India’s Home Delivery Biz Is Crammed. A Shakedown Is Coming

As the number of operators (b)reached the ‘dozen milestone’ in these sectors, even a growing market could not sustain all of them. Over-regulation and hyper-competition led to cut-throat pricing wars that maimed finances and hastened sudden death. Tens of thousands of crores in investments and lakhs of jobs were snuffed out overnight.

An eerily similar act is being played out in the home delivery space. Demand is soaring, new customers are opting for the convenience and ease of deliveries, ordering more and more.

The sheer number of firms vying for the pie, though, is fast melting the ice. As Zepto co-founder Aadit Palicha warns: “2025 will show that quick commerce requires exceptional execution to succeed. It will be challenging for every single player to deliver that level of execution.”

Revenue Numbers Too High To Ignore

It will indeed be a challenge to maintain marketshare, but the enormous opportunity size makes this space quite impossible to ignore. According to Statista, the online food delivery space will reach US$ 54.87 billion (Rs 4,77,369 crore) in revenues by March 2025, and 13.76 per cent CAGR will take it to US$ 91.88 billion (Rs 7,99,356 crore) by 2029.

The other new get-rich-quick kid on the block, the grocery delivery market, is projected to notch up revenues of US$ 40.06 billion (Rs 3,48,522 crore) by March 2025, with an annual growth rate of 22.1 per cent which will see market size rocket to US$ 89.03 billion (Rs 7,74,561 crore) by 2029.

Throw in medicines, electronics, fashion and apparel, auto accessories, trinkets and other goods — the list goes on. “Quick commerce has made consumers impulsive buyers,” says Karan Taurani of Elara Securities. “The rise of delivery services has increased demand at online platforms, turning them into market darlings,” he adds. This ‘darling’ status, too, draws many to the fold.

Comparatively, the food delivery business in China (whose population is less than India’s) is worth US$ 90.76 billion (Rs 7,89,647 crore), expected to grow at 10.6 per cent CAGR to US$ 135.81 billion (Rs 11,81,555 crore) by 2029. The size of China’s overall home delivery industry will rise to US$ 500.50 billion (Rs 43,54,350 crore) by 2029, says Research and Markets.

Reasons Behind The Runaway Numbers

Gastronomy and convenience are two big reasons for the growth, with an estimated 35.12 crore people expected to click on their phone screens to get instant delivery satisfaction by 2029 — one-fourth of India would be going online to get stuff delivered at home. The third-biggest growth factor is technology.

The home delivery trend extends beyond food, and it didn’t just arrive by magic one fine day. It has been there for years, growing in fits and starts. Auto expert and researcher Sharif Pinwala says: “There was a gestation period as people became accustomed to the idea of not touching, feeling and smelling their purchases. Once that was overcome, the floodgates opened.”

Paradoxically, the biggest trigger for this shift was COVID-19. The pandemic spurred home deliveries when people were forced to stay at home or opted to do so. Other than floodgates, it also opened up a Pandora’s Box, particularly for traditional mom and pop stores—for these shops, a lurking wannabe suddenly became a deadly adversary.

Delivery Boom Changing Lifestyles, Traffic Trends

It is not just us digging into burgers and ice-creams as we sit on our favourite couch, or trying on a new pair of jeans, sneakers or tube-top; lifestyles and the traffic on our roads have changed too. While the ease of home shopping and the aversion to crowded markets have boosted the delivery business, they have also sparked a jump in two-wheeler riders carrying our goodies to us.

For one, fashion brand Myntra used to deliver apparel the traditional way, in a day or two. It now does so in minutes with its quick delivery platform M-Now. Myntra CEO Nandita Sinha says: “Fashion is aspirational and thrives on a vast selection that empowers customers to style their look. M-Now will expand (fashion) possibilities and reshape lifestyle shopping.”

Changing lifestyle and buying trends have fanned the rush of companies into the delivery space. Euromonitor International says: “Households cooking at home have witnessed a visible decline as people ordered stuff in, driving home deliveries.” It didn’t provide a specific India number, but revealed that the APAC delivery market was US$ 1,300 billion in 2024 itself.

Research firm RedSeer adds: “India’s 2024 festive delivery market witnessed a 12-per cent YoY increase with a merchandise value of US$ 14 billion (Rs 1,21,800 crore), driven by rapid growth in Tier 2+ towns and cities. It was US$ 300 million (Rs 2,610 crore) in 2016.” Bottomline—quite a Happy Diwali.

The Firms That Bring Good Stuff To Your Home

The biggest stakeholders are Swiggy and Zomato, with 80 per cent of the delivery marketshare. There are plumes jostling to get a foot into your door — Zepto, Blinkit, Instamart, M-Now, Snacc, Bolt, Dineout, FreshMenu, Box8, Foodpanda, eat.fit and UberEats.

Then there are old favourites like Domino’s, McDonald’s, Behrouz Biryani, Fasoos and Railrestro. The last will deliver any cuisine to any railway station when you travel by train. And let’s not forget the lakhs of food outlets that have their own delivery guy on his faithful bicycle, pedalling his way to us.

Together, these 17 aggregators and firms (and lakhs of others on EVs and Atlas cycles) only make up the tip of the delivery iceberg. Courier firms like FedEx, Blue Dart, DTDC, Delhivery, Ekart Logistics, Ecom Express, DHL, Gati, Xpressbees are there too. And they are no slowcoaches either, having wizened up to the bigger opportunity and already re-focussing their sights.

With a cake so big, the number of people sharpening their knives is large too. That leads to the burning crux — there are simply too many of them, which is too good to last for too long. Business history tells us that when seething competition makes a deathly entry, discontent and worries follow soon.

Employee Discontent, Regulatory Concerns

Delivery companies also face headaches over and above accelerating competition. The first is that the staff are unhappy. Wages and benefits are minimal, while working hours are unwritten.

Most work because they have no alternative, and all work long hours because tips and handouts are a big part of their earnings. Thus, retention is a problem, and employees pilfering into delivery bags a nightmare.

There's a big worry on the regulatory front, too. Food deliveries have a complex regulatory environment that varies from state to state. Challenges include issues related to food safety, taxation, licensing and labour laws.

And for all delivery firms, regardless of the class of products, the classification of delivery personnel as ‘gig workers’ has led to legal tangles. The Goods and Services Tax (GST) also creates complexity in pricing structures and compliance requirements.

“Other than competition impacting profitability and leading to lower discretionary spends, regulatory hurdles are an overhang for quick commerce firms. Also, consumers are indifferent to platforms — they are only concerned about price, assortment and delivery time,” Anand Rathi Research says.

The ‘consumer expectation’ angle cannot be taken lightly. Just last month, this resulted in 3-4 times more Monthly Transacting Users (MTUs) for regular delivery firms, compared to those who offer only slotted deliveries, such as Big Basket and DMart Ready.

Clearly, the deck is stacked precipitously for India’s delivery firms. Dexterity, execution, staying power (read ‘funding’) and innovation will decide who keeps standing. Some may merge operations, taking a leaf out of telecom and aviation history. Others may become history.

(The writer is a veteran journalist and communications specialist. Views are personal)