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Quick-commerce (q-commerce) platforms in India must adapt their business models for markets beyond major metros to sustain profitable growth, according to a report by Bain & Company and Flipkart.
The report stated that these platforms have managed to improve their profitability by increasing order values, reducing supply chain costs, and improving margins through direct sourcing and additional revenue streams like advertising and platform fees. The report said "to sustain profitable growth, companies must adapt their business models for markets beyond major metros, manage rising competition, and optimise supply chains as the market evolves into a two-speed proposition-- offering select products in under 15 minutes and a wider assortment within an hour." The report highlighted that q-commerce, which initially focused on delivering groceries, has expanded to categories like mobile phones, electronics, general merchandise, and apparel. Currently, around 15-20 per cent of its gross merchandise value (GMV) comes from these non-grocery segments. The industry is expected to grow at over 40 per cent annually through 2030, driven by expansion across new geographies and customer segments. Despite its rapid growth, q-commerce faces challenges such as rising competition and the need for a more efficient supply chain. The market is evolving into a two-speed model: delivering select products in under 15 minutes and offering a wider range within an hour. This shift requires businesses to rethink their logistics and delivery strategies to maintain efficiency and customer satisfaction. While q-commerce has expanded beyond the top six metro cities, these urban hubs still contribute the largest share of revenue. However, with increasing demand in smaller cities and towns, companies must fine-tune their business models to cater to these regions effectively. India's q-commerce sector has performed better than its global counterparts due to its unique advantages. The country's high population density and availability of low-cost dark stores (warehouses that serve only online orders) have played a crucial role in this success. These factors have enabled Indian players to scale profitably while offering consumers better deals and faster deliveries. Q-commerce is already transforming shopping habits in India. Over two-thirds of the online grocery and about 10 per cent of the total e-retail spending now happens on q-commerce platforms. The industry's future growth will depend on how well companies manages to balance speed, efficiency, and expansion into new markets while managing competition and cost pressures. (ANI)
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