The Quick Commerce Comeback

How 10 minute delivery apps went from being a joke to a key part of modern life.

I clearly remember that I was part of the consensus that dismissed the entire idea of 10 minute delivery apps when they first launched. My reasoning back then was other than condoms, nothing is needed that quickly. Fast forward to today, I was trying to find my nail cutter and realised I had spent more time finding it than what it would take to get a new one. Even my mother has started taunting my dad that it’s better to order from BlinkIt than him getting it because the order will be here, by the time he even gets ready.

That’s when my curiosity peaked and I decided to write this essay as I’m more than happy to eat my words and admit that Quick commerce isn’t just a fad but it’s disrupting the behaviour of buying groceries in India. I wanted to explore what exactly changed that lead to them becoming so popular because delivering groceries online isn’t a new thing, Grofers (BlinkIt before it got acquired by Zomato), BigBasket and Dunzo have been in this space for a while but nothing blew up back then.

A warm welcome to the 89 new subscribers that joined us since last time and let’s dive in.

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The Dark Magic

You may already know about — Dark stores, supermarkets where nobody can walk in but only order from. We have only understood dark stores from a quick delivery perspective as they are located nearby to residential areas. However that’s only a small part of the value they bring. We’ve massively underlooked the real value of dark stores which is:

• Increased optionality: Dark stores have about 6,000+ SKUs which is 6x of Kirana shops who have 500-1,000 SKUs. Which means that customers are more likely to find what they need on Quick-commerce than go to the Kirana shop.

• Higher Throughput: Since there are no walk in customers, the layout of these stores is planned and optimised for maximum efficiency. What it implies is that a dark store is able to sell more goods per square foot as compared to a general supermarket. BlinkIt is 1.9x more effective than any regular DMart stores.

• Leveraging Data: Regular Kirana shops rely on intuition to manage inventory and gauge demand. These Quick Commerce apps are data mines, every order makes them smarter about what people want and precisely how much. Not just that the entire stack is such that a packer can pack 6 items in less than 1.5 minutes of the order.

Dark stores have been around for a while, however the pandemic has pushed their demand ten folds and iterations have made them more efficient. BlinkIt and Instamart have around 450+ Dark stores around the country and Zepto, BBNow also have about 350.

All roads lead to BlinkIt

When it comes to market share by GMV: (source)

• BlinkIt is the clear winner by 46% of the market

• Instamart comes second which has a 27% share.

• Zepto is the new player on the block with 21% share, which grew rapidly in the last 2 years

• BBNow is the only other large player with 7% of the total market share.

Other players like Ola Dash, Flipkart Quick have exited the space or like Dunzo and Amazon Fresh have a negligible market share of the quick commerce gold rush. It proves that being first to market means nothing, you have to the be first to do it right, otherwise you’re merely providing R&D for the companies that come after you

The primary reason why Dunzo and other players failed is they did not innovate on the whole supply chain level. They were merely getting groceries from Kirana shops and their key innovation was just their app that allowed you to order from home. However in terms of optionality + delivery time there wasn’t enough delta compared to just getting it yourself. They tried Dark stores but they weren’t as efficient as the ones we have today.

Why BlinkIt Wins

A few weeks ago, I posted this comparison that blew up on twitter. I may have roasted Zepto and Instamart a bit too much but I still stand by this comparison:

• Honesty wins: Swiggy and Zepto have the most unreliable timers, this makes people lose trust. BlinkIt keeps it’s promise more often than these 2 and even when things are delayed they are communicative versus showing a fake estimate timer.

• Integrated app is a bug not a feature: I’m sure the Instamart PMs thought if they had a single app it would create more usage as people don’t need to switch, however that has turned out to be false as the Instamart’s confusing experience is switching many tabs, mixed up search results for doing a simple thing, where as in BlinkIt it’s open the app and get going.

• BlinkIt is going for the 6th star: Airbnb came up with this idea that 5 stars is not enough as that’s the basic service expected by a user. You should deliver an experience that makes someone want to give you a sixth star. BlinkIt is doing this by:

  • Providing Printouts at your doorstep. I’m sure this isn’t very profitable however it blows people’s minds.

  • Letting you search a recipe’s name and showing the ingredients you’d need to cook it.

  • Adding a switch called “Single’s mode” for single people who feel left out on Valentines day.

  • Letting you share your cart for your sibling to order for you.

  • Making their delivery bags with outline illustrations that you can color into.

  • Writing Quirky copy for their mothers day section. I saw some hilarious product placement like rolling pins for when you get late and saridon for when your bua arrives.

It feels like BlinkIt has achieved operations supremacy and is now doing side quests and building customer delight where as all other players are stuck in solving the basic promises.

BlinkIt for X is coming

While you might feel that BlinkIt or Instamart will become super apps where possibly any item can be ordered in 10 minutes, I disagree:

• Vertical vs Horizontal expansion: BlinkIt is trying to build horizontally by having one of every best seller in all possible categories. But they can’t go deep in one category so there is an opportunity to go niche and build vertically.

• Supply chains are hard to switch: Instamart’s logistics / storage / procurement and processes are setup according to their retail + FMCG needs. However they’ll need a completely different process if they wanted to deliver certain perishable items / frozen foods / high value items and so on. Which is hard for them to add on to their existing flows.

• Customer experience matters: Even if they had every possible items supply chain setup. The way people buy fashion is very different from groceries. People in fashion like ordering 3-4 SKUs and then selecting one. People buying gold would want some sort of purity tester and so on.

My new friend Ansh is building Blip which is BlinkIt for Fashion. It’s fairly new but another similar company that is YC backed Ole , which is delivering luxury fashion items in 50mins is growing 35% MoM and has a 7x AOV that it’s e-commerce competitors. My point is after getting a taste of quick commerce in groceries, consumers will expect the same delivery times in other places they order and we’re about to see a rise of BlinkIt for X startups.

What to build?

If you’re a builder who’s excited about this space but you feel it’s too late. Obviously the best time to build was 10 years ago but the second best time is today. Here are some ideas I’m excited about in this space:

• Give the power back to Kirana stores: BlinkIt is eating their market, they are desperate to get back but don’t have tech. Not just storefronts but analytics to predict demand / manage inventory and even insights on what people order in this area will be valuable.

• Build on top of ONDC: Leveraging ONDC’s existing network and discoverability will help you solve the cold start problem and it’s free markets / low fee structure will even give you an edge to compete against the leaders.

• Build Community for Delivery people: Trust me I have seen so many delivery people send each other short messages about what they’re doing. There should be a community focused for them where they can share / ask questions help each other. This becomes the spot where new people come to get trained, acts as a body that helps to fight for their rights and even the big companies like Zomato / Swiggy would be interested to acquire such communities.

• B2B Products: While the whole world is looking at quick commerce as a consumer trend. Don’t forget that Indiamart exists and there are so many industrial and b2b related products where the delivery time today is still in weeks or days. Having same day delivery there and some version of dark store infra will be disruptive.

• Whitelabel Dark Stores: D2C brands will soon want to deliver items in 10 minutes using their own branding and without involving BlinkIt as their middleman. If you setup dark stores that any brand can rent + use for a fee that’s lower than BlinkIt there’s value in doing so.

• Quick Commerce Agency: Right now so many brands want to go to BlinkIt or Instamart but they aren’t aware of the process and they’re run by old Dhanda people who aren’t savvy. If you’re a teen who’s entrepreneurial you should form good relations with the BlinkIt / Instamart team then just cold email old businesses and tell them you’d help them figure out their QC strategy. Become the go to expert in pricing / getting listing / operations and so on.
  

• Start Dark Stores in Tier 2 / 3: This might sound too obvious but currently dark stores are concentrated in the metro cities. If you live in a tier 2 or 3 city, you should start dark stores in your city and pitch to BlinkIt for expanding there.

fin.

I’m excited to see this space evolve and all the startups that will operate in this space. It still feels like the early days. If you’re building a company in this space, please write to me, I’d love to geek out on your product. For my usual readers (we’ve had 2 past issues lmao) I really appreciate you all opening my emails. I have a 51% open rate for my previous editions.

later losers,
Yash