2 days ago
Q-com sees explosive growth; a win-win for customers
MUMBAI: A middle-aged private sector executive living in Delhi remembers making his first tentative order – a hair colour -- on quick-commerce (q-com) platform Blinkit one year ago. Prompt delivery pushed him to gently test the app further for more products such as staples and spices, chips and soft drinks. Last Diwali, he and his wife were thrilled to find fresh flowers on the service and purchased a silver coin, considered auspicious for the occasion. Their most recent purchase, however, has been two potted money plants – which they said arrived in eight minutes.
Much like the Delhi couple, the q-com journey of millions of people in India's top cities have similarly evolved as they add more products to their purchase baskets on leading platforms such as Blinkit, Zepto, Instamart (from Swiggy), Big Basket Now and Flipkart Minutes, among others. This faster-than-expected customer adoption of quick commerce, the rise in Average Order Value (AOV), implying a wider acceptance of products beyond groceries, has pushed global brokerage Morgan Stanley to revise its estimates for India's total addressable market (TAM) for q-com to $57 billion by 2030 up from $42 billion projected earlier. The Morgan Stanley estimate of potential market size rides on higher average spend per customer, larger number of households and monthly transacting users and the aggressive penetration of q-com services in smaller towns.
'The 10-30 minute delivery has rewired our brains as consumers. There's no perceived additional cost of ordering on q-com and doorstep deliveries are received within minutes. This has changed consumer behaviour, their expectations, the way they plan and stock things. Now they are stuck with the new habit and there's no going back,' said Santosh Desai, marketing expert and CEO at Futurebrands.
Srinivas Seshadri, consumer research enthusiast and category head at electricals and home appliances company V-Guard, said quick-commerce taps into the shortcomings of human behaviour such as the tendency to procrastinate, pick the easy way out and the desire for control. 'Q-com doesn't try to improve them but caters to them,' he said. For consumers, urgency is the new normal and the lines between necessity and impulse are blurring. Besides, there is trust in speed. 'Consumers no longer see fast as risky; they see it as dependable,' he noted.
Speed is a proxy for reliability and relevance, said Devendra Meel, chief business officer, Zepto. 'Life in urban India is increasingly spontaneous and consumers expect their commerce experience to match this reality -- whether it is ordering ingredients for an unplanned dinner, buying a birthday cake late at night, or gifting on the fly,' he said.
Q-com isn't just about saving time, it's about reclaiming time, Meel said. Consumers recognize that every small task they outsource gives them back valuable bandwidth to spend on what matters more: family, health, hobbies, or professional growth, he added. 'Today, q-com is customers' go-to platform for everything from festival gifting to last-minute gadgets and not just grocery top-ups. As this trust builds, the format is evolving from a utility to an enabler of modern living,' Meel said.
A June report by management consulting firm Kearney said that India's quick commerce grocery market will triple between 2024 and 2027. Kearney defines groceries as fast-moving consumer goods (FMCG) in food and non-food segments as well as fruits and vegetables. The report said that in the initial growth phase, food, especially, staples have seen greater adoption on q-com. The shift in fresh produce (fruits and vegetables), personal care and electronics is lower.
However, Zepto has seen its electronics business grow over 15 times in the past year. 'Q-com purchase basket is expanding because consumer trust and use cases have evolved,' Meel said. There's a massive increase in buying frequency, cart size, and cart diversity. 'For example, among our oldest user cohorts, we've seen average cart size expand by over 80% in the past three years,' he added.
But the burgeoning quick-commerce business isn't without its share of challenges. Smarter economic models will need to evolve for the smaller towns as, by its very nature, q-com thrives in high-demand, high population density areas within a small radius. The sector could also be marred by shortage of gig workers.
'Additionally, as consumer expectations grow, maintaining differentiation will be key. Platforms must balance speed, quality, assortment depth and experience—without compromising on operational rigour,' Meel said.
