Why a quick commerce shakeout is inevitable: Kearney’s Sumat Chopra

The first time Sumat Chopra saw the quick commerce revolution up close; he wasn’t wearing a management consultant’s hat. He was deep in the operational trenches, running an online grocery startup, ekstop.com, in the heart of Mumbai that promised same-day delivery, owned its own inventory, and built its tech stack from scratch. Years before 10-minute deliveries became a VC obsession and before Zepto, Blinkit, or Instamart became part of India’s urban lexicon, Chopra had already tested the waters, getting to know choppy it could be.

“We were too early,” Chopra, a Carnegie Mellon and Harvard-educated professional who cut his teeth with Goldman Sachs in Wall Street reflects, without regret. His company was among the first to back the fundamentals of inventory-led commerce, rather than asset-light marketplace models.

But even that early lead couldn’t mask the brutal economics. Rather than bleed indefinitely, Chopra made the call to sell out to the-then owned Godrej Nature’s Basket in 2015. It wasn’t the biggest exit, but it was clean—and, in hindsight, wise. “We thought we were being pessimistic when we said break-even was 10 years away,” he reflects. “Turns out, we were optimistic!”

That instinct would come into play again, but this time on a far larger scale.

The Metro Reality Check

Post the sellout, Chopra joined Metro AG, the German cash-and-carry major, as the investment and value creation lead across Asia.

Metro was the back-end engine for BigBasket in its early years and had struck favourable terms with FMCG majors. The company had cracked a rare code in Indian B2B retail: operational profitability. In an ecosystem where most global players—Walmart, Amazon, Carrefour—either failed or floundered in B2B, Metro was holding its own, having built deep relationships with SME buyers and offered a modern trade solution to India's fragmented kirana landscape.

Metro had invested ~₹1,800 crore in India since its foray in 2003. But Chopra began to see diminishing returns on future capital. "To stay competitive in India, we needed to pump in at least another ₹5000 crore. China would have needed even more. And we were still only clocking 3–4% EBITDA," he explains.

So, Chopra went to the German board with two options: double down, or exit. “There was no third option,” he says. “Slow death was not a strategy,” recalls Chopra.

The German board was receptive. Over a series of closed door meetings, they approved the recommendation to exit most of the continent entirely—India, China, Japan, and Myanmar. The India business was sold to Reliance Retail, the only modern trade player with the balance sheet and strategic intent to scale. The deal generated close to 2X returns on book value.

China had seen approximately $500 million in investment over a longer horizon but fetched Metro a significant exit value of $2.25 billion, by far the most lucrative asset in the portfolio. In Japan, Metro exited for $400 million after holding the asset for roughly 13–14 years—a more modest 2X return. Myanmar and Singapore were smaller bets but still required operational management and board-level attention. While not individually transformative, they added complexity to a region already under strategic strain.

“You never exit on a low,” says Chopra, who joined as Partner & India Head at Kearney in 2023. “Exit when you still have a story to tell and a buyer who sees the upside,” adds Chopra, who is just 41 years old but brings the business acumen of a seasoned operator.

Living the Disruption Cycle

One underappreciated reason quick commerce has taken hold, according to Chopra, is the changing equation between FMCG companies and their retail channels. Modern trade, once seen as the future of distribution, has now become concentrated in the hands of a few large players. This has made major FMCG firms wary of being overly dependent on just a few modern trade giants. FMCGs don't want all their eggs in one or two basket," he explains.

As per Tracxn, India has 61 quick commerce startups, the most by any country, followed by United States which has 16 startups and United Kingdom which has 13. While by definition quick commerce comprises are those offering less than 30-minute delivery, it’s the likes of Zepto, Blinkit and Instamart that dominate the space with their combined revenue exceeding $1 billion in FY24.

Quick commerce offers them an alternative route to consumers—particularly the urban, premium ones. "They can sell their experimental SKUs, new flavours, limited editions—things that just don’t move in a traditional kirana setup," Chopra says. Traditional kiranas typically stock between 800 and 1,000 SKUs and focus almost entirely on high-volume, high-rotation products. "The next 800 to 1,000 SKUs, the long tail, just don’t fit. That’s where quick commerce becomes valuable," explains Chopra.

Moreover, FMCG companies are not just supplying products to these platforms. They’re also advertising directly within them, offering both margins and back-end spends. “They're giving 3-4% back on marketing alone. So overall, they’re being quite supportive,” Chopra notes.

This makes quick commerce more than just a distribution channel—it becomes a digital marketing platform for new-age FMCG rollouts. And for these companies, having more players in the game means better leverage, more competition, and better terms.

"Ultimately, they want a diversified retail ecosystem. Two modern trade giants calling the shots is not a healthy long-term strategy for them," Chopra says.

What makes Chopra’s perspective unique is not just that he’s advised or analysed the quick commerce wave. He’s lived it.

Retail in India has moved in waves. Traditional kirana got disrupted by modern trade. Then modern trade was disrupted by e-commerce. Now e-commerce is being disrupted by quick commerce. Each wave has taken share without solving for profitability.

Gross margins in quick commerce hover around 23–24%, but the cost stack remains daunting. Direct costs—driven largely by last-mile logistics—consume about 6–7% of sales. Add another 9–10% for dark store operations, mid-mile logistics, warehousing, and store-level expenses. Then come corporate overheads and marketing costs, typically in the range of 3–4%. “All things considered, there’s the potential for a 4% EBITDA business,” says Chopra.

But things are changing. The customer is slowly getting conditioned to pay. “Piece by piece, consumers have started accepting delivery charges, packaging fees. So, there is a path to profitability,” believes Chopra.

Yet, competition keeps undercutting any progress. Even if one player reaches breakeven, another will enter with fresh capital and reset the game. It’s a crab bucket dynamic.

Chorpra’s prediction is that within the next 12 to 18 months, the space will see consolidation. “There are six to seven players today. That number won't hold. Some will exit, while others will merge.”

The Survival Dilemma

Chopra believes Amazon and Flipkart are stuck in a high-stakes battle in India. The core issue, he explains, is structural: food and grocery make up nearly 60% of India’s $500 billion retail market, compared to just 20% in the West. “If you want to dominate Indian retail, you can’t ignore food and grocery,” he says. “It’s not optional. It’s the bedrock.”

And yet, both Amazon and Flipkart have struggled to make meaningful inroads. For years, they have pumped in capital, built out warehousing networks, and tried partnerships. But they remain marginal players compared to quick commerce startups that are gaining mindshare through speed, convenience, and geographic agility.

Chopra's own household, he notes, has shifted behaviour. “My wife ordered an air fryer, a printer, and a scooter—all from Blinkit. It came in half an hour. Same price as Amazon,” he says. “Why would she wait two days for delivery?”

The dilemma, however, for these giants is compounded by the lack of clear exit paths. IPOs are not a viable option due to profitability constraints and reputational risks. "You can’t have your India business listed and then struggle with negative cash flows quarter after quarter. That dents global credibility," Chopra. Shutting shop isn't on the table either—they’ve already invested billions. “Amazon has put in over $15 billion in India. Walmart paid $16 billion for Flipkart. They can’t walk away. The market is too big, the capital already sunk too deep,” he adds.

So, what’s left? According to Chopra, the only logical path forward is acquisition. “If they want a fighting chance, they’ll have to buy a player such as Zepto or Swiggy Instamart. But even that’s not easy. These startups are burning cash and holding lofty valuations,” he says.

Still, Chopra sees strategic patience. “They might wait 2-3 years, let valuations settle, let one or two blow-ups happen, steady existing operations and then step in. That would be the smart play.”

Chopra warns that conglomerates jumping into consumer tech are underestimating the execution risk. “Tata has bought BigBasket and 1mg. But these are not just capital-heavy businesses. They require a startup mindset to iterate weekly,” he says. BigBasket, once a market leader, is now barely discussed among the top players. “They didn’t break into quick commerce. They’re being outpaced,” he says.

Indian corporates are enamoured by consumer valuations, especially as traditional businesses lose favour with investors. “Everyone wants a consumer story,” he says. “But these aren’t just about capex and branding. They require cultural agility.”

But as private equity giants seek exits, IPO windows narrow, and burn rates rise, Chopra’s feels not every market is worth the fight. “India is a massive retail market, yet it’s also chaotic, price-sensitive, and capital-intensive. Unless you have the stomach to lose money for five to ten years or more, think twice,” feels Chopra. In Q3 FY25, losses at Swiggy’s company’s quick commerce arm rose to Rs 528 crore, up 70% YoY from Rs 310 crore, while Zomato’s Blinkit posted Ebitda loss of Rs 103 crore, 16% increase over Rs 89 crore in the year ago quarter.

With big players already in the fray—and more queuing up—a phase of consolidation is all but inevitable in India’s quick commerce market with an estimated $7 billion in gross merchandise value. Yet, for all its scale, this will likely remain a low single-digit margin business. And in this high-stakes jamboree, the most valuable insight may well be this: it’s not just about knowing when to enter the market—it’s knowing when to get out.