75% of Zepto’s stores are EBITDA positive, reaching profitability within six months.
In conclusion, it’s not a question of whether Q-commerce will replace traditional e-commerce, but how soon it will happen. The shift in consumer behavior towards quicker, more convenient shopping experiences is undeniable, and Q-commerce platforms like Zepto and Blinkit are leading the charge.
