Dark horse rising in online clash for festive season supremacy

Zomato’s Blinkit, Lightspeed-backed Zepto and Swiggy Instamart are adding costlier items and expanding stores, multiple industry executives said, posing a direct challenge to established online marketplaces such as Amazon and Flipkart.

Zepto is launching dozens of new dark stores in cities like Ahmedabad, Kanpur, and Chandigarh, said co-founder and chief executive Aadit Palicha, days after his four-year-old company raised $340 million at a valuation of $5 billion. "Our recent success in Nashik, with over 1,000 orders daily in just six weeks, shows the potential in these markets. We are also expanding into new categories like consumer electronics, general merchandise, high-utility apparel and beauty products," Palicha said.

Larger appliances

Tata group owned BigBasket, which has made a full tilt to quick commerce, is set to offer large appliances, smartphones and other high-value items in 30-60 minutes through tie-ups with other Tata ventures such as Croma and Tata Cliq, The Arc reported last week.

To be sure, most quick commerce platforms already offer a limited number of items such as earphones, toasters and induction cooktops. The companies are expected to expand stocks and add new categories for the festive season.

“We have recently launched in Kochi, Vijayawada, Bathinda and Haridwar. We plan on increasing coverage to more cities in the next few weeks and are looking to expand our service to cover more neighbourhoods in these markets," a Blinkit spokesperson said in response to Mint’s queries.

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A spokesperson for Instamart did not respond to an emailed query.

Season of sales

India's festival season kicks off with Raksha Bandhan in August and lasts until the New Year, featuring Onam, Ganesh Chaturthi, Diwali, Durga Puja, Navratri and Christmas in between. Known for high spending, the period is critical for manufacturers and retailers of electronics, consumer durables and apparel, who unwrap new models, offer discounts and roll out easy payment schemes to attract customers.

The first week of last year’s festive season sale saw online platforms clocking a gross merchandise value (GMV) of about ₹47,000 crore, up nearly 20% from the previous year, according to estimates by Redseer Strategy Consultants. Redseer had projected that e-commerce firms will touch GMV of ₹90,000 crore by the end of the festive season.

Overall, e-commerce companies expect sales to jump 35% this festive season, according to a report by recruitment and hiring services platform TeamLease, aided by the rise of quick commerce and consumer spending capacity.

If logistics partners are willing to onboard large appliances, brands may consider partnering with quick-commerce platforms, executives of several brands said.

Samsung India follows a "very democratic, omni-channel strategy," said Saurabh Baishakhia, senior director of digital appliances. "If there is a promise a (retail) partner wants to give to their consumer in terms of delivering fast, we will support their endeavour by making sure they have the right stock of inventory, they have the right product mix etc. We will look into that kind of precision to be built into that consumer expectation. But for us, we would probably let people who want to do that for us; we will support them as a brand and enable them to do it," he added. Baishakhia, however, did not specify on whether the company will partner quick commerce platforms this festive season.

Bigger rivals

Meanwhile, larger e-commerce marketplaces like Amazon, Flipkart and Meesho are gearing up to add more products, speed up deliveries and provide easy payment options. Last week, Amazon India cut its listing fees by up to 12% across categories to help sellers widen their product portfolio on the platform as well as pocket higher earnings.

Also read: Ola to roll out portable dark stores for quick commerce, launches first electric motorcycle

Mint reported last month that e-commerce and quick commerce are set to lead festive season hiring for gig workers this year. While no festive season forecast is available yet for quick commerce, global brokerage firm CLSA said in a note on Tuesday that it expects the top three players—Blinkit, Swiggy and Zepto—to reach $10 billion in gross order value by FY26 and surpass $78 billion within a decade.

“Consumers will benefit greatly in terms of product options and convenience this year, especially with quick commerce picking up well," said Satish Meena, an analyst at Datum Intelligence.

A Unicommerce report said that in 2023, e-commerce order volumes grew 37% during the festival period from a year earlier, driven by attractive discounts and effective marketing campaigns.

Quick commerce – the winner?

Quick commerce is witnessing a period of hypergrowth. Flush with private capital and customer demand, the sector is giving tough competition to established e-commerce platforms by delivering goods to consumers’ doorsteps within minutes. However, convenience is just one factor; according to Datum Intelligence’s Meena, consumers may continue to be drawn towards e-commerce much like in the previous years, given their ability to offer a strong selection of products as well as customer experience.

Platforms such as Amazon and Flipkart have an extensive portfolio of products as well as the benefits of competitive pricing from a range of sellers, unlike quick commerce platforms where options are limited.

Categories like staples, gifting items, and pet care will be popular purchases from quick commerce platforms, helping build order volumes. Big-ticket items like smartphones, apparel and large appliances like refrigerators and washing machines will continue to be strong segments for larger e-commerce marketplaces, Meena added.

“The disparity in order values will determine the rate of growth for both sets of platforms. While both platforms will benefit from high order frequencies, e-commerce will see larger average order values as well," Meena said.

For context, the average order value on quick commerce platforms is about ₹600, while that on e-commerce platforms starts from ₹1,000.

“Our focus is on small, frequently purchased items, ensuring we maintain high product quality and safety," Zepto’s Palicha said.

Also read: Staffing firms see a spike in demand for quick commerce workers

Moreover, the availability of easy payment options including equated monthly instalments (EMI) and attractive credit and debit card offers are a major plus point, according to Meena.

Mapping consumer preferences

Every platform has its own unique proposition, said Shankar Prasad, founder of Plum, a Unilever Ventures-backed skincare firm.

“E-commerce offers wider selection, is discovery-driven and has more innovative offer structures (such as freebies on cart), among other advantages. Q-commerce, of course, serves the need for speed and convenience, besides the opportunity to discover/replenish the category several times a month. D2C (direct-to-consumer) is all about trust, loyalty, and post-sales support," Prasad noted.

A brand’s product portfolio, marketing approach, promotions and supply chains are also mapped to each of these verticals differently. For example, the marketing funnel in quick commerce tends to have a shorter life cycle than in e-commerce or D2C. Similarly, pack sizes and product combos are mapped differently to different channels, he added.

Others said quick commerce partners have been prepping for the festive season since the June quarter. “We were already seeing platforms approaching us well ahead of the festive season to on-board our brands," said Pratik Mukherjee, business head, beauty, Lovechild by Masaba. Mukherjee said consumers are keen to buy beauty products via quick commerce platforms.

However, for many quick commerce companies, restrictions could set in with the number of stock-keeping units they can manage. Meaning, companies may prefer to list only top-selling products, as compared to a wider assortment on larger e-commerce platforms.

Also read: Zepto secures another $340 mn at $5 bn valuation as quick commerce booms