A lot can go wrong when everything arrives in 10 minutes

By Andy Mukherjee

Quick commerce, the most powerful driving force of India’s consumer economy, is what happens when a 5,000-year civilization sets a 10-minute timer on gratification. Run out of sugar? Someone will zigzag through traffic to get it to you before the tea goes cold. No time for a diaper run? Blinkit has you covered. Or Zepto... or Swiggy Instamart.

Several such platforms are challenging the more established physical and online retailers. To have at least half a dozen options for quick commerce is a good thing in an economy where concentration of large monopolies and duopolies is on the rise. But what might seem like a gain for consumers is not a free lunch for the society. A 10-minute delivery has many hidden costs.

That’s no showstopper for the industry. Blinkit sales more than doubled from a year earlier in the September quarter, according to financials released last week by its owner Zomato Ltd., a $27 billion startup that began to trade publicly three years ago. The unit, which rushes everything from groceries and medicines to pet supplies in eight minutes, is now nearly half as big as food delivery, Zomato’s original business. It’s growing six times faster.

Swiggy Ltd., too, began as a food-delivery app. Instamart, which it started in two locations in 2020, has grown to cover 43 cities. And according to the prospectus of Swiggy’s much-awaited initial public offering, Instamart stocks nearly 20,000 items now, including electronics and wearables. That’s more than double from a year earlier. Back then, the average delivery time was nearly 17 minutes. In June, it fell to under 13 minutes.

Rapid expansion is drawing in both fresh-faced entrepreneurs and seasoned investors. Lightspeed Venture Partners and DST Global recently raised their stakes in Zepto, founded by two 19-year-old Stanford University dropouts who found themselves stuck at home during the pandemic. The quick-commerce startup is worth $5 billion, based on its last funding round in August.

I’m not convinced the economics of the 10-minute delivery will be able to withstand the relentless pressure of growth, especially in smaller cities and towns where the cost of warehousing a large number of goods may be too large compared with the size of the average order. The US market is littered with failures like Fridge No More, Buyk, Jokr, and Getir.

So far, though, the Indian model has shown surprising resilience. It’s as if Covid-19 flipped an impulse-buying switch in people’s heads. “Life is short,” is how late-medieval Europe reconciled itself to the ravages of Black Death, the 14th-century plague that led to a surge of consumerism in a pre-capitalist society. Glass panes appeared in the windows of working-class homes, and a scandalized state sought to limit the height of Venetian women’s platform shoes. That history has an echo in 21st-century capitalist India, where the smartphone seems to have became a tool of affirming one’s existence: “I am, because the delivery guy says so.”

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.