The rise of quick commerce has affected kirana sales, with 46% of quick-commerce shoppers reducing their purchases from kirana stores, the report said. More than 82% of buyers have moved at least 25% of kirana purchases to quick commerce, while 5% of those who responded to Datum Intelligence’s survey stopped buying from kirana Shops, it added.
“After Covid, a lot of customers have experimented with online grocery and there is a buyer base who is ready to pay for convenience. So, once these companies were able to solve two things — one is the supply chain, second is the fulfilment rate — that is where quick commerce picked up and now more and more customers are looking for convenience,” Satish Meena, an adviser at Datum Intelligence, told ET.
Currently, unorganised retail holds 92% of India’s grocery market, the report said. India’s grocery market relies on frequent small purchases, making quick commerce the preferred choice for everyday essentials over modern retail for many.
“Grocery and beauty and personal care are the two categories where the shift from kirana to quick commerce is more significant,” said Meena.
Quick commerce also saw a significant boost during this year’s Diwali festive season, generating around $1.1-1.2 billion in sales.
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According to new-age logistics firm Delhivery’s chief executive Sahil Barua, quick commerce is impacting kirana stores.“The reality is that quick commerce is impacting kiranas, and the reality is that its impact on ecommerce is not as large as it is on the larger retail ecosystem. The fundamental SKUs (stock keeping units) are the difference between larger ecommerce and quick commerce … Even if quick commerce expands its total number of SKUs, it’s going to look a lot like ecommerce, where the large players have entrenched advantages,” he said during an earnings call Thursday.
Distributors on the ground are unable to recover dues from kirana stores due to the negative impact on kiranas by digital platforms, Elara Securities said recently in a note.
Quick commerce is expected to grow 74% in 2024, making it the fastest-growing channel as compared to ecommerce and kirana in the 2023-2028 forecast period, with an expected compound annual growth rate of 48%, the Datum report said.
According to the report, fast delivery emerges as the primary motivating factor. However, discounts and pricing remain a key issue for customers and play a vital role in wider adoption of these platforms, especially in small cities.
The quick commerce market is expected to reach $40 billion by 2030 as more and more customers are willing to pay for the convenience of immediate and on demand purchases.
This is also leading to more competition among the top players like Zomato-owned Blinkit, Swiggy Instamart and Mumbai-based Zepto that are expanding dark stores and SKUs in order to drive growth.
Blinkit opened 152 new dark stores or warehouses in the second quarter, bringing its total to 791 as of September 30. Rival Swiggy Instamart has around 557 dark stores as of June 30 and plans to take it to 741, while Zepto has surpassed the 500-store mark and is on track to hit 700 by March.
Despite this, quick commerce platforms have been denying the impact on kirana stores. According to Meena, while these platforms readily acknowledge that they are capturing a portion of the ecommerce market, they are reluctant to admit that they are impacting kirana stores.
Blinkit, Swiggy Instamart and Zepto did not comment.
Zomato founder and chief executive Deepinder Goyal had said earlier that quick-commerce platform Blinkit was not affecting local kirana shops but was instead drawing business away from ecommerce platforms. In its July quarterly report, Blinkit said it was not taking market share away from small mom-and-pop kirana stores or value-focused large-format retailers such as Dmart.
The quick-commerce sector is seeing significant activity with several companies trying to enter the space as well as raise capital. Flipkart has launched a quick-delivery service, Minutes, while Reliance Retail has re-entered the sector and Amazon is gearing up to launch its own service. On October 28, ET reported that Tata Group’s e-commerce platform Neu is set to enter the quick-commerce market under the brand Neu Flash, offering groceries, electronics and fashion.
“Everyone has decided that quick commerce is the model to cater to online grocery buyers at this point of time,” Meena said.
