JOIN USWalking a tightrope, quick-commerce companies try to stay afloat: Report
To cope with lightning-fast deliveries, increasing competition and rising prices of commodities across the spectrum, quick e-commerce grocery start-ups have now set up a maze of complex structures and business models to keep up in the race.
Grocery startups, such as Ola Dash and Blinkit, have been hit by poor unit economics, heavy discounting, undiscovered markets, and a depleting investor appetite, according to a report by The Economic Times.
Months ago, several of these companies introduced superfast grocery deliveries within 10-30 minutes. This model, not only needs a large fleet of delivery partners but also high investments to keep its inventory running and have the most advanced technology. Apart from that, for companies and delivery partners to clock in profits, the average number of deliveries must also be higher than what it are now.
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High attrition among delivery partners and deep discounting are affecting these q-comms adversely. In addition, to counter the drying well of funds, these companies have had to set up entities similar to Cloudtail for their platforms which help maintain inventory or set up dark stores (a franchise model wherein local entrepreneurs and retailers set up warehouse operations and are listed on your app).
Companies are now also exploring the possibility of having shared dark stores to operate out of, which could further cut costs for them.
To retain delivery partners in the ecosystem, the model should be such that it allows them to take home at least Rs 15,000-18,000 a month. For this, the volume from this segment of sales has to be higher. Once the rider delivers 25/30 orders a day, the cost of delivery is likely to come down to Rs 20 per order, a senior executive who worked with BigBasket, Blinkit told the publication.
“We shall see evolution in real-time and smart inventory tracking, and AI and machine learning heavily dependent on the last-mile delivery execution, and greater dependence on a flexible last-mile fleet model,” Nishant Vora, co-founder and director of last-mile logistics firm Grab.in, which provides delivery staff to Swiggy, Zepto, and JioMart, told ET.
Apart from changing business models, companies are also changing their set in the stone promise of how 'quick' the quick delivery will be. The ten-minute delivery has moved to 15/20/30 and even longer wait periods as there is a shortage of delivery partners to pick up these orders and drop them off. Several companies have also started charging for ultra-fast deliveries to combat the surging demand.
“Our belief is that there are going to be two delivery models. One is going to be an ultra-fast delivery model, which will deliver anywhere in 10-15 minutes for a small delivery fee, others will have to wait for 30-40 minutes,” Kabeer Biswas, co-founder and CEO of Dunzo told the news agency.
Shortage of partners also led to companies shutting some operations to prioritise grocery and food/ restaurant delivery. Earlier this month, Swiggy temporarily shut its "Genie" courier service in Bengaluru, Hyderabad and Mumbai due to the lack of delivery workers.
Attrition in the gig workers industry has also risen to 20%-25% compared to 5%-6% a few months ago, according to industry analysts ET spoke to.
It remains to be seen how these companies, which some time ago cropped as stiff competitors to online grocery stalwarts like BigBasket, will keep up in the game with consumers cutting on spending on food items and making more planned purchases as prices of essential commodities keep rising.