Small Retailers Struggle as 10-Minute Grocery Apps Gain Popularity

Small Retailers Struggle as 10-Minute Grocery Apps Gain Popularity

Small Retailers Struggle as 10-Minute Grocery Apps Gain Popularity

Share This News

In India, the rapid rise of 10-minute grocery delivery apps is transforming the retail landscape, significantly impacting small neighborhood stores. Companies like Swiggy, Zepto, and Blinkit are leading this “quick commerce” revolution, offering unprecedented convenience to urban consumers.

The Quick Commerce Boom

In Mumbai, Swiggy’s warehouses operate at a frantic pace to fulfill orders within 10 minutes. Workers’ speed is meticulously monitored, and delivery bikers rush to meet the high demand. This business model, spurred by SoftBank-backed Swiggy and its rivals, is reshaping grocery shopping habits across India.

Goldman Sachs estimated that quick deliveries account for $5 billion of India’s $11 billion online grocery market in 2023. This segment is projected to grow significantly, potentially making up 70% of the online grocery market, expected to reach $60 billion by 2030.

Swiggy, originally a food delivery service, has pivoted towards groceries with its Instamart service. Targeting young, urban consumers who prioritize convenience, Swiggy plans to expand its warehouse count from 500 to 750 by April 2025.

The surge in quick commerce is causing distress among traditional grocers. For example, a Mumbai grocer has seen his daily sales halve due to the convenience offered by apps like Swiggy and Zepto. Patel’s experience is echoed by thousands of small retailers across India, with monthly sales dropping by 10% to 60% for some stores.

Retail associations are urging members to embrace technology, such as using WhatsApp groups for quick order-taking and delivery. Around 500 stores in Gujarat have implemented these innovations to sustain their business.

Financial Landscape of Quick Commerce

While quick commerce companies report high revenue, profitability remains elusive. Swiggy’s Instamart saw its annualized order value triple from $340 million in December 2021 to $1 billion by September 2023. Despite this growth, profitability challenges persist due to high promotional and marketing expenses.

Zomato’s Blinkit reported breaking even recently but anticipated near-zero operating profits in the near term.

Strategic Diversification:

To enhance profitability, companies are expanding beyond groceries. Swiggy now offers fitness products and electronics, while Blinkit has ventured into selling flowers and gifts, particularly successful on occasions like Valentine’s Day.

Swiggy aims to rebrand Instamart from a virtual “7 Eleven” to an “online supermarket,” indicating a broader product range and strategic shift.

The rapid growth of 10-minute grocery delivery apps in India is a double-edged sword. While offering unparalleled convenience to consumers, it poses significant challenges to traditional retailers. The industry’s future will depend on how well these quick commerce firms can balance rapid expansion with profitability and how small retailers adapt to the changing market dynamics.