By: Heet Dhawale; Edited by: Parisa Chatrath
Imagine it’s 12:05 AM, and you urgently need a charger, some snacks, or medicine. With innovative quick commerce, the convenience of ordering and receiving that item within minutes has become a reality. Quick commerce, or “q-commerce,” emerged as a solution during the COVID-19 pandemic and has since revolutionized consumer expectations by offering ultra-fast, on-demand deliveries, typically within 10 minutes. The quick commerce space, superficially simple yet inherently complex, has been of intrigue to many, including myself. Let’s dive deeper to see exactly what will drive the growth in this sector to help achieve a CAGR of almost 45% in the next 7 years!
BUSINESS MODEL OF Q-COMMERCE
To understand the sector, let’s look into the complex workings of the business model. Looking at the infrastructure, the business operates through a mother warehouse and dark stores. Dark stores are small supermarkets spread over 2,500-4,000 sq. ft. area optimized to carry a wide range of inventory. These are utilized through a third party generally so that the firm does not have to invest in the highly priced inventory. Q-commerce operates through a network of strategically located micro-warehouses that stock high-demand products close to high-density neighborhoods. These micro-fulfillment centers enable rapid response times since items don’t travel far to reach the customer. This is the backbone of the quick commerce model, allowing for short delivery times and high convenience.
Technology becomes another important factor. As the order is placed, the technology alerts the store and the delivery incharge picks it up. The app then guides the individual through the roads with live traffic updates to ensure minimum friction. Additionally, an important aspect is the supply chain[2] [3] of the inventory, which mainly comprises the distributors, the brands directly and the farmers for the food and vegetables. It involves partnerships with distributors for bulk goods, direct sourcing from brands for authenticity, and farm-to-platform models for fresh produce, reducing middlemen and ensuring quality. The strategically located dark stores near urban hubs are stocked with high-demand items. Advanced inventory management and demand forecasting technologies keep these stores optimized, reducing waste and ensuring availability. The companies do not have to account for the cost of inventory as they do not buy anything from the companies but only rent their spaces for their inventories to be stocked.
Another important aspect is the delivery. Alongside technology, the efficiency of delivery riders plays a crucial role in ensuring rapid fulfillment. These riders are strategically positioned near dark stores, enabling them to pick up and deliver orders within minutes. Advanced route optimization tools and real-time traffic updates further streamline the process, minimizing delays. Together, these elements create a seamless experience for customers, making quick commerce a game-changer in modern consumer habits.
FROM GLOBAL SCALE TO UNIT ECONOMICS
This space becomes interesting when we think about the absence of established global players in this field. In today’s world, we are so used to consuming products that are owned by a few companies that this field seems unsustainable. In India after COVID, many players entered this space, backed by big names. Examples include Ola Mart, JioMart Express. However, they were all consolidated due to the complexity of the business model, lack of clarity over sustainable unit economics and a prolonged funding winter for VC investments. Now only four major players remain, out of which three have a complementary brand.
Yet looking deeper, analysis and logic indicates that this field requires complex thinking and extreme patience to breakeven. For a sector or business to be viable, every unit it produces should be able to turn in some profit.
The profitability potential of companies here is a long-term and patient game. Let’s break it down into the revenue and costs to see where the potential lies. The revenue is majorly divided into three sources: Commissions, Ad Revenue and Delivery Fee. The costs include Inventory Costs, Lease Costs, Cost Per Delivery, Customer Experience and Refund Costs and Customer Discounts. We can get even more granular but the point to note is that the costs highly outweigh the revenue in the beginning. And to turn those costs into revenue requires groundwork that takes effort and time to materialize. The future has the potential to increase revenue while decreasing the cost through various exogenous and endogenous variables.
The time and effort needed in this space are evident, with Swiggy’s Instamart taking 9 years to break even and competitors like Zomato’s Blinkit aiming for profitability by FY25. The potential to overturn losses into profits hinges on factors such as economies of scale, operational efficiency through AI and automation, dynamic pricing, and ad revenue. Customer retention strategies, strategic partnerships, data-driven demand forecasting, and supportive regulations can further reduce costs and boost income. As consumer reliance on quick-commerce grows, these variables collectively pave the way for long-term profitability with patience and strategy.
The sheer time and effort in the space can be seen with the examples. Swiggy’s Instamart broke even at its EBITDA level 9 years after its launch. Similarly, other competitors are on their path with Zomato’s Blinkit signaling turning positive by FY25. Others like Zepto and BB Now are finding it difficult to maintain their expansion and margins at the same time.
WHAT WORKS WELL AND WHAT DOES NOT?
With people now depending on last minute deliveries, this has started to integrate itself as a need. Many questions come into mind, will 10 minute delivery become 5 mins and go even lower? Will this dream only ever be for the urban cities of India? Looking at the pattern we observe that the current focus remains on densely populated urban centers, especially Tier 1 cities like Bangalore, Mumbai, Delhi, Hyderabad, and Chennai, with an increasing presence in Tier 2 cities as well. This focus is strategic: Tier 1 cities have higher population densities, greater disposable incomes, and more tech-savvy consumers who value convenience and are willing to pay for rapid delivery services. By targeting these markets, quick commerce platforms can maximize order volumes and revenue potential per location, leveraging existing consumer demand and infrastructure to support rapid delivery times.
The ability to leverage the data their consumers leave at every step is a goldmine the companies can tap into. Ishmohit’s analysis highlights how if one goes in a mall store and looks at iPhone 15 in Midnight Blue, they might or might not know. Imagine spotting a PS5 in your neighborhood, and within minutes, it’s at your doorstep. This is the magic of last-mile delivery—a critical factor that can either elevate or hinder the success of a business. While it often functions seamlessly, it remains a significant challenge to scalability.
CONCLUSION
The quick commerce industry has introduced a revolutionary way of shopping, yet its future trajectory raises many questions. As players like Zepto strive for profitability amidst fierce competition, their approach contrasts with Swiggy Instamart, which has already broken even after years of groundwork. Consumer behavior also adds complexity—why do some prefer Blinkit over Swiggy Instamart despite comparable services? Is it loyalty, user experience, or simply pricing?
Scalability remains the sector's biggest challenge. While rapid expansion into Tier 1 and Tier 2 cities is promising, logistical hurdles, cost pressures, and infrastructure limitations could hinder growth. The critical question is whether this model, designed for instant gratification, can transcend urban markets and reach the masses. Will it evolve into an indispensable utility or remain a luxury for the privileged few?
The future of quick commerce will likely depend on its ability to solve these challenges. Innovations in AI, dynamic pricing, and strategic partnerships will drive operational efficiencies. But the core issues—scalability, profitability, and consumer loyalty—will decide whether quick commerce remains a lasting disruptor or a fleeting trend.
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