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Quickcommerce – What clicks behind the clicks?

Ashwin Ramasamy
Ashwin Ramasamy
Mar 20, 2022
Min Read
Quickcommerce – What clicks behind the clicks?
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My shaving cream got over this morning.

For a moment, I remembered the flashy ad at my apartment's elevator that talked about a 50% discount on my first order via Zepto. Good sense prevailed and I used my electric shaver instead. Who in their right mind would need anything delivered in under 10 minutes? This was the raging question two months ago (in my twitter echo-chamber dominated by founders and product managers).

Deliveroo is doing it in the UK. Gorilla is delivering doritos to your door-step in under 10 minutes, if you live in NYC. Zepto does it in all metro cities in India. Customers love it. We all seem to have snacks, groceries and shaving emergencies. Who woulda thunk?

Quick commerce is here to stay.

In dense markets like India, Quick commerce creates more impact behind the scenes as it does for retailers and consumers – the layers that we often talk about. Where zoning laws don't exist or are not followed, it's relatively easier to roll-out dark stores overnight and that's what Zepto is doing.

Marriage Halls (where we cram 300 people over 3 days and spend half-a-million dollars on 'arranged marriages') have occupancy issues due to COVID-19 restrictions. Gas stations try hard (and often fail) to generate more revenue per square feet. Movie halls, school premises – you name it. If there is space, there will be a dark store in it, if there isn't already. The beauty of retrofitting expansive spaces into dark stores is that the unit economics actually work better. Depending on how efficient the dark stores are and how you define your catchment area, a dark store can ship between 1000 to 1500 orders a day. Zepto does about 2500 orders according to their founder, Aadit Palicha, who is just 19 years old.

There are three unspoken forces at work that make quick commerce formidable:

Cheap blue-collar workforce
Gentrification that brings homogeneity in demand every 3 miles
Dead commercial real estate

Except for the 2nd point, the rest are caused by the pandemic.

All of these variables work for all players in the market. So it's a land grab all over for spacious commercial real-estate that can be retro-fitted into dark stores. The next frontier of competition is about how much throughput a store can process.

Scaling and managing throughput is a tough balance between growing delivery numbers and keeping up the quick delivery promise. A store can process more orders if the delivery radius (and hence the number of orders) is more. But the delivery time is what gives. The more micro-market you go and start defining the delivery radius in terms of single-digit minutes, insane level of SKU optimization and performance marketing have to work in tandem to scale throughput and stick to the delivery-time promise. Then there is unit economics above all of these factors.

From what I learn, CPG margins can be as high as 15% in urban micromarkets. With cheap real estate, clever outdoor marketing (micromarket targeting is less precise with digital performance marketing), positive unit economics is possible – at least on paper.

I am still unable to shake off the fundamental premise on which the model is anchored – that we need our bread in 8 minutes. But if the model can work with positive unit economics, generate jobs, prevent a commercial real estate doom the only thing I'll be left to complain about is the lack of good kettle chips where I stay.

Quick commerce won't fix it but one can't have it all even as a king who has a personal genie that fulfills his wishes in 8 minutes, sort of.

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eCommerce-specfic lead qualification criteria
Freedom from non-Commerce databases.
Predictable demand generation. Very precise segmentation & messaging.
Free Trial
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
hm.com
HQ Location: Beaverton, Oregon, United States Of America, 97005
hm.com, operated by H & M Hennes & Mauritz AB, is an internationally-focused online store that generates eCommerce net sales primarily in Germany as well as in the United States and the United Kingdom. With regards to the product range, hm.com achieves the greatest part of its eCommerce net sales in the “Fashion” category.
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Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
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