I was in India for a four-day trip, and even in that short time, I couldn't help but notice how big – and incredibly convenient – Q-commerce had become. The whole e-commerce landscape (and I have a soft corner for this space ;) is undergoing a revolution, with quick commerce changing the game. Forget waiting days for your online orders to arrive – customer are promised hyper-fast delivery, within minutes (think 7-minute or 15-minutes!) or a couple of hours if you are patient. I got paans, hot chai, indian desserts, band-aids, phone charging cable, t-shirt, flowers, all delivered in 15 mins or less with average order size of <10$. I was addicted. It's an example of demand for instant gratification and convenience among urban consumers in India.
I feel the seeds of Q-commerce in India were sown during the COVID-19 lockdowns. Restricted movement and a surge in online shopping with all the free time created a gap – people needed immediate access to essentials, and often fast. This demand gap was filled by startups specializing in quick delivery of groceries, medicines, and daily necessities. Players like Blinkit, Zepto, Swiggy, Instamart, and Dunzo (and am sure I missed many) capitalized on this opportunity, offering lightning-fast delivery times, sometimes as quick as 10-20 minutes.
I met and spoke with a few friends in this industry who have been instrumental in shaping Q-commerce in India at few of the companies mentioned above. Our discussion primarily centered around what's driving the exponential growth of Q-commerce in India. Interestingly, I haven't observed a similar trend back home in the US. Here's a summary of our conversations:
Consumer behavior is evolving in India, and evolving fast: Today's (not just affluent, but the HUUUGE middle class) consumers prioritize convenience and speed. Who wants to wait around all day for a delivery, that DNA is not there anymore. A significant percentage of Indian online shoppers are even willing to pay a premium for faster delivery. Q-commerce has found a good fit with their busy lifestyles.
Urbanization density: India's urbanization is happening faster than ever before. Densely populated urban areas create a favorable environment for rapid delivery models. Over 35% of India's population is expected to reside in urban areas by 2030 (McKinsey Global Institute, 2021). I don’t think this is a good thing, with the infrastructure in some of these metros. But that aside, this concentration fuels the growth of Q-commerce – the closer the customers, the faster the deliveries! It also opens up avenues for optimizing delivery routes and utilizing technology like smart route planning algorithms. So much innovation headroom.
Venture Capital fueling the Q-comm boom (obviously): VCs are injecting significant $$$ into the sector. Q-commerce startups are all burning money to grow, seems familiar, and to an extent deja vu.
Beyond Essentials: Maintaining super-fast delivery times while ensuring profitability is a major challenge. While initially focused on essentials, platforms are now extending their offerings to include a wider range of products. They are exploring higher-margin product categories. Cosmetics, electronics, and other non-essential items are finding their way onto these platforms, catering to a wider range of consumer needs. It's a one-stop shop for everything from toothpaste to that new phone you've been eyeing.
Local businesses are onboard: Partnerships with local stores is key for this to scale. India is still decentralized in terms of physical commerce. Small local nearby shops are the fabric of commerce. So this partnership is a win-win for everyone – consumers get their products quickly, and local stores gain a wider customer base.
Also touted as a job creation engine: The growth is creating employment opportunities across various sectors. From logistics and delivery to tech, there's a growing need for skilled professionals to keep this speedy delivery machine running. There is good support from local residents and cities for this.
and then the reach to the belly of the country - smaller cities: Q-comm isn't just for big cities anymore. Companies like Swiggy Instamart are already expanding their reach, aiming to tap into the demand in smaller towns and cities. This will make the convenience of Q-commerce accessible to an even wider population.
Very excited and curious on how this pans out in the next few years, as profitability and sustainability (environmental impact) pressures on top of evolving customer demands will continue to shape this industry.