Startup and VC Ecosystem Updates | Issue# 11 [February 12, 2025]
What?
The past year established Quick Commerce (QC) as one of the fastest growing market segments in India, with Blinkit, Swiggy’s Instamart, and Zepto competing fiercely, while heavyweights like Amazon (plans to launch instant delivery in Q4 FY25), Flipkart (with Flipkart Minutes), Tata’s BigBasket, and Reliance’s JioMart gearing up to go all-in on QC. This is driven by shifting consumer behavior, with users increasingly seeking instant gratification through QC as an alternative to physically visiting kirana stores and supermarkets.
Indian QC startups claim that their target consumers are evolved, big-city shoppers who already purchase groceries online from various platforms rather than from offline kirana stores or supermarkets. Naturally, this has allowed them to capture a share of the ecommerce market. In fact, in 2024, QC players expanded their offerings to include clothing, footwear, and electronics. Additionally, these companies began delivering items like toys, fashion basics, and beauty products, providing consumers with the option to make last-minute purchases. The distinction between slotted ecommerce (includes giants like Amazon and Flipkart) and QC is increasingly blurring as Blinkit, Instamart, and Zepto enhance their infrastructure and logistics to deliver non-grocery items within 10–15 minutes. It is fair to say that QC has redefined the Indian ecommerce landscape.
Apart from widespread adoption, the burgeoning sector has been highly attractive to investors, with significant capital inflows. The fact that Indian consumers, especially in Tier 1 and Tier 2 towns and cities, have increasingly turned to QC for both grocery and non-grocery items in recent quarters, has fuelled investments in the QC space. Zepto recently raised $1 Bn in a matter of a few months. Zomato-owned Blinkit has been championing the efforts to establish QC as a successful segment in India and Zomato’s popularity as a public company has only added to its visibility. A host of new entrants have jumped on the QC bandwagon, hoping to capitalize on the sector’s unprecedented growth potential. This has also led to additional regulatory scrutiny and competition checks. YourStory analyzed the emergence of QC in 2024. Let us take a closer look.
Market Leaders
The QC space in India is largely dominated by Blinkit, Instamart, and Zepto. As of November 2024, Blinkit led the QC market with a 40% market share, experiencing a Year-on-Year (YoY) and Quarter-on-Quarter (QoQ) growth of 122% of 25%, respectively. However, by the end of Q4 2024, the company’s adjusted EBITDA loss ballooned over 13x on a QoQ (15.7% YoY) basis due to rising competition in the QC space and dark store expansion efforts. This impacted Zomato’s (Blinkit’s parent company) performance, as its net profit fell down by as much as 57.2% on a YoY basis. However, both Blinkit and Zomato’s revenue surged by 117% and 64%, respectively. Notably, Zomato had announced in its Q4 FY24 earnings report that Blinkit achieved EBITDA positivity in March 2024. Zomato had raised INR 8,500 Cr ($1 Bn) through a Qualified Institutional Placement (QIP) in November last year to support Blinkit’s expansion efforts and other key initiatives. In January this year, Zomato infused around INR 500 Cr (~$57.7 Mn) in Blinkit to expand, compete, and fortify its position in the QC segment.
On the other hand, Swiggy made a strong public debut on the domestic bourses with a Rs 11,327 Cr IPO. The foodtech giant looks to make its QC arm Instamart profitable by September 2026. Like its listed peer Zomato, Swiggy also saw its losses increase by 39% YoY in Q4 2024, driven by aggressive dark store expansion expansion and marketing, despite a 30% increase in operating revenue. In fact, revenue from Instamart doubled on a QoQ basis.
Zepto too raised a mammoth $1.35 Bn (INR 11,865 Cr) in 2024 to fuel its dark store expansion efforts and plans to strengthen its food delivery vertical with a focus on expanding Zepto Cafe. The company looks to add more categories, focus on monetization, and ramp up the Average Order Value (AOV) to improve its unit economics. As of November 2024, Zepto held a higher market share than Instamart as a result of its laser-sharp focus on QC. The QC unicorn announced in January that it tripled its annualised Gross Order Value (GOV) to $3 Bn (INR 24,500 Cr) within eight months and is confident of sustaining the momentum towards profitability in the near term. The company recently moved its domicile to India from Singapore ahead of its $800 Mn – $1 Bn IPO.
Monetization
It is important for QC firms to achieve sustainable and profitable growth to remain investable. To sustain the costly hyperlocal delivery model along with its operational infrastructure and supply chain, QC companies rely on multiple strategies. Back in 2024, both Zomato and Swiggy increased their platform fee from INR 5 to INR 10. Zepto too, introduced a platform fee of INR 2 per order on top of a variable handling fee. The QC giant also imposes restaurant charges on Zepto Cafe orders in addition to taxes and levies occasional overhead fees, such as late-night charges, surge costs, and rain charges.
In addition, Zepto and other QC startups rely on supplemental revenue from advertising and other channels. Brands are happy to increase their advertising spends on QC platforms given the competitive nature of these platforms compared to local kirana stores. Direct-to-Consumer (D2C) brands contribute a significant share of the advertising revenue of QC platforms, benefiting the most from an increased visibility and an overlapping target audience. In fact, brands are now comfortable spending as much on QC platforms as they previously did on ecommerce platforms to leverage quick fulfilment of orders, and allot about 20% of their sales revenue for advertising on QC platforms. The shift towards QC in India is being driven by customers in the Tier 1 cities – the same overlapping group that prefers D2C brands. Swiggy also expects advertising revenue to be a key growth driver for Instamart, boosting take rates and expanding the contribution margin by 9%.
Besides advertising, the QC companies also charge a commission on sales from brands, which can go up to 30-45% for D2C brands. This is notably higher than the 10% to 20% commissions typically paid by larger, established FMCG companies. However, when compared to ecommerce, D2C brands favor QC platforms for their lower competition, city-specific inventory flexibility, and instant payments – an edge over Amazon’s 3-4 day payment cycle. Unlike the ecommerce giants, QC platforms enable brands to cut inventory from a 60-day supply to just one week. As a result, brands willingly pay higher commissions to QC players like Blinkit, compared to the 20% charged by Amazon and Flipkart.
New entrants like FirstClub aim to prioritize customer trust and transparency over advertising. The omnichannel QC retailer plans to generate additional revenue through a subscription model. Meanwhile, Zepto introduced Zepto Pass in 2024 as a revenue stream, while Zomato has confirmed that the company has no immediate plans to launch a loyalty program for Blinkit. Next, QC startups are looking at sampling services and private labels as key levers of monetization, but developing the necessary infrastructure remains crucial.
10-Minute Food Delivery
To increase the order frequency and AOV of customers, QC companies are looking to ramp up the SKUs. This expansion goes beyond non-grocery items to compete with ecommerce companies, incorporating additional offerings through the 10-minute food delivery service.
Zepto Cafe, which pioneered quick snack delivery in Mumbai in 2022 by offering both branded and non-branded pre-made food items, recently announced plans to expand its service to 120 cities and spin it off into a standalone app to deliver snacks and beverages within 10 minutes. Currently, Zepto Cafe delivers around 30,000 orders per day and estimates an Annual Run Rate (ARR) GMV of INR 160 Cr. However, Blinkit’s Bistro boasts of a wider range of SKUs, compared to Zepto Cafe. If Zepto Cafe witnesses strong growth, Zepto could also consider partnering with restaurants to enter the food delivery segment.
Blinkit expanded its services with the launch of Bistro, a new quick food delivery app. Swiggy’s Bolt, launched last year, has gained traction by partnering with restaurants, achieving significant order volumes and targeting expansion to over 400 cities. In fact, Bolt accounts for about 5% of Swiggy’s total orders within two months of its launch and the number is expected to grow. Bistro, on the other hand, operates independently of restaurant collaborations, focusing instead on delivering ready-to-eat meals and beverages. Earlier this year, Swiggy launched Cafe, offering users a curated selection of snacks and beverages delivered within 15 minutes.
Among other startups in the quick food delivery segment, magicpin recently partnered with certain brands to introduce magicNOW and offer 15-minute food delivery in select cities. BigBasket too does not want to be left out of the quick food delivery race and plans to offer a diverse range of food items with a 10-minute delivery service. After shutting down its QC service Ola Dash in 2022, Ola Consumer recently launched a 10-minute food delivery service Dash in Bengaluru. Swish, a new entrant in the food delivery space, aims to disrupt the traditional experience of ordering food by offering ultra-fast 10-minute delivery across select locations in Bengaluru. Zing, another new startup in the space, recently introduced its 10-minute food delivery service in Delhi-NCR.
A higher AOV helps offset logistics and warehousing costs. To leverage this, Zepto launched SuperSaver, requiring an INR 1,000 minimum order value to attract price-conscious consumers. This aids the QC giant in positioning itself as a grocery stock-up service rather than just a top-up option. By expanding SKUs and introducing high-value order options, Indian QC firms are not only boosting order frequency and AOV but also redefining their role – moving beyond quick convenience to becoming full-fledged grocery and food delivery ecosystems.
Stretching the Limits and Challenges
Gourmet foods, premium beverages, and small electronics are poised for growth as platforms enhance delivery capabilities. To support larger orders, Blinkit and Swiggy have begun pilot programs, with Swiggy investing in separate infrastructure for extended delivery timelines on certain Instamart categories. It also plans to expand store sizes by 30-35% and introduce megapods or mega dark stores – warehouses housing 50,000+ SKUs – to improve selection of its categories.
As noted earlier, the expansion into non-grocery items reflects QC companies’ efforts to blur the line between QC and ecommerce. However, although the QC players see growth with expanded SKUs, they face rising operational costs. A shift towards ecommerce requires increased focus on strengthening logistics, warehousing, and dark store infrastructure. This increases the working capital, which becomes an important metric in this case, apart from delivery cost, AOV, and order density. In the future, QC companies may consider dark stores located on city outskirts for infrequent and high-value purchases, thereby adding to the delivery time. A solution to this problem is to consider less stricter delivery times, which will allow stacking of orders. Slower, stacked deliveries and higher order value are key to profitability in QC, a strategy also seen with Swiggy’s mega dark stores.
New Entrants
With the Indian grocery market projected to grow by $250 Bn by 2028 (as per the Datum report), competition among players vying for a share is intensifying. Recognizing the potential of quick commerce, vertical marketplaces like Myntra and Nykaa have introduced 30-minute delivery options under M-Now and NykaaNow, respectively. Tata Digital has also entered the space with Neu Flash through its ecommerce app Tata Neu, offering apparel, beauty, personal care, electronics, and daily essentials. Learn more about the new entrants in the Indian QC space here.
Major ecommerce players are also stepping up. Flipkart launched Flipkart Minutes in Bengaluru this year, with plans for expansion, while Amazon is piloting its QC service Amazon Now (earlier reported to have been named Tez) in the same city. Amazon’s advantage in QC lies in its strong partnerships and sourcing integration with brands, and expertise in non-grocery categories, as most of its business comes from slotted commerce.
Industry experts believe that the QC battle will be multi-faceted, with companies optimizing factors like pricing, product assortment, and delivery speed. However, new entrants may struggle to disrupt the market, as customers prioritize reliability over price, making them less likely to switch unless service quality declines.
Shift in Channel Mix
QC is reshaping retail in India through a channel shift rather than market creation. Offering better prices by cutting intermediaries, it poses a challenge to kirana stores and supermarkets. FMCG giants, such as HUL, Tata Consumer, Dabur and Parle Products, are seeing strong sales growth in QC and expect the momentum to continue. While unorganized retail holds 93% of the Indian grocery market, the share of QC is expected to grow from under 1% in CY2023 to 3% by 2028, reaching a $40 Bn valuation, as per a report by Datum Intell. QC companies have primarily captured market share from slotted ecommerce players in major cities rather than offline stores, as they cater to urban, big-city consumers already accustomed to online grocery shopping. As the sector expands rapidly, regulatory scrutiny is expected to increase. This has prompted the QC firms to restructure their Cap Tables with higher domestic investor representation to meet FDI requirements on inventory holding.
Thoughts
QC has rapidly transformed India’s retail and ecommerce landscape, driven by evolving consumer behavior, increasing investor confidence, and relentless competition among major players. Today’s consumers require instant gratification of needs – from grocery and electronics to food and beverages. To serve the growing needs of the Indian consumer, QC giants like Blinkit, Instamart, and Zepto are focusing on expanding their SKUs and dark store networks and rely on a data-driven approach for vertical SKU growth. Scaling QC operations, including product offerings, dark stores, supply chain, and logistics, requires significant working capital to manage operational costs. At the same time, QC firms must focus on increasing AOV while expanding their user base. The long-term sustainability of the QC sector will depend on balancing speed with efficiency, optimizing supply chains, leveraging high-value orders to offset delivery costs, and effectively navigating regulatory guardrails. As quick commerce moves beyond convenience to become an integral part of India’s retail ecosystem, the next phase of growth will likely see further consolidation, strategic partnerships, and deeper integration with traditional ecommerce and offline retail.
QC companies are exploring multiple monetization strategies, including platform fees, advertising revenue, and commissions on sales from listed brands and partners. However, they must balance revenue growth with profitability to ensure long-term sustainability. For example, by benchmarking product pricing for non-grocery items (e.g., consumer electronics) and other consumer products to align with ecommerce giants such as Amazon and Flipkart, the likes of Blinkit are able to achieve lower delivery costs and better sales margins. Slower, stacked delivery for infrequent, high-value items can optimize delivery times and delivery costs, thereby reducing overall operational costs. The QC startups could also consider removing any premium pricing from daily-use products to improve their AOV and active user count. Similarly, the QC giants may need to reconsider the premium commission (30-45%) for D2C brands as their SKUs expand and eventually plateau. They will aim to sustain revenue from D2C partnerships while providing brands with a sustainable pricing structure and enhanced visibility.
The intense competition in India’s QC space is evident in Zepto’s monthly cash burn, which surged sixfold to INR 250 Cr in September and October 2024 from INR 35-40 Cr in May 2024, as it ramped up investments in operations, digital marketing, and hiring. Given this growth trajectory, we expect increased VC participation to further bolster the sector. For consumers, it helps to have competing options that offer instant gratification of needs. With innovation and technology fueling growth in India’s QC ecosystem, we are confident that QC companies will continue enhancing their platforms to deliver greater value to users. We wish them continued success.
If you are interested to learn more, feel free to check out this coverage by YourStory.
Thank you for reading through! I genuinely hope you found the content useful. Feel free to reach out to us at [email protected] and share your feedback and thoughts to help us make it better for you next time.
Acronyms used in the blog that have not been defined earlier: (a) Venture Capital (VC), (b) Financial Year (FY), (c) Billion (Bn), (d) Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), (e) Indian Rupee (INR), (f) Crore (Cr), (g) Million (Mn), (h) Initial Public Offering (IPO), (i) Fast-Moving Consumer Goods (FMCG), (j) Stock Keeping Unit (SKU), (k) Hindustan Unilever Limited (HUL), (l) Calendar Year (CY), and (m) Foreign direct investment (FDI).