The Rise of Quick Commerce in India

Syllabus: GS3/ Economy

Context

• Quick commerce , altering India’s retail and last-mile delivery landscape, stands out as a prominent trend in the country’s e-commerce sector.

What is Quick Commerce?

• Quick commerce, a subclass of e-commerce, refers to the rapid delivery of goods, primarily groceries and essential items, within a very short time frame, typically in 10 to 20 minutes. 
• This model relies on hyperlocal fulfillment centers, dark stores, and robust supply chain management to ensure fast and efficient delivery. 
• The Indian quick commerce market is presently valued at $3.34 billion and is expected to reach $9.95 billion by 2029. 
  • The industry grew 76% YoY in FY 2024.

Growth drivers of quick commerce market

• Changing Consumer Behavior: Urban consumers prefer instant gratification and convenience, making quick commerce an attractive option.
• Internet Penetration: The widespread use of mobile applications and digital payment systems has accelerated Q-commerce adoption.
• Technological Advancements: AI-driven inventory management, data analytics, and last-mile delivery optimization have made quick commerce viable.
• Affordable Workforce: Availability of low-cost manpower enhances efficiency.

Benefits of Quick Commerce

• Urban Convenience: Quick commerce delivers essentials like groceries, medicines, and personal care products within 10-30 minutes.
• Employment Growth: Expands the gig economy, projected to reach 23.5 million workers by 2029-30.
• Tech & Innovation: AI-powered demand forecasting, route optimization, and micro-warehousing models. Companies like Zepto use machine learning to manage inventory efficiently.
• Tier-2 & Tier-3 Expansion: 60% of e-commerce growth is from smaller cities.
• Emergency Support: Quick commerce helps in emergency situations, providing fast access to medicines, baby products, and essential goods. For example: recently launched Ambulance by Blinkit. 

Favourable Government Initiatives

• Digital India has transformed India’s digital infrastructure, increased digital literacy, and promoted e-services.
• Start-up India has created a favourable environment to encourage innovation from new-age start-ups.
• UPI and RuPay have simplified digital payments, offering seamless banking access.
  • BharatNet has expanded broadband connectivity, boosting quick commerce and e-commerce in underserved areas.
• Open Network for Digital Commerce (ONDC) has increased the reach of India’s quick commerce and e-commerce ecosystem by onboarding smaller vendors onto digital platforms.
• 100% FDI is permitted through the automatic route in entities engaging in B2B models to encourage the participation of foreign players.

Concerns associated with quick commerce 

• Gig Economy Issues: Delivery executives face job insecurity, long working hours, and lack of social security benefits.
• Anti-Competitive Practices: Predatory pricing and deep discounting to eliminate competitors.
  • These platforms have deep pockets because of the inflow from venture capitalists and/or foreign direct investment.
• Data Exploitation: Differential pricing based on user data, location, and purchasing behavior.
• Impact on Traditional Retailers: Small retailers struggle to compete, leading to business closures and financial losses.
• Quality Assurance: The rush to deliver products quickly compromises product quality, packaging, and safety standards.

Way Forward

• Fair Employment Practices: Companies should focus on providing better wages, insurance, and incentives for delivery personnel.
• Integration of Local Kirana Stores: Strengthening partnerships with local retailers can ensure broader market participation and economic inclusivity.
• Technological Upgradation: Leveraging AI, blockchain, and IoT can enhance efficiency while maintaining quality and compliance standards.

Concluding remarks

• Quick commerce is reshaping India’s e-commerce with unmatched convenience. 
• A balanced, well-regulated approach is needed to address sustainability, labor rights, and environmental concerns, ensuring long-term benefits for all stakeholders.

Source: TH