Alka Jain, Outlook Business
10 July 2025

Just when Blinkit, Instamart and Zepto were slowing down in their quick commerce game, Amazon’s entry may spur them towards a more aggressive race. The ecommerce giant has begun offering deliveries in as little as ten minutes in Delhi after Bengaluru, under the name ‘Amazon Now’.

“We are excited with the initial customer response and positive feedback, especially from Prime members. Based on this, we are now expanding the service over the next few months addressing immediate customer needs while maintaining Amazon’s standards for safety, quality and reliability,” the company said in an official statement.

Till now, the company was moving at its own pace with the idea that Indian consumers would wait a day or two for their deliveries. But the game has changed now—convenience is king here. Online shoppers want everything from milk to mobile chargers within a few minutes at their doorsteps.

And the big three of the quick commerce market—Blinkit, Instamart, Zepto—have cracked the consumer code perfectly. This trend has nudged Amazon and Flipkart to enter the 10-minute delivery segment. It started as an experiment in the larger ecommerce sector but has now become a necessity for online retailers.

Kathryn McLay, chief executive of Walmart International—an American multinational retail corporation—revealed that quick commerce now accounts for 20% of India’s ecommerce market and is growing at a rate of 50% annually. According to a Morgan Stanley report, the market is expected to reach $57bn by 2030.

Hence, Amazon could not afford to stay on the sidelines. The company has already pumped $11bn into Indian market since 2013 and recently announced another $233mn to upgrade its infrastructure and speed up deliveries. In addition, it has also opened five fulfilment centres across the country.

Despite continued investment, there are doubts if Amazon can disrupt the quick commerce game. Industry experts state that the ecommerce major’s late entry could upend the fragile unit economics of the space. It can even reignite discount wars and increase burn rate (a company spending its cash reserve while going through loss) for the incumbents, once the ecommerce giants begin to exert pressure and begin to capture market share.

Open Market, Thin Margins

Given the growth momentum and market size, quick commerce start-up Kiko.live cofounder Alok Chawla believes that there is definitely headroom to accommodate another player in the quick commerce market. However, margins may remain negative for a couple of years due to high business and delivery costs.

As per data, the average order value of ₹350–₹400 yields a gross margin of approximately 20% but high fulfilment and delivery costs (₹50–₹60 per order) significantly reduce overall profitability, often cancelling out most of the gains.

“Indian customers will not be willing to pay high shipping charges for convenience. But the market will continue to grow due to cart subsidies and shipping discounts. On top of this, profitability also remains quite some time away,” he says.

Even a survey by Grant Thornton Bharat, a professional services firm, shows that 81% of Indian quick commerce users cite discounts and offers as one of the main reasons they shop on platforms like Blinkit and Instamart.

But the fact is Amazon has extremely deep pockets, which means, the trio will once again have to get into aggressive discounting to protect their turf, said Chawla, indicating the possibility of higher cash burn quarters ahead.

In February, reports revealed that Indian quick commerce companies, including new entrants, were burning cash to the tune of ₹1,300–₹1,500 crore on a monthly basis. But a few months later, Aadit Palicha, chief executive of Zepto, a fast-growing 10-minute delivery platform, claimed that the company had slashed its operating cash burn by 50% in the previous quarter.

Still, the path to profitability remains shaky. Though Amazon can get an advantage of its existing huge customer base that is habitual of making online purchases including those in similar categories.

The real challenge lies beneath the surface because ecommerce and quick commerce operate on fundamentally different engines.

E-Comm vs Q-Comm: A Different Game

It may seem like a simple extension of what Amazon already does: deliver products. But in practice, the logistics, timelines and cost structures behind traditional ecommerce and quick commerce are different, said Somdutta Singh, founder and chief executive of Assiduus Global, a cross-border ecommerce accelerator that helps brands scale on global marketplaces through end-to-end solutions.

She explains the difference using a hypothetical situation: let’s say you order a phone case in Mumbai, which is picked from a nearby fulfilment centre. It will be added to a pre-routed delivery run with 30-50 other stops. This batching on the basis of route optimisation, keeps last-mile costs low, somewhere around ₹40–₹80.

But if you order the same item in a smaller town like Alleppey, it may first travel mid-mile from a hub in Cochin, then be handed off to a local partner like India Post. This increases the delivery time but keeps costs manageable through scale and planned routing.

This setup suits well in ecommerce business, which is built for reach and variety, not for speed. However, quick commerce runs on a completely different playbook because speed becomes priority here.

For instance, you order a pack of chips and a cold drink via Zepto in Andheri. These items are already stocked in a dark store within one to two kilometers of your home. The moment you place the order; someone picks it off the shelf. A rider is dispatched almost immediately and heads directly to your address.

There is no mid-mile movement, no routing logic and no batching. Each trip is a solo run. Delivery often happens within 10 to 15 minutes. This kind of speed relies on a dense network of local stores and a steady flow of short-range riders. But it also means higher costs.

“With no bundling of orders and lower average cart sizes, usually ₹250 to ₹300, the delivery cost per order can shoot up to ₹60 to ₹120. That is a heavy operational burden. Unlike traditional ecommerce, where cost efficiency scales with distance and order volume, quick commerce is constrained by geography and time pressure,” she explains.

So, it becomes more than just a category expansion for e-commerce platforms like Amazon and Flipkart. It marks a pivot in their “logistics thinking” and signals a broader shift in entry strategies. What once worked must now be retooled for hyperlocal and real-time operations.

Speed over Scale Not Easy

There are multiple challenges ahead for Amazon to make its presence felt and stay competitive in the quick commerce space. Firstly, it must build an operations and logistics layer that enables sub-15-minute deliveries, along with a technology stack to support it, according to Mit Desai, practice member at Praxis Global Alliance, a management consulting firm.

Second, it needs to build a dark store network to succeed in the space which is crucial to meet the 10-15 minutes delivery promise. Experts believe that a hybrid model will be the most successful in India—a mix of micro warehouses, partner stores and dark stores.

Desai states that Amazon’s existing capabilities can give it a base to build on, but it would also have to account for complexities and differences that come with the quick commerce business.

“For Amazon, the challenge will be operations. Can they build 700+ dark stores? Can they go hyperlocal? Can they navigate the chaos of Gurugram rain, Bengaluru traffic or the lanes of Dadar?” wonders Madhav Kasturia, founder and chief executive of Zippee, a quick commerce fulfilment start-up focused on hyperlocal deliveries and dark store management.

Another challenge can be repeat, loyal customers. As of now, customers check prices across platforms, and order where prices are the lowest. So, Amazon will have to spend heavily on discounts to gain market share. Chawla says retention will remain a problem because Zepto’s growth has also slowed down after a reduction in discounting burn.

However, Singh highlights that Amazon may not roll out everything in one shot. “We will likely see small-scale pilots, co-branded dark stores, local partnerships, new rider networks, tested in top cities before any nationwide push. They will also reveal whether it is viable to retrofit scale-driven e-commerce infrastructure into something that runs well in a hyperlocal loop,” she added.

Profitability Remains a Concern

While the quick commerce space is becoming increasingly dynamic with new entrants, the core question remains: is it a sustainable business model? The path to profitability is still fraught with operational complexity, margin constraints and uncertainty in consumer behaviour.

“Margins in quick commerce were never pretty to begin with,” says Kasturia. Yet he remains optimistic about the market because India’s grocery market is still largely untapped online.

As per data, India’s grocery and essentials market is over $600bn, of which online commerce is just three to four percent. Even quick commerce is sitting at ₹7,000–₹9,000 crore gross merchandise value today. So, the market isn’t crowded. It’s just early.

“We are barely scratching the surface,” he says, arguing that whoever wins customer behaviour, will lead the game. For example, in tier 1 cities, users no longer compare prices—they compare time.

For Amazon, this is both an opportunity and a constraint. Experts believe that the ecommerce giant can stand out by focusing on trust, hygiene and reliability—areas where existing players sometimes falter.

Kasturia says that the platform should not even chase everything, rather focus on profitable categories like fruits, dairy and personal care. “Build strong private labels. Nail density before geography and don’t discount blindly,” he adds.

The key is to build for reorders, not virality. That’s when customer acquisition cost (CAC) drops, margins compound and a player stops bleeding money per order. And to reduce the cost of dark stores, Chawla suggests an alternative route.

“Riding to neighbourhood stores for long-tail stock keeping unit can cut real estate and wastage costs,” he says, adding that it can decentralise inventory without owning all of it.

To follow this playbook, Devangshu Dutta, founder of Third Eyesight, a management consulting and services firm, says that every player needs to invest hundreds of crores before the model begins to show surplus cash. It will demand multiple, interlocked shifts—in pricing strategy, tech backbone, category mix, and even brand positioning.

Amazon’s entry doesn’t merely add another contender in the 10-minute delivery race—it rewrites the playbook for every player. The real question now is: can the frontrunners hold their turf, or will Amazon’s scale and deep pockets tip the balance of power?

Shambhavi Anand, Economic Times

New Delhi, May 24, 2023

Retailers and shopkeepers will soon not be allowed to seek phone numbers of their customers while generating bills, according to a diktat by the department of consumer affairs, a senior government official said.

Taking the numbers of customers without their “express consent” is a breach and encroachment of privacy, said the official, without wanting to be identified.

The official added that such a move will be classified as an unfair trading practice defined as any business practice or act that is deceptive, fraudulent, or causes injury to a consumer.

Most large retailers mandatorily take down buyers’ phone numbers while generating the bill for their purchases and use them for loyalty programmes or sending push messages.

The move has come after the department received several complaints from consumers about retailers insisting on getting their phone numbers. This will be communicated to all retailers through industry bodies representing retailers soon, the official added.

While the implementation of these new rules may require some adjustments and initial costs for retailers, it is seen as a necessary step towards protecting consumer privacy and ensuring fair business practices in the retail sector, said experts.

While retailers will have to rework their systems in case this becomes a regulation, this won’t stop them from asking for phone numbers of consumers as their loyalty programmes run on these numbers, said Devangshu Dutta, founder of Third Eyesight, a retail consultancy firm.

He added that retailers also use numbers for sending e-invoices and so this could have a cost impact and environmental impact.

(Published in Economic Times)

REVIEW: FLIP THE FUNNEL: Joseph Jaffe (John Wiley & Sons)

I’ve read Joseph Jaffe’s book across multiple air journeys, nationally and internationally. I agreed with the principles described and saw parallels with excellent services businesses over the past few years. However, the implications didn’t quite strike me in the gut until I realised – while writing this on board an aircraft – that the journeys I had taken with this book had also been with just one airline.

My loyalty to this airline is not because of the mileage card I hold, although their mileage programme is certainly among the best in the world. It is not because they were the cheapest or the most on-time, though they compete favourably with other comparable airlines.

My loyalty to them is because of what they did during the Mumbai floods in July 2005. Those who remember the chaos, through personal experience or through media, wouldn’t blame airline staff for abandoning their counters, and leaving the airport to try and reach home as early as they could. Certainly most of them must have felt helpless in the face of increasingly desperate passengers who couldn’t expect to depart any time soon. Jet Airways stood out as being the only one in Mumbai’s Terminal 1-B whose team felt responsible enough to stay back at the airport to be available to the passengers. Not only did they ensure that the passengers stuck in the terminal were safe, but that all waiting passengers got three meals a day! Whether or not they were flying with Jet Airways.

Now, in telling you about incident, I have closed the loop and given you a living example of the “flipped funnel” that Jaffe describes in the book.

The normal marketing funnel is described by the process Awareness, Interest, Desire and Action (or “AIDA”) which underlies the spray-and-pray approach of traditional marketing. The result of AIDA is that a lot of customers become aware of a business, brand or product. Some are interested enough to seek out the product. However the number who move on to the next stage of actually expressing desire to buy is lower, and those who actually buy are fewer still, as amply demonstrated by carts being abandoned before actually checking out.

Jaffe points out that the AIDA principle was created in times of abundant growth in the US, but is a suicidal funnel to fall into when resources are scarce. It is lopsided, with more money being spent on customers who will not buy. It is linear and does not capture the complexity of buying behaviour. It is open and incomplete because it only handles potential customers up to the point where they become actual customers, but does nothing with them thereafter. AIDA also inherently assumes customer churn, hence the opening focus on creating awareness among potentially new customers.

The alternative principles Jaffe describes are simple: getting more customers to buy from us and more often (repeat purchases), to spend increasing amounts with us (loyalty), and finally, to recommend us to their friends and associates (referrals). However, to do this requires dramatically different thinking from AIDA spray-and-pray. Jaffe’s alternative model – ADIA (Acknowledgment, Dialogue, Incentivisation and Activation) – focuses on customers more than prospects.

Acknowledging customers itself is such a major stumbling block for so many companies, such as the retailer whose front-line staff would prefer to fold and put away garments than meeting the eyes of the customer who has walked into the store. In some cases it may be about using technology effectively rather than as a barrier. When the taxi company can recognise the number you are calling from and close your order in less than 120 seconds, why does the telephone company that issued that number make you jump through burning hoops for 5-10 minutes before they will allow you to request a duplicate bill?

That acknowledgement should lead to an on-going dialogue, before, through and well after the purchase is done. This would be supported by constant incentives for the customer to buy more from you. It is not about having a loyalty programme, as Jaffe quotes studies that demonstrate that loyalty programmes alone don’t produce loyalty; in fact there are enough businesses that do not run loyalty schemes but have what can only be called fan followings.

The final link in that funnel is building that community of evangelist enthusiasts who will carry your brand message farther and far more effectively than any traditional form of marketing could. Religious organisations have known this for thousands of years – it is high time that businesses and other organisations recognised the power of the community as well.

Jaffe acknowledges that Seth Godin actually came up with the term “flipping the funnel” over 3 years ago, when he released the e-book of that name (available on sethgodin.typepad.com) primarily about using social media effectively. Jaffe, to his credit, has applied the principles more fully across the marketing and customer service process.

Jaffe recently sold his business, crayon, but has kept his title “Chief Interruptor” at the acquiring company. If you want to make your marketing really pay, you’ll find it worthwhile letting “Flip the Funnel” interrupt your normal marketing thought-process.

(This review was written for Businessworld.)

A keystone of a retailer’s business is the loyalty that customers show in shopping at his or her store.

Loyal customers help to sustain a basic level of sales and reduce the need for expensive broadcast-style marketing spending that the store may otherwise have to do in order to keep the traffic and business flowing. This is as true for chain-stores as it is for independent mom-and-pop stores.

Therefore, as competition increases along with the number of stores selling the same products within a common catchment, retaining the loyalty of the customer becomes crucial, both in terms of strength of relationship (which is reflected in how much of the total spend the customer spends at the specific store) as well as the duration of the relationship.

In some parts of the more developed markets regulation may prevent the overcrowding of grocery stores and supermarkets. However, in markets such as India, one can see as many as four or five mini-supermarkets coming up on barely a kilometre along a busy street, before you even count the numerous kiranawalas. How can a store ensure a continued loyal custom from a certain share of that catchment?

Managers at modern chain stores may draw some comfort from studies which suggest that customers with higher incomes tend to be more “loyal” than customers with lower incomes. Since Indian chain stores tend to be targeted on high-income customers when compared to the traditional kiranawala, they may benefit from an intrinsically more loyal base of customers.

The variety of factors behind this “loyalty” may essentially boil down to the fact that with rising incomes the perceived benefit – lower prices, potentially better products or service – from comparing alternative stores may be outweighed by the perceived cost (time) of seeking these options and the personal adjustment involved in shopping in an unfamiliar environment. (Or, perhaps, to put it more bluntly: “rich customers couldn’t be bothered”?)

However, as the number of competing offers increases, promotional noise draws the consumer’s attention to benefits they might be missing out on, whether this is through flyers in the mailbox, kiosks set up near the consumer’s primary store, or even a full-blown ad campaign across multiple media. With every new offer or promotion, there is a temptation to try out an unfamiliar retailer.

This is more acute during recessionary times, when just about every competitor is shouting out deals to lure the customer to at least step into their store. And don’t think that high income customers are immune from the “toothpaste-discount” bait. During such times, whether they acknowledge it or not, everyone is down-shifting. It is at such times that loyalty is truly called upon. And it is also at such times when retailers start to think of loyalty schemes.

Most loyalty schemes are focussed on the objective of retaining existing customers through the use of incentives that are available only to loyalty programme members. They will ask a customer to provide some personal and contact information, and will provide some reference – a set of coupons to be redeemed during future purchases, or a card (index, swipe or smart) – that must be presented during subsequent transactions. In almost all cases, there is an attempt at getting the customer to return to the store because, as we all know, when we step into a store to redeem anything, almost without exception we end up shelling out more money than the redemption is worth. Since the value of the cash-back equivalent can be anywhere between 1 and 10 per cent (sometimes higher) customers are happy with the bribe, while the store is happy to ring up the additional sales.

However, it is surprising – or perhaps not – how many loyalty schemes turn into shams. In many such cases, the true benefits and the liabilities during the life cycle of the loyalty programme or of the customer’s relationship with the store have not been considered deeply enough. We all have multiple examples from our personal lives, which offer valuable lessons on such shambolic “loyalty schemes”. For instance:

• An oil company’s “membership card” that you pay for, whose points can never be redeemed because you never get the points statement nor a list of rewards, and the last time you see the card is when the petrol pump attendant takes it with the promise to check the status with the company.
• “Reward points” which offer a customer a second-rate bag or an uncertain brand of electrical gadget for points PLUS a cash amount that would be the equivalent of what you might spend with a pavement retailer buying a similar item.
• A credit card that looks attractive with discounts at certain merchant establishments, until you discover that someone who doesn’t hold that card is getting the same benefit even on cash payment.

Very often we find that a loyalty scheme has been conceived by an executive in charge of advertising to get the message out more cheaply (?) and focussed on a set of frequent customers. There is little link with the other parts of the operation, such as merchandising, store planning, or even promotion management, and certainly no influence. Thus, a second and potentially more powerful objective – using customer shopping data to tighten merchandising and improve the targeting of promotions – is virtually ignored.

Some companies have decided that managing a loyalty programme would offer lower benefits than the cost of maintaining the scheme, and decide to pass on the amount to the consumer directly in the form of lower prices. However, given the times, and the prospective goldmine of consumer purchase information that consumers willingly provide through such transactions (despite all vocal concerns about privacy) I would expect loyalty schemes to mushroom in the next few years.

The fact is, whatever our income levels, evolution has deemed that we become creatures of habit. Once a certain path has been followed successfully, a berry has been eaten safely, a transaction has been made satisfactorily, we are inclined to return to it again and again.

Trust, predictability and precedence are huge factors in developing loyalty, and when translated into the modern life of shopping (especially for food and groceries), this translates into the phenomenon that has been called first store (or primary store) loyalty. This can lead to as much as almost 70 per cent of grocery shopping being carried out at one store. Typically consumers will have a strong secondary store, and the balance grocery shopping would be split between multiple stores based on product availability, convenience and opportunity, deals and other factors.

But just because customers are genetically wired for loyalty to the familiar, the retailer should not treat this loyalty with contempt. Or even laziness. Because that can tip over the loyalty scheme into being a loyalty sham. And that is it only one letter away from “scam” – a dangerous label in these times of the consumer-activist.

A few years ago when I was called upon to make a presentation about customer loyalty, I ran into this brick wall of, “Do loyalty programs work or don’t they?”

The way around the wall was to not look for a black or white answer. Some programs work and some don’t. The difference, I found, was in the degree of impact on core operations (e.g. product selection, displays, pricing etc.) – i.e. how these were fine-tuned from the feedback and other information collection from the loyalty program.

What was certainly clear is that we can clearly differentiate between loyalty that is “bought” (discounts, freebies, loyalty points etc.) vs. loyalty that is “earned” (i.e. you attend carefully to what the customer is saying she wants, and you make sure that you go all out to provide that).

The hotel and airline industry, where well-structured loyalty programs have their roots, depended heavily on buying loyalty. Interestingly, these are now proving to be long-term liabilities, which initially led airlines to put an expiration date and is now leading them to de-value the mileage points (just like a country would devalue its currency!) – thus customers would need more points to make the same trip.

On the other hand, those retailers, hotels or airlines that have learned from their loyal / club / elite customers, have made sure that their offer is constantly value-added, and in some cases constantly differentiated.

In most markets, the top criteria for a consumer to select a store are operational (location of the store, availability of product, range of merchandise, pricing, etc. etc.), and often there is a huge gap between what the consumer expects and what the retailer serves up. In that context, a loyalty program is like applying band-aid to a fracture!

Does this all mean that all “bought loyalty” is useless and that loyalty programs don’t work? Not at all! Retailers can certainly use loyalty schemes to identify high value customers and cultivate them through ongoing exchange of information, and also reward customers for their purchase behaviour. But building and retaining relationships with customers and increasing the share of customer spending in-store is something that can only be delivered by better operations.

We need to reconsider the motivation to have a loyalty program. “Loyalty” schemes’ primary benefit is not loyalty, but a basis of building relationships with individual customers in gathering “Purchase Trend and Product Information” and in achieving better focus and targeting. These need to be used to improve operational effectiveness which produce loyalty – product focus and a service customization opportunity.