The Rise of Quick Commerce in India and Its Impact on E-Commerce Giants

Introduction

• Introduction of Blinket, Zepto, and Instamart causing disruption in the market.
• Blinket potentially becoming larger than Amazon in India within the next 10 years.
• Zomato’s ambition and its influence through Blinket.

Historical Context

• In 2022, concerns about the viability of quick commerce.
  • Delivery partner safety.
  • Feasibility of 10-minute delivery.
• Increased Customer Acquisition Cost (CAC) during the pandemic.

Recent Developments

• Bombay Shaving Company’s experience: Blinket surpassing Amazon in sales.
• Historical comparison: Amazon's early rise and current status as too crowded.

The Current Market Dynamics

• Key figures in unit economics analysis for quick commerce in 2022.
  • Dark store setup costs: ₹25-40 lakhs.
  • Average order value: ₹350-400.
  • Gross profit margins: 15-20%.
  • Delivery costs and its impact on profitability.

Three Major Challenges in 2022

1. Low Average Order Value (AOV)
2. Unrealistic Gross Margins
3. High Delivery Costs

The Shift to Profitability

• Importance of increasing AOV from ₹400 to ₹550.
• Calculation demonstrating the profitability shift.

Three C’s of E-Commerce

1. Convenience: Shift from 1-day delivery to 20-minute delivery.
2. Cost: Price sensitivity depending on customer segment.
3. Catalog: Diverse product range.

Segmentation of Indian Market

• India 1: Wealthiest, focus on convenience and catalog, less price-sensitive.
• India 2: Middle, balancing cost and catalog.
• India 3: Poorest, highly cost-sensitive.

Evolution of Quick Commerce Companies

• Blinket, Swiggy, and Zepto increasing AOV and margins.
• Pricing strategy analysis.
  • Premium pricing for convenience.
  • Example comparisons with Amazon.

Economies of Scale and Unit Economics

• New financial estimates and contribution margin explanations.

Understanding Contribution Margin

• Difference between fixed and variable costs.
• Impact of scale on profitability.
• Explanation through a simplified example.

Conclusion

• Business Lessons
  1. Importance of targeting India 1 for high margins and volume sales.
  2. Continuous market and economic analysis for investment decisions.
  3. Strategic use of data as a competitive barrier.

Final Thoughts

• Future of blinket, swiggy, Amazon, Flipkart, and zepto as an ongoing case study.
• Encouragement to subscribe for more insights.

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