Various food and grocery delivery aggregators have registered a record rise in orders during the festive season. Industry experts are inclined to discern this surge as an indication of convenience taking an edge over loyalty toward the neighborhood kirana stores.

Zomato CEO Deepinder Goyal said on X that the food delivery platform delivered almost as many orders on December 31, 2023, as it did on the New Year's Eve between 2015 and 2020 combined.

Albinder Dhindsa, co-founder of Blinkit, which champions itself as “India’s Last Minute App”, said that the grocery delivery platform recorded its highest-ever orders on December 31 this year. Swiggy, Zepto, and other food and grocery delivery platforms also registered a significant uptick in order volume.

But do these numbers suggest that trust in online delivery platforms is increasing?

“These trends indicate that quick commerce will continue on an upward trajectory not only in the tier I cities but also in tier II and III cities. I believe, convenience has made the big difference,” said Sapna Popli, Professor of Marketing at the Institute of Management Technology, Ghaziabad.

Popli said the hyperlocal model employed by these players has also helped them meet delivery deadlines. “I see the quick commerce segment marching on toward a growth trajectory.”

A recent India Brand Equity Foundation (IBEF) report has suggested that the e-commerce sector is estimated to grow at a compound annual growth rate (CAGR) of 27 per cent to reach US$ 163 billion by 2026. It said the grocery delivery segment is likely to be among the driving factors in propelling India’s e-commerce sector to US$ 100 billion by 2024.

What’s Behind The Surge?

While quick commerce is believed to be driven largely by young shoppers, older generations too have begun adapting and trusting the technology. There are several other factors that may have acted as a catalyst for the boom in the quick commerce sector. These are increasing internet penetration, availability of affordable smartphones, convenient shopping processes in the digital age, and improved logistics due to an expanding network of warehouses.

The growth in warehousing and logistics has helped e-retailers deliver to 15,000-20,000 pin codes out of the total 100,000 pin codes in the country, according to the IBEF report. As the smartphone user base is likely to surpass 88 million by the end of the decade, the consumer base is likely to increase as well. And most of these new consumers are expected to come from tier II and tier III cities.

What does this mean for quick commerce players? They would need to evolve and innovate to cater to the demands of these new customers, who may not be so well adept at the technology or familiar with the delivery-at-your-door-step idea.

For this, they can make use of Artificial Intelligence (AI) – for boosting user experience and data analytics. “AI is hastening the need, want, desire, and aspiration assessment cycles of consumers. AI can be a big help in locating micro-stocking points across cities and towns for quicker delivery. I expect a lot of traction and action in this space,” said Harish Bijoor, a brand consultant.

Outlook For Tier II And III Cities

While metro cities like Bengaluru, Mumbai, and Delhi contribute hugely to e-commerce, some studies have said the next surge could come from tier II and tier III cities. A report by EYnoted that 80 per cent of Indian consumers prefer to shop on their smartphones and 53 per cent of them come from non-metros.

Industry experts said e-commerce platforms should include regional languages in their application interface to provide better service to the consumers in these areas. Using local languages can also help regional quick commerce players who may not have deep pockets to challenge the big wigs.

“Regional players can operate with a cloud distribution model that is quicker than the bigger players. Today, small is beautiful, and small is nifty and fast. And of course faster delivery wins,” said Bijoor.

Therefore, tweaking the user interface to suit the regional consumer base better could be a game changer for quick commerce players in tier II and tier III cities.

However, Professor Popli explained that there are other factors slowing down the onboarding of consumers in non-metro cities. Among them is the fact that grocery and fresh food products are often cheaper off-line in tier II and tier III cities.

“I believe regional players can emerge in quick commerce segments as the competition is quite different from that of tier I cities. There is a need for regional players to understand the local needs better so that they can cater to it faster in order to grow in in tier II and tier III cities,” she said.

A Deloitte report suggests India’s new commerce segment accounts for 1.7 per cent of overall retail sales, compared to China's estimated 5 per cent. However, India’s new commerce is expected to grow eight-fold in the next eight years. This expected rise is likely to help India match China’s growth in retail sales quickly.