Racing against time: How offline grocers are adapting to the quick commerce surge

Quick commerce disruptors such as Blinkit, Zepto, and Swiggy Instamart have taken urban India by storm, promising deliveries in minutes and transforming how consumers shop for essentials. “Quick commerce is changing the game for us. There is intense competition,” said Niyaz KN, director of Bengaluru-based MK Retail.

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Since convenience reigns supreme, offline retailers are rethinking strategies to retain their footing in this fiercely competitive market. A key part of their adaptation lies in partnering with third-party logistics providers, who are also benefiting from the growing demand for faster deliveries. At the same time, some retailers are also adding strength to their in-house delivery fleets.

Adapting to the quick-commerce race

MK Retail, for example, is slashing its home delivery window from 30 minutes to just 15 minutes, according to Niyaz. By partnering with logistics providers like Loadshare and PhonePe’s Pincode, MK Retail is looking to capitalize on the quick commerce trend while maintaining its strong foothold in physical retail.

similarly, The Organic World, another Bengaluru-based retailer known for its gourmet offerings, is eyeing a delivery window of under two hours, with plans to bring it down to just one hour in the coming months, according to Gaurav Manchanda, founder and director of the company. It currently offers next-day deliveries.

In June, offline retail giant Reliance Retail began piloting one-hour delivery of groceries and fast-moving goods in select areas of Mumbai and Navi Mumbai, according to media reports.

Improving the online-ordering experience is crucial to staying competitive, Manchanda said.

Other stores like Ratnadeep Supermarket and RP Sanjiv Goenka Group’s Nature’s Basket are experiencing similar pressures as they adapt to shifting consumer expectations.

The Rise of Quick Commerce

India’s quick commerce sector is booming. In 2023 alone, the market grew 77%, reaching a GMV (gross merchandise value) of $2.8 billion, according to Redseer. However, this phenomenon remains largely confined to major metro cities, where consumer habits have evolved to favor the ultra-fast delivery of daily essentials.

Currently, traditional trade—small local shops, chemists, grocery stores—still accounts for 88% of fast-moving consumer goods (FMCG) sales across the country. In metros, e-commerce has carved out a 7.2% share of the FMCG market, with quick commerce playing a growing role in this space, according to NielsenIQ.

Platforms like Blinkit have emerged as leaders in this sector, commanding a 46% market share, followed closely by Zepto and Swiggy Instamart. Together, Blinkit and Zepto control 60-65% of the quick commerce market, according to Karan Taurani, an analyst at Elara Capital.

These platforms have capitalized on consumers’ demand for speed and convenience, reshaping the grocery retail experience in top-tier cities like Delhi, Mumbai and Bengaluru.

“So many of us order groceries every day depending on what we want to cook that day. I want the convenience of receiving my order in 10 minutes,” said Mahima, a 24-year-old Mumbai resident.

Logistics and scaling strategies

Offline retailers are paying attention to the consumer’s voice, and adopting a dual strategy: investing in logistics to compete with quick commerce while maintaining their core strength—walk-in customers.

“There is intense competition. We have to revamp our sales approach,” said MK Retail’s Niyaz. Currently, online orders account for 10% of its overall sales.

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The logistics game is crucial. Many offline retailers are partnering with third-party logistics providers to scale up quickly, while also investing in their own in-house delivery fleets to maintain control over the customer experience.

MK Retail, for example, operates 12 delivery partners within a 3-5km radius but supplements these with third-party partnerships to ensure it can meet rising demand.

“While these workers can fulfill only limited orders per day, our tie-ups with third-party logistics firms as well as Ola and Loadshare will help take our share of online orders to 15% from 10% in the next few months,” Niyaz noted.

The Organic World, which currently has 20 stores, is also eyeing expansion of physical stores that will double up as dark stores for faster deliveries, according to chief executive Manchanda.

“To cut down the delivery window, we will likely expand our fleet, optimize delivery routes to improve delivery efficiency, and reduce travel time, increase the number of our stores across the city so that effectively double up as dark stores for delivery, improve inventory management so that the high-demand products are always in stock,” he added.

Bonanza for logistics companies

Logistics companies like Shiprocket and Borzo have also benefited from the rising demand.

Shiprocket’s recently launched quick-delivery vertical, Quick, has tied up with multiple department stores in multiple cities including Delhi-NCR, Bengaluru, and Mumbai in the last two months, enabling deliveries within minutes.

“As consumer demand for faster deliveries continues to surge, especially during the festive season, Shiprocket Quick allocates riders in under 10 seconds and often ensures order pickups in under 5 minutes,” Gautam Kapoor, co-founder and chief operating officer of Shiprocket, said .

Intra-city delivery service Borzo, too, has inked partnerships with about nine grocery retailers including Hyderabad-based Ratnadeep Supermarket and Food Hall in the last few months.

“Larger supermarket chains naturally have higher order volume but mid or small chains with fewer orders with longer distance contribute well to the margin. We are receiving a sizeable demand from supermarket chains across key metros. Borzo’s 45-60 minute delivery model aligns with the needs of retail chains, offering a fast, reliable solution without the complexities and costs of ultra-fast deliveries,” said Eugene Panfilov, managing director, Borzo India.

However, building a digital business is far from easy.

“Online delivery is not an easy task. Only scale can define the success of a digital business and a lot of investment goes into technology and last-mile logistics,” Elara Capital’s Taurani said.

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During its Q4FY24 investors’ call, Avenue Supermarts, the parent of DMart chain of supermarkets, said that it has no plans to launch ultra-fast delivery services. Instead, the company will focus on expanding its store footprint to cover areas where quick commerce is gaining traction.

The profitability puzzle

quick While commerce players are winning the battle for convenience, they are still struggling to achieve profitability.

Blinkit reported an adjusted Ebitda loss of ₹37 crore for the last quarter of FY24, although it was a significant improvement from its ₹203 crore loss in the same period the previous year. Zepto, on the other hand, saw its losses surge to ₹1,272 crore in FY23, highlighting the challenges of scaling a low-margin, high-volume business.

Quick commerce relies on frequent, small orders, with average order values ​​(AOV) of ₹460 for Swiggy’s grocery division and ₹617 for Blinkit.

In contrast, both MK Retail and The Organic World are betting on maintaining higher order sizes to ensure profitability.

Orders above ₹1,500, they believe, will allow them to absorb the cost of deliveries, which typically range from ₹70-100 per order. For smaller orders, many retailers are introducing delivery fees, as seen with MK Retail’s ₹50-60 charge for orders below ₹500. This approach, they argue, keeps them competitive while ensuring that they don’t lose out on margins.

The economics of quick commerce are tricky, according to Manchanda, and doubling down on ultra-fast deliveries can raise costs by up to 5%, so there is need to strike a careful balance to maintain profitability.

Another pain point for quick commerce platforms is the quality of products. Consumers are increasingly vocal about poor-quality production and inconsistent deliveries. This has given traditional retailers an opportunity to stand out by emphasizing quality.

Mumbai-based Mahima added that she raises refund requests for at least one order every week, emphasizing the need for better quality management.

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As the lines between online and offline retail blur, the ultimate winners will be those who can deliver not just speed, but quality, customer satisfaction, and profitability.