Flipkart Minutes and Quick Commerce Olympics

Every four years, during the Olympic Games, we see the spirit and competition that become stories and legends. Records are broken and new challengers emerge. It is similar with fast trading in India, where Flipkart Minutes to join the field.

And like any athlete looking to challenge the leaders, Flipkart is fully prepared and openly eager to capitalize on the potential of fast commerce.

Coincidentally, the fast-paced trading model gained popularity four years ago, before the pandemic pushed the 2020 Olympics to 2021. Covid has upended plans on the sports side and has certainly changed the rules of the e-commerce game as well.

This shift is most evident in how Flipkart sees the category. Whereas instant delivery used to be for essentials, today it’s pretty much everything.

While Flipkart Minutes is still in its infancy, there are valid reasons why the current operators – Blinkit, Zepto and Swiggy Instamart – have reason to be concerned.

Before we find out why, let’s take a look at the biggest stories from our newsroom this week:

Learning Quick Tricks of the Trade

Flipkart had already made several attempts to introduce grocery delivery in 2015 and again in 2017. The first one was Flipkart Quick, which offered deliveries within 30-90 minutes in some cities, which was followed by Flipkart Supermart in 2017. Flipkart Quick was then discontinued in November 2022.

Supermart had the best chance of success, but instead of expanding defunct stores in multiple corners of the country, Flipkart opted for fulfillment centers that had a larger assortment and typically a wider distribution reach.

The dark store model has more or less become the only way to do fast commerce. Blinkit, Instamart, Zepto have all taken this route, and Taty’s BigBasket is also following this path.

This time, Flipkart has gone with the stealth store model and is competing in every category that Blinkit, Zepto and Instamart added last year.

Flipkart Minutes currently offers free shipping on all orders above INR 99 and also charges a platform fee of INR 5 per order.

The division is headed by Hemant Badri, who is vice president and group head of supply chain at Flipkart. His appointment indicates that Flipkart sees supply chain as a key part of its business.

Flipkart plans to open 100 dark stores in major cities. But Blinkit, in comparison, currently has over 639 dark stores. The Zomato-owned company aims to have 2,000 dark stores by the end of 2026. In terms of scale, Flipkart has a lot of catching up to do.

Sources say Zepto is on track to double the number of its dark stores to over 700 by March 2025. The company recently received a massive cash injection of $665 million to fund this expansion.

Swiggy’s Instamart is also expanding its network ahead of an initial public offering in 6-12 months. In recent months, the company has been focusing mainly on short-term trading, where it has seen significant revenue growth.

Flipkart Advantage

Flipkart may be benefiting from a large user base, as well as strong brand recognition in smaller cities where Blinkit or Zepto may not have made inroads yet. Blinkit has done remarkably well in the last two years, but much of that is due to the metropolitan consumers.

Most or 80% of the new stores that opened in the last quarter were in the top eight cities, with Delhi NCR seeing the most investment. Delhi NCR is also the largest contributor to Blinkit’s GOV and revenues, and is well ahead of the other 25 cities where Blinkit is currently present.

Earlier this week, Drools CEO Shashank Sinha had predicted that Flipkart Minutes would overtake other quick commerce players in smaller cities. Speaking at The D2C Summit by Inc42, Sinha said Drools joined hands with Flipkart Minutes because Flipkart can grow quickly in these cities, even though the service is currently only available in Bengaluru.

Flipkart has in the past introduced same-day delivery services for many products in 20 cities in India, including Ahmedabad, Bengaluru, Bhubaneswar, Coimbatore, Chennai, Delhi, Guwahati, Hyderabad and Indore. So it has the capabilities in place to meet the logistics needs of fast-paced trade in these cities, many of which are likely to get their first taste of instant delivery.

The fact that Blinkit, Zepto and Instamart are yet to penetrate the country gives Flipkart an opportunity. Earlier, Zepto co-founder and CEO Aadit Palicha had said that India’s top 40 cities provide Zepto and other instant commerce platforms with ample room to grow. “If we do the job well, we can realistically scale this business from INR 10,000+ Cr today to potentially INR 2.5 lakh Cr in the next 5-10 years,” Palicha said, even though Zepto is currently present in just 10 cities.

Flipkart’s entry into the fast-paced retail space ahead of the 2024 festive season is also significant as it allows the company to get the right mix of volume and order value. In this regard, Flipkart’s entry into non-grocery categories is key.

Zomato, in its latest letter to shareholders, said that more and more non-food e-commerce users are moving to quick commerce. D2C founders also believe that there is a shift of brands and customers away from marketplaces and towards 10-minute delivery.

For example, Swiss Beauty co-founder Mohit Goyal highlighted that instant commerce has become the preferred method for making urgent beauty purchases, a category that was never served before the introduction of 10-minute deliveries.

Where Flipkart Minutes stands out

And the fast-paced retail trend has also made its way to fashion and food delivery startups. That’s when Flipkart Minutes decided to go all-in, offering a slew of electronics products and some items like cameras and large printers that aren’t currently available on Blinkit.

The number of SKUs in each category on Flipkart Minutes might mislead some and make them think that Flipkart has transformed its entire platform into a fast-paced marketplace. Although, to be fair, this is currently limited to only a few postal codes in Bengaluru.

In the short term, the company will have to invest heavily to scale up Flipkart Minutes. The $1 billion funding round led by Walmart and with Google as a backer will certainly come in handy in that regard. But it will also have to restructure its distribution for fast-paced commerce, from fulfillment warehouses to smaller, dark stores and limited SKUs.

While Instamart, Blinkit, and Zepto have recently added thousands of SKUs to their grocery aisles, as well as new categories, their customer base is skewed towards urban users. It is not yet clear whether Flipkart Minutes can unlock the same appetite for new brands and faster deliveries of value-added items in smaller cities.

Given this, it is very likely that some Flipkart Minutes properties will serve dual functions: as warehouses for intercity deliveries and as dark stores for hyperlocal fast commerce. The exact model is yet to be determined.

Flipkart Minutes is a key part of the e-commerce giant’s super app. It also invests in growth areas like digital lending, insurance distribution, travel and fashion verticals. But none of them has the revenue potential that fast-paced commerce offers.

Goldman Sachs estimates that Blinkit is already worth more than Zomato’s food delivery operations. Zomato’s fast-trading revenue grew by about 2.5X YoY to INR 942 Cr and adjusted EBITDA loss also improved to INR 3 Cr in Q1 FY25. The change from adjusted EBITDA loss of INR 133 Cr in Q1 FY24 caught the attention of many.

Blinkit is on the verge of breaking even after shifting from its legacy hyperlocal model to fast commerce in 2022, with 78.8 million orders in the last quarter and a monthly transacting user base of 7.6 million, a benchmark for Flipkart Minutes and other fast commerce competitors.

When it comes to competition, the Indian market is very competitive, but there are also huge companies like Zomato, Swiggy, Flipkart, Reliance Retail, BigBasket, and Zepto.

Everyone will want to justify their investment in fast trading, and there will be a situation where the market will be divided between five or six players. It will be interesting to see which of these giants will lose patience first and want to end the battle of attrition by taking over their rivals instead of playing long and patiently.

Will Flipkart be on the right side of the market when this happens?

Sunday Wrap-Up: Tech Stocks, Startup Funding, and More

• Startup funding totals for the week fell by half from the previous week, with startups raising $112 million in 22 deals last week
• Ola Electric debuted on the market unchanged, trading at INR 75.99 against an issue price of INR 76. However, by the end of the week, the shares were trading at INR 91, which was 20% higher than the issue price

• E-commerce giants FirstCry and Unicommerce are also set to go public in the first half of next week after their IPOs ended this week with both companies significantly oversubscribed
• BYJU’S US lenders have filed an appeal in the Supreme Court of India against the NCLAT decision to quash the bankruptcy proceedings against the company
• Economic Offences Branch has made an arrest in connection with the alleged BharatPe scam and detained a person linked to the fake sellers who were allegedly paid by Ashneer Grover and Madhuri Jain Grover