Credit: Bloomberg
The durability of this behavioral change is not something the established retail players could foresee. Earlier this month, shares in Avenue Supermarts Ltd., also known as Dmart, fell the most in over five years after analysts got spooked by the severity of the quick-commerce onslaught. Mukesh Ambani, the richest Indian who owns the country’s largest supermarket chain, has started a pilot run of under-30-minute grocery delivery, according to the Morning Context, a news portal. Ambani has shut down a similar service in the past.
Blinkit says its new “stores,” which are essentially retail partners that help fulfil demand in a neighborhood, break even when they reach 7,00,000 rupees ($8,300) in daily gross order value. The average for all its stores is nearing 1 million rupees a day. As some investors have noted, what started as “top-up” buying of milk, eggs and other frequently ordered items is now encroaching into “stock-up” purchases of higher-value staples ordered far less frequently. Brands like Adidas and Decathlon are queueing up for a ride, boosting the per-order amount.
The origin of India’s quick-commerce revolution is not purely psychological. It’s also financial, economic and social.
Trouble with other large bets, such as online education and fintech, is leading to faddish overinvestment in quick commerce. For the economy, it’s creating low-quality work amid a jobless recovery. India has only 1 per cent of the world’s vehicles, but the largest number of deaths from road accidents. While the quick-commerce fleet is increasingly dominated by slower-moving electric two-wheelers, instantaneity is the top value proposition of quick commerce. And that won’t change.
On work conditions, contracts, and responding to delivery partners’ grievances, the industry is doing a better job than ride-hailing platforms like Uber Technologies Inc. and Ola, and e-commerce behemoths like Amazon.com Inc. and Walmart Inc.’s Flipkart, according to Fairwork’s latest ratings. There are gaps, however, when it comes to letting riders earn at least the minimum wage. Collective bargaining remains a distant dream, and the traditional retail supply chain is so unhappy with being bypassed that it’s demanding an antitrust probe.
A lot can go wrong when 1.4 billion consumers start expecting even household appliances to arrive in 10 minutes, and are not willing to take stock of the consequences of their impatience. They might get more than they bargained for when the doorbell rings.