I have been surprised with quick commerce’s 13,000 Cr explosion in the past few years
Everyone has written off quick commerce globally. Europe’s Getir reached $11B in valuation in 2021, only to collapse to $2B in 2022. Gorillas folded in 2022. 2021’s peak mania was followed by 2022’s articles on “quick commerce is quickly gone” in India. Unit economics didn’t work, money was burnt, and it was a pandemic-fueled fad.
Except, it is turning out to be Indian e-commerce’s potential 50,000 Cr star
India’s grocery market is growing at $700B. The online grocery market is $10Bn, or 1L crore. Quick commerce has cornered an astonishing 13% of online. But it is just scratching the surface of overall grocery, barely at 0.1%. India’s top 1% holds 22% of India’s total national income. I suspect 20% of groceries are also bought by these 1%, or 14 million people.
India is so large that serving grocery to the 1% rich could potentially yield $1B+ companies
The 1% in India is a unique beast. Some believe they value time, others say they are lazy. Almost everyone concurs that they want to be “spoilt”. The new generation of well-earning raja beta or beti doesn’t want to go and shop for groceries. They don’t want to plan. Most importantly, they don’t want to wait.
Quick commerce is magical for this problem statement
But the 1% can also want the moon. Unfortunately, it costs millions of dollars to go there. The magic has to make money too. Here is where India’s unique demography comes in. Indian megacities are highly dense. Additionally, most of the 1% live close together. Logistics costs go down. As rich as the 1% are, labour costs are also low. Countries like the US struggle due to manpower costs, but not India.
The 1% premium price combined with lower logistics and labour costs keep the magic going
Kirana stores will perhaps feel the most pain with this explosion. It is a giant, disorganized market that may face its biggest reckoning. The killer use case for the Kirana apps was quick commerce. Perhaps a Shopify for quick commerce emerges to compete with full-stack quick commerce players.
The bull case for quick commerce could be quite big, and as most VCs love, fast
The economics of the model have yet to play out, and the market size has yet to be proven. It is still a few years old, and I am myself watching keenly. But it has taught us all, especially investors, that we cannot tell the future. Excellent surprises like these keep us humble.
Rooting for quick commerce to succeed both as a customer and a curious analyst of businesses