Why Reliance Retail plans to grow its quick commerce network organically

India’s largest retailer, Reliance Retail , is focusing on building its quick commerce network organically as inorganic growth doesn’t make much sense given the cost structures of existing players in the industry.

Responding to an analyst's question on whether Reliance is considering growing inorganically in the quick commerce space, Reliance Retail chief financial officer Dinesh Taluja said, “It is very difficult to integrate somebody with your existing network. We have been focusing on building our network organically. And we have a big customer base which is already there with us.”

Reliance is already building dark stores, said Taluja. “A lot of our orders actually get delivered within 10 to 15 minutes. 30 minutes is the outer limit. Wherever there are gaps in the network or where there is enough order volume because beyond a certain order volume, it starts impacting the customer experience in the store. So, we are already building dark stores. We are in the process. We have rolled out quite a few in the top 10 cities already. So, the dark stores will come,” he explained.

The Reliance Retail CFO, however, added that the company’s own stores will continue to be the backbone of its model and dark stores will basically supplement the model and help in filling the gaps. “More than 90% of the orders are coming from top 40-50 cities. We are already present in 1,000 cities. Most of the cities where we are doing quick commerce today, they will possibly not reach there in the next three years as well. Why should I give up that advantage? I will continue to leverage my store network. Wherever there are gaps, wherever I need to reduce the delivery radius or wherever there is enough order volume, we are going and setting up dark stores,” said Taluja.

Reliance's e-commerce platform JioMart competes with Eternal's Blinkit, Swiggy 's Instamart, q-commerce startup Zepto and Tata Digital's BigBasket.

Reliance Retail is setting up dark stores, especially in places like South Bombay, where the retailer doesn’t have a big network. “We do not want to leave any pocket where we are not competitive,” said Taluja.

The CFO of the country’s biggest retailer said Reliance only sets up a dark store where there is enough order volume, where the existing store cannot support it, or where there is no store presence. “So, economics are much better for me because I am able to leverage existing infrastructure. And most of my dark stores are in places where the order volumes are high and dark stores are a positive contribution margin from day one,” said Taluja.

“We have multiple growth levers which are helping us drive the growth of this business. So, as we spoke last time as well, we have been expanding our quick commerce business. We have the largest coverage across 1000 plus cities, 4300 pin codes and every quarter we will continue to expand this. As a result, our daily orders are up 68% on a quarter-on-quarter basis and 175% on a YOY basis. This is the fastest growing digital grocery platform in the country today,” said Taluja.

Taluja said most of Reliance’s quick commerce competitors are focused on the metro and tier one cities. “We are already doing quick commerce in thousand plus cities. We are also focusing on building frequency building categories. So, fruits and vegetables people order, fresh people order every day, every alternate day, right? So those are a big advantage. As you know, we operate the largest fresh supply chain in the country,” he added.