Making sense of the Quick-Commerce

By Team Invester India Alliance

16 Mar 2022

The Zomato and Blinkit merger has brought the discussions around quick-commerce to the fore. Here, in Mumbai Zepto is visible everywhere in the physical and digital world as they have embarked on a very aggressive brand visibility and customer acquisition journey. This begs the question - What is the problem that the quick-commerce companies are really solving?

I am sure the pitch for such companies goes something like this - "Imagine you have guests coming over and you realize you are out of Ghee. What do you do? How do you get it immediately? We come to your rescue as we deliver groceries in 10 - 15 minutes"

I am not sure I buy into the value proposition. Let us take the above scenario and study options available to us today. Let's say you really run out of a key ingredient and need it as soon as possible. What are your options - (In decreasing order of ease of use and convenience) 

• Borrow it from neighbors (Unfortunately vanishing act today)
• Call local kirana store and have them deliver it to you
• Send someone from the house (child / spouse / househelp / security) to quickly run an errand and get it for you
• Go personally to the store and get it. 

Given that you are unlikely to encounter a situation where you need something within 10-15 minutes on an emergency basis frequently AND looking at options available; is setting up dark stores and promising delivery within 10-15 minutes really necessary?

Are we inventing a problem & solving it instead of solving an existing problem? 

"Getting groceries & household items delivered instead of buying them from the market" is a trend that's well entrenched now in urban areas. People use various services and they offer deliveries in reasonable times (few hours to few days) already. All of us probably have used these services. But why do we have an obsession to dismantle existing infrastructure in the name of startups, valuations, funding and technology?

Fundamentally, the problem is not "getting stuff delivered in the shortest possible time". Fundamentally, the startups operating in this ecosystem need to solve three issues - 

• How do I efficiently use the existing infrastructure? (Restaurants, Kirana shops, shoe / clothing shops, chemists et. al.)
• How do I help these business find customers and vice-versa
• How do I efficiently deliver stuff from these businesses to the customer?

In this space, if we let the people with the core-competency and the domain knowledge retain the customer and solve other pain points for both the supplier and the customer - we are done! Instead, what the startups are trying to do is to acquire and retain the customer (By spending investors' money on customer acquisition) and making the restaurant owner or the grocery store or the shop either redundant or inconsequential. It may generate valuation bubbles and unicorns - but is this the right approach? 

I am not sure.