E-commerce behemoths target quick-delivery space, but challenges remain

Bengaluru: The fast-expanding quick-commerce market in India, currently being dominated by newer start-ups like Swiggy Instamart, Zepto Zomato’s Blinkit and others, may see a shake-up as ‘traditional’ e-commerce giants like Flipkart and Amazon eye a slice of the sector which is expected to generate revenues in surplus of $3.3 billion in 2024.

Flipkart has already launched its quick commerce arm Minutes, while as per media reports Amazon India is considering a serious foray in the quick delivery space.

However, analysts and sectoral experts believe that the quick-commerce companies have many advantages over the e-commerce firms, as the former are nimble and flexible enough to adapt to the space.

“It’s going to be a long haul for traditional e-commerce players to enter the quick-commerce space because it’s a game of user experience and technology. You need to know your customer very well, it’s not an easy business proposition and I think incumbents will continue to have an upper hand,” said Karan Taurani, Senior Vice President, Elara Capital.

“With the entry of quick commerce, bigger cities have been saturated as a market. The quick-commerce companies have demonstrated how consumer behaviour in India can be changed,” said Ankur Bisen, Senior Partner & Head - Consumer, Food & Retail, Technopak Advisors.

The biggest challenge for the likes of Walmart-owned Flipkart and Amazon is regarding the infrastructure and a complex logistical network, which takes time and significant investment to build.

“For example, Flipkart has plans to open 100 dark stores, but this covers only a limited number of pin codes. Meanwhile, established quick commerce platforms are rapidly expanding, with plans to reach 700-1,000 dark stores by next year,” said Anubhav Pandey, chief strategy officer, Consortium Gifts.

Harish Bijoor, business and brand strategy expert said that e-commerce players are feeling the proverbial heat from the smaller quick-commerce companies who have expanded beyond delivering food and grocery items, and are now also delivering electronic items within a short period of time.

Of course, the biggest advantage that e-commerce players have is capital and resources. They can also benefit from established distribution systems and niche offerings.

“E-commerce companies’ capital power is significant. Additionally, they have a network, technology platform and a chain of stable suppliers. So, they are also trying to stay in the competition,” said Neeti Sharma, chief executive officer, TeamLease Digital.

“Big e-commerce players have a lot of expertise, institutional and strategic backing. Both Flipkart and Amazon are backed by the largest retailers in the world. They’ve done e-commerce and tech right,” added Bisen.

With regards to sustainability of quick-commerce for several players in a tight market, analysts remain uncertain. While the sector continues to grow, it may not work for some players, especially in smaller cities.

“There are several questions at the moment ranging from the model e-commerce companies will adopt to transition from one-day delivery to fifteen minutes delivery. We’ll have to wait and watch because quick-commerce is clearly competing very hard and challenging their growth rates as well,” commented Taurani.

“The long-term sustainability of quick commerce hinges on balancing these short-term sacrifices like higher discounts or free delivery on larger baskets with future gains in consumer loyalty and operational efficiency,” added Pandey.