Quick commerce to stay competitive, food delivery remains profit engine: Bernstein Research

It stated "Quick Commerce will remain intensely competitive... Food Delivery is the cash machine".

According to the report, the quick commerce (QC) segment caters largely to about 70 million money-rich, time-poor consumers living in dense urban areas who place a high value on convenience.

Bernstein estimates this segment to be a USD 35 billion market by FY30, with QC increasingly taking share from traditional mom-and-pop stores, especially across the top 40 cities.

The report added that modern trade continues to cater to a different consumer use case and is also expected to grow steadily.

The report noted that store location, consumer data, and operational rigor remain the key value drivers for the quick commerce business. These factors give incumbents a significant first-mover advantage.

However, Bernstein disagrees with the notion that quick commerce will be a "winner-takes-all" market. Unlike network-effect-driven platforms, quick commerce benefits mainly from scale effects.

This means that while leaders enjoy better profitability profiles, the overall profit distribution is not as concentrated as in the food delivery space.

Bernstein expects Blinkit, Instamart, and Zepto to continue to dominate as the top three players in the quick commerce market and to remain profitable despite the heightened competition.

On the other hand, the report described the food delivery (FD) segment as the "cash machine" of the online commerce ecosystem.

The phrase "Food delivery is the cash machine" means that food delivery is the main source of profit and steady cash flow for companies operating in the online commerce space.

However, the growth in food delivery has slowed to below 20 per cent as the "channel-shift phase", during which demand shifted from dine-in and offline delivery to online platforms -- has largely ended.

This trend is structural, as the share of food delivery in organized, higher average order value food services has already reached between 30 and 50 per cent.

The report also pointed out that the genericization of GLP-1 drugs, expected by mid-2026, could further dampen growth, as seen in other global markets.

To sustain a 16-18 per cent net order value growth, food delivery platforms will need to innovate through shorter delivery times, promotion of gourmet or healthier options, and enabling lower-value orders. However, margins are likely to remain range-bound despite the growth in scale.

Bernstein further highlighted that the "Top-5 per cent" of Indian consumers -- about 70 million people with a per capita GDP of around USD 20,000 -- represent an USD 80 billion relevant wallet by FY30.

These consumers are willing to pay for both convenience and quality. Sustainable business models, therefore, will require companies to consolidate transaction frequency across different use cases and capture a higher share of wallet from these premium customers.

To achieve this, companies may need to expand beyond their current offerings in quick commerce and food delivery by exploring new areas such as dining out, events, and entertainment ticketing, creating fresh growth opportunities through continued innovation and investment. (ANI)