DMart and JioMart are unable to keep pace with Dunzo, Swiggy Instamart, Ola Dash

• Quick commerce platforms like Dunzo, Zepto, Blinkit are getting ahead of the retail stores in terms of fast delivery at your convenience.
• Grocery shopping in India’s major cities is set to undergo a never-seen-before tec(h)tonic shift led by quick commerce platforms, says a report.
• Meanwhile, DMart is still aggressively opening stores in parts of the country to get back to pre-covid levels.

The stores are coming to the consumers – figuratively. The local kirana store or India’s largest retail chain, all of them are keen on getting a piece of the online grocery delivery market.

DMart, for instance, has set up its app and pick-up centers for home delivery after handling its bulk delivery orders during the pandemic. Reliance Retail too stepped into this delivery business with its app, JioMart with little success, though it has also invested in Dunzo.

Time does matter
When it comes to the delivery market, it’s not about what you deliver, how you deliver but it’s all about ‘when’ you deliver. Most of the online grocery delivery hinges on timing which is why quick commerce companies are walking away with a lion’s share of the pie.

“Grocery shopping in India’s major cities is set to undergo a never-seen-before tec(h)tonic shift led by quick commerce platforms,” said a report by JM Financial.

Online grocery market has two segments -- quick commerce and scheduled e-grocery. Only Jiomart, Bigbasket and DMart are scheduled e-grocery stores, all the other platforms are in a race of quick delivery business.

And the segment seems to be ruled by the ‘10-30-minute delivery’ offered by platforms like Swiggy, Blinkit, Zepto and Dunzo. Most of the retail chains who intend to deliver groceries however have a one-day lag period between order and delivery.

Added to that, quick commerce platforms are addressing multiple consumer pain-points such as convenience, speed, curated assortment, value, and round-the clock standardized services.

Online food ordering business is aiding growth in the e-grocery as well. Customers who order food online for convenience, wider selection, discounts and standardized customer support are also likely to be more amenable to ordering grocery items online for the very same reasons. This opens up cross-sell opportunities for food-techs like Swiggy and Blinkit, which is merging with Zomato.

Paan to curds - quick commerce delivers it all
A February 2022 Survey by LocalCircles indicates that 71% of the households used q-commerce platforms to either order daily use items such as milk, bread, eggs, curd, fruits and vegetables, etc.

They also ordered indulgence items such as soft drinks, ice creams, chocolates and paan. Though, only 29% of the surveyed households used q-commerce for ‘all their grocery’ purchases.

For the bulk purchases however, the large format stores are still in the running as people are going to the stores. DMart is still aggressively opening stores in parts of the country to get back to pre-covid levels.

“We believe it will look to accelerate store expansion and the benefit of recent expansion is yet to fully kick in – revenue intensity is lower than pre-Covid levels,” said analysts at ICICI Securities post its March quarter earnings.

Redseer estimates the grocery market size in India was worth $620 billion in 2021, which is expected to grow at a CAGR of 8% over the next four years to reach over $850 billion by 2025.

Quick commerce is all set for the long haul
Quick commerce players are also vying for a bigger piece of the entire pie. The quick ordering might start with fresher foods like fruits and vegetables, meat, dairy and other ready-to-cook items; and also indulgence categories like chocolates, biscuits, snacking items, cold drinks, and tobacco. But it could extend to others too.

“We also expect grocery staples, cooking essentials, medicines, baby and personal care, home care and pet care, amongst others, to pick up as consumers become more habituated to ordering through the platforms,” said the JM Financial report.

Recently, Swiggy raised $700 million for quick-commerce grocery service Instamart. Zomato poured $150 million into quick commerce startup Blinkit. Zepto raised $200 million and lastly Reliance Industries also caught the quick commerce train by investing $200 million in Dunzo.

This also means that competitive intensity is likely to be severe in the near term, between them and also with the big retailers.

“Only those platforms that have very strong customer recall, robust back-end supply chain and/or strong balance sheet are likely to survive this battle of attrition,” said the report.

JM Financial believes that quick delivery platforms have what it takes to disrupt the unorganized grocery market including neighbourhood kirana stores or even retail chains like DMart in large cities.


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