India’s quick commerce (Q-commerce) sector is rapidly growing, driven by affluent consumers in metro and tier-1 cities seeking convenience, as reported by PwC. A survey revealed that 42% prefer quick deliveries, leading to a 28% drop in physical store footfalls. While traditional retailers in tier-1 cities struggle with sales declines, niche categories remain unaffected. Q-commerce is dominated by players like Blinkit, Instamart, and Zepto, but faces competition from Amazon and Flipkart. Challenges persist in tier-2 and tier-3 cities due to delivery costs and demand fragmentation. Profitability remains a concern due to high delivery and customer acquisition costs in the evolving market.
India’s quick commerce (Q-commerce) sector is experiencing rapid growth, as highlighted by a report from the global consulting and advisory services firm PwC. The findings indicate that Q-commerce is gaining significant traction in metro and tier-1 cities, where wealthier Indian consumers prioritize convenience over cost.
A survey conducted by PwC in collaboration with Kirana Club—the largest digital community for kirana stores in India—reveals that 42% of consumers in Tier 1 cities prefer rapid deliveries for urgent needs, resulting in a 28% decline in foot traffic at physical retail outlets.
According to the report, the overall retail market in India is on a positive growth trajectory, projected to reach $1.89 trillion by FY30, with a compound annual growth rate (CAGR) of 10.3%. Within this framework, e-commerce is emerging as the fastest-growing segment, boasting a CAGR of 22.5%. Moreover, Q-commerce has established itself as a vital sub-segment, reshaping customer expectations and shopping behaviors.
The rise of ultra-fast delivery services is significantly affecting brick-and-mortar stores, primarily in essential categories, as demonstrated by the PwC survey. It found that 508 traditional retailers reported a decrease in foot traffic, particularly in Tier-1 cities. Among these, 52% experienced sales declines in food, beverages, and confectionery; 47% noted a drop in personal care and hygiene sales; and 33% encountered reduced sales in household cleaning and care products.
Conversely, niche categories such as childcare, beauty, and wellness have largely remained unaffected, emphasizing that impulse and essential purchases are more heavily influenced by Q-commerce, according to PwC.
Despite the presence of lower-cost alternatives in the retail and e-commerce sectors, Q-commerce platforms are offering products at a premium of 10% to 20% and often include additional delivery fees, PwC reported. Nevertheless, the consulting firm noted that urban customers are willing to pay this premium for expedited delivery, valuing convenience over cost.
Challenges in Tier-2 and Tier-3 cities
Although Q-commerce is thriving in metro cities, its expansion into smaller cities poses several challenges. Research by PwC indicates that retailers in Tier-2 and Tier-3 cities remain largely insulated from the impact of Q-commerce’s emergence. High delivery costs associated with long distances and fragmented demand complicate inventory management, slowing down the rate of adoption in these markets.
Market dynamics and challenges for Q-commerce players
The current landscape of India’s Q-commerce sector is primarily dominated by Zomato’s Blinkit, Swiggy’s Instamart, and the unlisted Zepto.
However, this space is facing competition from global giants like Amazon and Flipkart, which have introduced Amazon Fresh and Flipkart Minutes, respectively. Both companies are leveraging their extensive supply chains and vast customer bases. Additionally, Reliance Retail is emerging as a significant competitor, utilizing its strong presence among kirana stores and supply chain advantages.
Tata Group’s BigBasket is also vying for market share in the Q-commerce arena with its BB Now initiative, offering deliveries within 15-30 minutes in major metropolitan areas. The company follows the dark-store model utilized by Blinkit, Instamart, and Zepto. BB Now is aggressively expanding, supported by investments from Tata.
Avenue Supermarts, which operates DMart stores, is addressing the challenge posed by the rising dominance of Q-commerce players by launching DMart Ready, its hyperlocal delivery service. Unlike Blinkit or Zepto, it does not promise instant deliveries within 10-15 minutes but aims to attract price-sensitive customers through competitive pricing. DMart’s core advantage lies in its deep-discount pricing, offering lower prices compared to quick commerce platforms that typically charge a 10-20% premium, analysts noted.
The high costs associated with last-mile delivery and customer acquisition make it difficult for Q-commerce companies to scale profitably. Furthermore, engaging in continuous discount battles to remain competitive in this rapidly evolving Q-commerce sector poses significant challenges for companies aiming to gain market share, analysts have added.