Q-comm boom: How Zepto, Swiggy, and Zomato are driving disruption

A MEETING WITH ITC chairman Sanjiv Puri is incomplete without savouring the food division’s latest launches. From onion rings and paneer pakodas to french fries and aloo tikki, his coffee table is full of ITC’s frozen snacks. But Puri is tasting not only paneer pakodas — his weakness — but also success. These products, and a host of other innovations, have caught on in quick commerce, the 10-minute delivery service that has emerged as retail’s biggest disruptor. Sales of such products on quick commerce platforms Blinkit, Zepto, Swiggy Instamart and BBNow accounted for 50% of ITC’s e-commerce revenue (10% of total) in FY24.

While frozen food appeals to the young, who are avid quick commerce shoppers, Puri says ITC has also seen traction in Right Shift, a healthy food brand for 45-plus consumers, apart from products such as bambooless dhoop sticks Mangaldeep Temple and Savlon laundry disinfectant. “We are developing products that can be pushed through the channel,” says Puri. “Quick commerce requires you to think differently. One needs different skill sets for promotions, listings and providing information about products,” says Puri. It has been the biggest disruptor in recent times, forcing businesses to not only create super-agile supply chains but also innovate for the consumer, who is opting for convenience over value, he says.

ITC is not alone. Quick commerce, almost non-existent four years ago, accounts for 30-35% of the e-commerce revenues of some of India’s biggest FMCG companies such as Tata Consumer, Colgate-Palmolive and Marico (one-sixth for Hindustan Unilever). For new-age brands SUGAR, BoAt and Mamaearth, it is expected to account for 10-20% revenue in 12-18 months, from 5-6% at present.

“Quick commerce is a reality. You have to go where the consumer is going,” says Sunil D’Souza, managing director, Tata Consumer Products. Be it Soulfull millet-enriched food or quick commerce-friendly packs from Tata Gold Tea, it cannot be ignored, says D’Souza. The trend started with FMCG but is evolving fast and now covers segments as diverse as gold, apparel, athleisure, appliances and beauty. Experts expect it to tap service segments such as salon, pest control and after-sales service as well.

Quick commerce has come a long way from 2021-22 when it was written off by most as non-essential and impractical due to high cost and cash burn. When Zepto founders Aadit Palicha and Kaivalya Vohra promised groceries in 10 minutes, critics said their business would bleed to death as the average order value was just ₹150-200 and delivery cost ₹15-20 per order. In 2024, it was the fastest-growing retail channel in India, encouraging companies to join the bandwagon: Walmart-Flipkart have started ‘Minutes’ in Mumbai and the National Capital Region; Tata Group’s BigBasket, which launched BBNow in 2022, has fully switched to quick delivery before it goes public in 2025; Amazon is planning delivery in 10-30 minutes; Reliance Retail is betting on JioMart.

The reason is simple. The average urban consumer has become addicted to quick delivery, a huge change from the time when groceries were bought once a month. Neither is she opting for slotted delivery from platforms such as BigBasket. She’s buying on demand and is fine with paying more as quick commerce platforms now sell a wide range of goods from toys and appliances to stationery and apparel. Mumbai-based research analyst Mona Mohanty decided to do the bulk of her Diwali shopping on Blinkit. She bought diyas, dry fruit and even four eight-gram gold coins for dhanteras. Blinkit sells coins of Malabar Gold and Joyalukkas. “There is no need to brave Mumbai traffic on dhanteras,” she says. Kalpana Rout, an economics professor, buys groceries from either Blinkit or BigBasket. Her average bill is ₹2,000. “I have stopped slotted delivery. This is more convenient,” she says. Blinkit and Zepto were in the news recently for selling the newly-launched iPhone 16.

A Redseer report says quick commerce will grow at 60-80% compounded annual growth rate (CAGR) to ₹2.3-4.2 lakh crore ($29-53 billion) by 2028. It is currently at $2.8 billion. Growth is expected to be 80-100% over the next two years on the back of user adoption, geographical expansion, rising average order value and increase in basket size. Globally, the quick commerce market is estimated to grow to $266 billion by 2029, from $171 billion in 2024, according to data-gathering platform Statista.

Retail Industry — Where It Stands

The Indian retail market is expected to grow from ₹76-78 lakh crore ($950-980 billion) in 2023 to ₹116-124 lakh crore ($1.4-1.5 trillion) in 2028. Organised retailers (modern trade and online) account for around 18% share; it’s projected to rise to 32% by 2028. Online retail is expected to rise from 5.7% to 8-10% and quick commerce from 0.3% to 2-3% as it starts catering to the top 10-12 million shoppers outside metro and Tier-1 cities.

What started with satisfying cravings for a bar of chocolate or a can of soft drink has become a full-fledged retail revolution. While e-commerce marketplaces tap value-seeking buyers, quick commerce platforms such as Blinkit, Zepto and Swiggy Instamart are targeting premium consumers who prioritise convenience over discounts. Their services are available in top 20-25 cities. “Flipkart took four years to hit a $1 billion top-line. We did it in 2.5 years, with a fraction of the capital,” says Aadit Palicha of Zepto.

In spite of being around for just two-three years, quick commerce companies are earning a few thousand crores in revenue. Some are close to profitability, unlike many marketplaces that are struggling to turn in a profit. About half of BigBasket’s ₹10,000 crore revenue comes from BB Now. Blinkit’s gross revenue was ₹2,300 crore in FY24 (its gross order value averaged $3 billion at the end of Q2 FY25); Swiggy Instamart reported ₹1,088 crore with gross order value of $975 million in FY24. Zepto clocked ₹10,000 crore in calendar year 2024, as per company sources. Its gross order value was $1.5 billion as of September 2024. They have grown on the back of steady rise in average order value from ₹100-150 in 2020, when they started gaining acceptance, to ₹450-600. This is encouraging them to set up 2,500-3,500 sq.ft. dark stores (every incumbent has 500-600 dark stores) near consumers with 10,000-20,000 stock-keeping units (SKUs). “Our business was EBITDA positive in Q1 of FY25. We recently raised $1 billion. Instead of reporting short-term profitability, we decided to expand dark stores (currently 639). EBITDA will fluctuate but we will be back to profitability once the stores mature,” says Palicha.

Blinkit, acquired by Zomato for ₹4,447 crore in 2022, turned adjusted EBITDA positive in FY24. Zomato’s letter to shareholders in Q1 FY25 said Blinkit has been able to sustain adjusted EBITDA breakeven despite opening new dark stores (791 in total). Swiggy Instamart has also reported adjusted EBITDA breakeven. However, Blinkit founder Albinder Dhindsa is conservative, having burnt his fingers several times before succeeding. “It is not easy to make money in quick commerce,” he says. “People are confusing valuation with profit. It’s a tough business. You have to first make the experience work for consumers. Getting good real estate and other infrastructure in cities isn’t easy. We have the largest cold chain in the country but had to invest heavily in it.”

Quick commerce has also become a favourite of investors. The less-than-three-year-old Zepto is valued at $5 billion. It had raised $300 million earlier this year and within a few months has raised another $350 million. Blinkit, before being bought, had raised $784.15 million (Zomato has invested another ₹2,300 crore). Swiggy, which recently went for a $1.25 billion funding from capital markets, is going to use ₹755.4 crore to expand the Instamart dark store (currently at 557) network. It will use an additional ₹423.3 crore for lease or licensing payments of these stores.

Swiggy and Zomato started as hyperlocal food delivery businesses and entered quick commerce later. This has brought economies of scale and added to profitability, says Anand Ramanathan, partner, Deloitte India. “The food service business is complemented by dark stores near consumers. This increases the number of times a consumer engages with you. A person might order food two times but grocery five times a week. So, you break even per customer.”

New Entrants

The newest entrant in the quick commerce market would be the RP-Sanjiv Goenka Group. Come January, the power-to-retail conglomerate would be launching its quick commerce operations under the Spencer’s brand. “We already have a network of stores and we are going to use that to deliver. As demand grows we will set up more stores which would be through a hub-and-spoke model,” says Shashwat Goenka, vice chairman, RP-Sanjiv Goenka Group. The group has 98 Spencer’s stores (including hypermarkets and convenience store formats) across the country and 33 Nature’s Basket (its premium food retail offering) stores across Mumbai, Delhi, Bengaluru, Pune and Kolkata, as on September 2024.

Legacy retail giants Walmart (Flipkart), Amazon and Tata Group (BigBasket) also cannot ignore quick commerce any more. The latest entrant is Reliance Retail, which had rejected quick commerce as unviable a couple of years ago. It now aims to disrupt not only Tier-I but also Tier II/III markets. It plans to serve customers from its 3,000 grocery stores as well as other retail formats such as Trends, Reliance Digital, Ajio, Urban Ladder, Tira and Netmeds. “We have thousands of physical stores. So, hyperlocal is best. For instance, we have 100 stores in Bengaluru. We don’t have to build additional infrastructure for quick commerce,” says a Reliance Retail spokesperson.

Unlike existing companies, which are focusing on top 20-25 cities, Reliance plans to deliver in 5,000 pin codes in 1,150 cities. The number of grocery SKUs alone is expected to be close to 12,000. Will Reliance upset business models of incumbents? Not really, says Bijou Kurien, chairman, Retailers Association of India. “Reliance will do pretty much what others are doing. It doesn’t have a natural advantage apart from the fact that it might give deeper discounts because of aggregation might. It will incur the same operating costs,” he says, adding, “You can’t depend entirely on one store’s inventory. You will need to pick up from a few stores. That is not going to be possible in quick commerce. Dark stores have much wider inventory.”

Tracing The Disruption

Big retailers rushed into quick commerce after consumers got hooked on to the newer platforms, especially in FMCG (80% SKUs are grocery). The current avatar was born during Covid when conventional kirana stores were unable to meet demand and the likes of Instamart, Blinkit and Zepto offered quick delivery of essentials. The first mover, though, was Blinkit (then Grofers), in 2013. Grofers’ delivery boys used to pick up grocery from stores. The hyperlocal delivery model didn’t work but Dhindsa says consumers needed quick delivery even then. “We were not able to scale up the experience the consumer wanted. We took a step back to build capabilities in a more sustainable manner in 2020,” he says.

After shutting down the hyperlocal business, Dhindsa dabbled in conventional online retail where he tried to partner with local stores. That gave him the idea about dark stores. He launched Blinkit in 2020. Companies open dark stores to be close to consumers and lower shipping costs (that most marketplaces incur) from central warehouse to homes. In quick commerce, goods are shipped from warehouses on city outskirts to smaller dark stores from where they are delivered. “We ensured dark stores had state-of-the-art electrical fittings, high quality cooling systems. We invested in technology to build a seamless supply chain,” says Dhindsa.

Around this time, Swiggy’s Instamart launched a hyperlocal model of grocery delivery that it withdrew in favour of dark stores. “Swiggy pioneered the quick commerce model with Instamart in 2020, starting with groceries and daily necessities. In the last one year, we have increased our assortment in 20-plus categories by four times, including apparel, toys, beauty, electronics, home essentials and festive selection,” says Amitesh Jha, CEO, Swiggy Instamart.

While online retailers offered deep discounts, which made the path to profitability distant, quick commerce companies in most categories have avoided deep discounting. “That’s not our promise to the customer. We are offering convenience and we charge for that,” says Blinkit’s Dhindsa. “We offer discounts only if the brand wants. We will perish if we deep-discount,” says Zepto’s Palicha.

This, and the rise in average order size, has helped quick commerce players scale up. One of the pain points for most online grocery retailers has been the cost of delivery (transport, cold chain, etc) from warehouses on city outskirts as grocery is a low margin business. The single-biggest driver of positive economics of quick commerce is gross order value, says Rishav Jain, MD, Alvarez and Marsal. “Absolute gross margin will come from gross order value. The 2,500 sq. ft. dark stores are set up closer to consumers and carry 5,000+ SKUs compared to less than 2,000 SKUs in a kirana store. What becomes critical is delivering within a certain time and having an overall basket size at a level where gross order value is high,” adds Jain. “From a balance sheet perspective, it is capital-efficient. Even 3-4% EBITDA margin will give high return on capital. For quick commerce, overall inventory is around 20-25 days, which is efficient.”

But then, wouldn’t a large format physical retail company like Spencer’s need to go through a mindset change to embrace the instant delivery format? “I would say yes and no,” says Goenka. To begin with, he is not promising delivery in 10 minutes. “We have always been doing e-commerce, it is more about getting more efficient and giving more services to our consumers. We earlier had slot-based deliveries within two-four hours or four-six hours, now we are going to introduce a quick commerce option as well. We will deliver in 30 minutes. Agility has always been our strength and the idea is how we extend that to one of the services we offer to consumers,” he adds.

Apart from this, target markets for quick commerce have been mostly metros and Tier-I cities where population density is high. Three-four orders on average from a single building at a given time can optimise delivery costs. In fact, the definition of quick may change, says Angshuman Bhattacharya, national leader (consumer product and retail sector), EY. “It needn’t be 10 minutes but 30 minutes. That can reduce a huge load on last-mile manpower.”

A quick commerce platform has three revenue streams — delivery fee charged to customers (10-15%), commission from brands, and advertising. The biggest cost is dark stores considering steep rentals in cities. “We don’t need stores in high streets. We set up in by-lanes and slums, so rentals are less than half of what modern trade stores pay,” says Palicha of Zepto. He claims 70% of Zepto’s 500 dark stores (in 17 cities) are cash positive. The number of SKUs has gone up from 3,000 a couple of years ago to 15,000. “Earlier, it took 23 months for dark stores to become profitable. Now, it takes eight months. We needed ₹3.91 crore to launch a store and turn it profitable; that has gone down to ₹1.54 crore. The business has come closer to EBITDA breakeven,” he says.

Profitability is a matter of time, says Bhattacharya of EY. “Overall P&L may still bleed because of rapid expansion, but there is reason to believe that in larger cities, network productivity is higher than in the food delivery business. The average order value is far higher,” he says.

The Premium Touch

Quick commerce, being a big city phenomenon, has also given a push to premium products, be it low-calorie ice-creams, ready-to-cook meals, protein shakes, crackers, yogurt or frozen kebabs/samosas, a trend most consumer goods companies are capitalising on. As consumers get used to the convenience, they are also meeting larger grocery needs, such as a 10-kg pack of atta, from quick commerce players. It is no longer about just impulse buying. This is increasing the average order value.

Dhindsa of Blinkit says buying habits are varied. Consumers do not necessarily buy smaller packs. He cites the example of sanitary napkins. “If a person orders from office, she goes for a smaller pack, but if there is an emergency at home, she may order a larger pack. Therefore, we have to ensure availability of all sizes.” While gold coins or smartphones may not have too many takers, if a woman runs out of foundation before going out, or her phone charger or headphones stop working in office, she may place an order on a quick commerce app. She may not buy a festive outfit but will not hesitate to buy athleisure or even tie or socks for her spouse or children. “Brands available on our platform include Hamleys, Lakme, Decathlon and FabIndia. We also sell appliances of Hawkins and Prestige,” says Swiggy’s Jha.

That is why for lifestyle brand boAt, quick commerce accounts for 5% revenue, expected to touch 10-15% in 12-18 months. “Initially, entry-level models were gaining traction, but over time, we’ve seen consistent performance across the portfolio. This channel is still in its early stages, and we are continuously learning about customer behaviour,” says Gaurav Nayyar, COO, boAt.

For Colgate-Palmolive, quick commerce delivers 30% of e-commerce revenue. “It has grown rapidly over three-four years. By segregating our assortment between brick-and-mortar stores and online, where we are offering premium choices, we have integrated quick commerce into our business model,” says Ruchir Bhatnagar, executive vice president, customer development, Colgate-Palmolive. Bhatnagar says the company’s supply chain teams work closely with quick commerce platforms to monitor stocks. “The app allows us to introduce new products to consumers through high-quality visuals, videos and personalised content. This fosters product discovery and engagement, encouraging consumers to go beyond repeat purchases. As a result, we not only enhance our portfolio but also drive consumer loyalty.” It recently launched a premium variant, Colgate Purple, and listed it on quick commerce apps.

Similarly, Marico finds quick commerce efficient as its food portfolio (oats, muesli, peanut butter) caters to upmarket consumers. “Quick commerce is emerging as one of the fastest growing channels for FMCG businesses. As consumers seek healthier food products at convenience, it is poised to drive growth of our food portfolio. Personal care is another category gaining traction on quick commerce. We are also witnessing a shift towards bigger pack sizes,” says Vaibhav Bhanchawat, chief operating officer, India & Foods, Marico.

D2C Proliferation

Quick commerce has also become a favourite of direct-to-consumer (D2C) brands which are struggling to scale up in general trade as it is capital intensive. “A lot of brands want to experiment with innovations in packaging, flavours and pricing. They believe they can first try out on quick commerce before adding other channels,” says Dhindsa.

Mamaearth, Minimalist, SUGAR, boAt and iD Fresh have experienced growth in quick commerce. Zepto’s Palicha says D2C brands are also open to tweaking formulations and packaging. He gives the example of low-calorie ice-cream brand Go Zero, which has launched ice-cream sticks only for quick commerce consumers. “They have changed the way they formulate their products. We have also asked them to introduce recipes more suited for the quick commerce supply chain,” he says, also citing the example of cocktail mixer brand Coolberg.

Can D2C brands afford to completely ignore general trade? Certainly not, says Vineeta Singh, co-founder and CEO, SUGAR Cosmetics. “Quick commerce does solve the problem of convenience and brand penetration among new customers. Most new customer acquisition is in Tier-I cities as these platforms have largely made inroads in metros. Up to 65% beauty shoppers reside in Tier-II&III markets, which are growing faster. So, a brand needs to keep grinding and building general trade beyond metros and steadily ramp up traditional distribution,” she says.

“While it offers convenient shopping, it doesn’t necessarily fill a gap for general trade distribution. Offline channels provide a unique value through direct customer interaction and ability to experience products first-hand. General trade continues to be a significant revenue driver for us. We don’t see it getting replaced by quick commerce. Instead, quick commerce complements other channels by serving the growing demand for convenience and instant purchases,” says Nayyar of boAt.

The D2C phenomenon on quick commerce is category-dependent, says Kurien of RAI. “If a category allows it, well and good, but if not, you may say that I will make some products available on quick commerce and the rest on general trade and online,” he says. Also, while quick commerce may help D2C brands scale up, there is a limit to the number of SKUs that can be listed on a quick commerce platform, which makes it difficult for an upstart to get listed. “Unlike e-commerce, a quick commerce platform may not list your brand if it is not among the top four-five in a category. A new brand may find it difficult to get visibility,” says Kurien.

Kirana Store Impact

Each time a new retail format is launched, critics predict the downfall of the 10-million-strong kirana store network. But they have proved to be resilient. Quick commerce, however, is eating into profits of traditional retailers in metro markets. Manish Shah, owner of Swastik Store, a grocery shop in Andheri West, Mumbai, says his sales have dipped over 40% in the past couple of years. But he hasn’t given up and recently launched an app for selling products from his store. He is encouraging loyal customers to order on the app. “There has been an uptake in sales in the past 10 days,” he says. While his app has all popular FMCG brands, he has been focusing on home-made snacks that have been popular among his clientele for decades. He says he has fortified his snack portfolio by launching a host of traditional healthy snacking options. “My snack portfolio has maximum takers on the app,” he says. However, Daniel D’Souza, the second-generation owner of Loreto Stores in Worli in South Mumbai, isn’t as enterprising. He is planning to shut shop. Sales have declined massively and D’Souza is looking for other employment opportunities. “There is an erosion in profitability of merchants as quick commerce is cannibalising the top end of the market,” says Prem Kumar, CEO and founder, Snapbizz, a tech company which helps kirana stores digitise. “Upmarket and mid-market products (premium shampoos, chocolates, etc), where they had good margins, are getting cannibalised. The basket profile has dipped drastically as consumers are mostly buying unbranded products such as namkeens from kirana stores,” he says.

In fact, the All-India Consumer Products Distributor Federation has filed a complaint with Competition Commission of India about predatory pricing by the likes of Swiggy, Zepto and Blinkit harming the livelihoods of kirana store owners. The quick commerce incumbents deny that they are eating into the market share of kirana stores. “Quick commerce meets a need which was not getting satisfied by kirana stores or any other existing channel,” says Blinkit’s Dhindsa. “Our model benefits local entrepreneurs. People who used to run small eateries or car wash services have pulled out some capital and started dark stores for us. We give tools, technology and operational support and they run the store. They are making money and launching second and third stores. We are empowering local entrepreneurs instead of being at odds with them,” says Palicha.

It is certainly a disadvantage for kirana stores for the time being. But the community is known for resilience and will find ways to bounce back. Quick commerce platforms are flying high. With stalwarts such as Reliance Retail entering the fray, there is a lot more disruption in store.