Quick commerce march trampling on ecommerce toes

India’s quick commerce grocery delivery was expected to hurt kirana stores first. Instead, the first casualty seems to be the ecommerce channel. Quick commerce now accounts for roughly 47% of India’s online grocery market and will outpace ecommerce channels to control two-thirds of the sales by 2030, according to latest data from strategy consulting firm Redseer shared exclusively with ET.

At present, kirana stores remain the most resilient channel for grocery shopping and hold a share of 91%, as opposed to modern retail’s share of 6% and 3% for ecommerce, it said.

Mayank Shah, vice president at leading biscuits maker Parle Products, said quick commerce has hurt ecommerce and modern trade sales the most, with ecommerce being a similar kind of channel and discount on large packs becoming like modern trade.

“There is an impact on kiranas, but its less in magnitude,” he said. What started as a channel for emergency daily staples and impulse snacks, is now being used for planned weekly replenishment orders and even monthly purchases, traditionally done either at supermarkets or ecommerce channels, said leading fast moving consumer goods companies.

Angshu Mallick, executive deputy chairman at AWL Agri Business, India's largest packaged edible oil company, said most ecommerce players, including Bigbasket, are transforming to quick commerce, which will accelerate this shift to the instant delivery model.

"After ecommerce and modern trade, the worst hit are the A-class kiranas in the metros. The share of quick commerce in total sales for us is also going up. For instance, in Delhi-NCR, almost 50-60% of our sales is from alternate channels driven by quick commerce," said Mallick. The Redseer report says the share of kiranas will fall to 86% over the next five years, but neighbourhood stores will still control most low-ticket, high-frequency purchases of Rs 100-200 that remain uneconomical for digital fulfilment at scale. Chhavi Singh, associate partner at Redseer, said within online channels, quick commerce will be the primary growth driver, expanding at twice the pace of slotted ecommerce grocery delivery.

"The growth of quick commerce is likely to have the most pronounced impact on convenience-oriented modern trade formats. Value-focused hypermarkets such as DMart are expected to remain resilient, given their strong price positioning and appeal to a large, value-conscious consumer base. However, supermarkets, which have traditionally competed on convenience, are likely to see a relative decline in share," said Singh.

For large FMCG companies such as Hindustan Unilever, ITC, Nestle, Dabur, Marico and Godrej Consumer Products, quick commerce has evolved into the fastest-growing channel for the last seven to eight quarters, with its contribution rising. For Tata Consumer Products, for instance, almost 18.5% of its total business came from ecommerce, including quick commerce, which is doubling in sales growth, while modern trade is about 14%. The Redseer data show that while kiranas are expected to grow at a compound annual growth rate of 7% till 2030, modern trade is projected to see a growth of 13% and online commerce, 29%. Within this, quick commerce is expected to see the fastest growth of 38% CAGR till 2030.

Swiggy, which runs its quick commerce enterprise under the Instamart brand, told investors on Thursday that quick commerce continues to "rapidly evolve as a preferred retail channel for more and more use cases of urban consumers."

Last quarter, the Instamart business grew at over 100% year-on-year, with average order value growing to Rs 746, a 7% quarter-on-quarter growth. The company said this rise is led by an upgrade in basket size - non-grocery's share in the sales mix has risen to over 32%, from 26% in the preceding quarter.

Large ecommerce platforms such as Flipkart and Amazon have forayed into quick commerce on a smaller scale to test the waters, retail chains like Reliance Retail and Spencer's Retail are delivering online orders within 30 minutes. Reliance Retail's management told analysts this month that it's on track to become the second-largest quick commerce operator.