Writankar Mukherjee, Economic Times
3 December 2024

Flipkart is set to shortly start delivering medicines within 10 minutes, likely becoming the first quick commerce service to do so, intensifying competition in this red-hot market.

The Walmart-owned company’s Flipkart Minutes service has started enlisting local chemists in the metros from where the products will be sold using its last mile delivery partners, said a senior industry executive aware of the plans.

Flipkart is hurrying since it wants to be the first quick commerce service to sell prescription medicines. To be sure, the company’s partnerships with local chemists needs to be in sync with India’s drug norms for foreign-backed e-commerce operators which bars owning inventory. Also, Flipkart can forge tie-ups only with registered chemists.

“Flipkart wants to develop Flipkart Minutes into a full-fledged quick commerce platform. Medicines is a hitherto untapped opportunity since existing platforms deliver products in an hour to even 3-5 days,” said the executive cited above. “Flipkart will provide the platform for these orders and undertake the last mile fulfilment with its logistic partners, while the product will be sold by the local pharmacies who have all the valid licences,” the executive said.

Flipkart did not respond to ET’s email queries. Analysts said quick commerce for medicines is an untapped area so far but has high potential with healthier margins than food and groceries.

Devangshu Dutta, chief executive at consulting firm Third Eyesight, pointed out that undertaking quick commerce for pharmaceutical products would be a logistics-based issue and would need partnering with a broad network of stores.

“There are no real demand-side or supply problems for quick commerce in medicines in cities. Players like Flipkart have the edge of being a high traffic platform and a robust last mile delivery network. However, critically, the medicine business is also about discounts which can make a real difference for chronic patients or for long-duration and expensive treatments,” he said.

With the latest venture, Flipkart will deepen its presence in quick commerce and the online medicine segment, currently dominated by Reliance Retail-owned Netmeds, Tata 1mg and Apollo Pharmacy.

In 2021, Flipkart took a majority stake in Kolkata-based SastaSundar Marketplace, which owned and operated an online pharmacy marketplace and digital healthcare platform. Through this deal, Flipkart ventured into the health segment and integrated it into its main e-commerce platform selling medicines and other healthcare products.

Flipkart is a late entrant into India’s thriving quick commerce market that has the presence of Zomato’s Blinkit, Swiggy’s Instamart, Tata Group’s BigBasket and Zepto among others. Flipkart rival, Amazon, sells grocery and other products through its Amazon Fresh service but it has yet to foray into quick commerce.

Flipkart Minutes went live in Bengaluru this August and it is currently operational in Bengaluru, Delhi-NCR and Mumbai. The company is preparing to extend the service to launch it in a total of top 8-10 cities including Kolkata, Pune, Hyderabad and Chennai.

Flipkart has partnered with local grocers, kirana stores, besides adding its existing sellers in the marketplace for fulfilling grocery orders under Minutes. It is betting on free deliveries besides having a wider selection than existing quick commerce operators across most categories.

“Almost 60% of the orders are fulfilled by local grocers and some of the large sellers in the platform are also moving for quick commerce deliveries. Apart from opening new dark stores, Flipkart is also repurposing its existing city warehouses for grocery deliveries and as dark stores for Minutes,” the executive said.

According to a recent report by Grant Thornton Bharat, India’s quick commerce market is expected to surge nearly threefold to $9.94 billion by 2029 from $3.34 billion at present. The market expanded 76% year-on-year in 2023-24.

(Published in Economic Times)

Economic Times
14 November 2024

The Swiggy IPO is making news for being the most successful in a decade in its category. The food and grocery delivery firm yesterday listed at a 5.6% premium to its IPO price of Rs 390, making it the first company with an issue size of over Rs 10,000 crore in the past decade to have listed above its offer price, ET has reported. The stock closed 17% above its issue price at Rs 455.95 in a weak market, surpassing analysts’ expectations of a tepid debut. The company’s market capitalisation at close on Wednesday was Rs 1.02 lakh crore.

Swiggy’s impressive debut also indicates the incoming deluge of cash in an emerging business, quick commerce. Swiggy plans to plough more cash into its quick-commerce business, Swiggy Instamart. Swiggy’s bigger rival, Zomato, is also planning to fatten its war chest. Zomato plans to raise fresh funds through a qualified institutional placement (QIP) despite sitting on $1.5 billion, or about Rs 12,600 crore. The money will also fuel its quick commerce business, Blinkit. Zepto, another quick commerce player, is also raising money. ET reported last month that Zepto is in talks to raise $100-150 million from a group of domestic family offices and wealthy individuals. It last raised $340 million in August. Swiggy Instamart, Blinkit and Zepto are the top three players with over 85% market share.

The floodgates of capital opening into the quick commerce sector would worry the big e-commerce platforms which have already started feeling the heat from quick commerce.

The quick rise of quick commerce

While quick commerce becomes the preferred medium for immediate needs and impulse purchases, e-commerce is favoured for more planned purchases like home, beauty and personal care. But now quick commerce firms are diversifying beyond groceries, small-value items, etc. and invading the home turf of e-commerce players.

Quick commerce is already conquering kirana, the neighbourhood small retail business, as well as hitting modern retail. As consumer preferences shift towards the convenience of last-minute grocery deliveries, quick commerce companies are outpacing traditional retailers, with 46 per cent of consumers surveyed reporting a cut in purchases from Kirana shops, a recent report has said. The quick commerce market size is expected to reach $40 billion by 2030, a jump from $6.1 billion in 2024, according to the report by Datum Intelligence.

Quick-commerce operators such as Blinkit, Swiggy Instamart and Zepto are aggressively trying to lure away consumers from large ecommerce platforms like Amazon and Flipkart by matching their prices across groceries and fast-selling general merchandise, triggering a price war in the home delivery space, ET reported a few months ago. This is a departure from the earlier pricing strategy of quick-commerce players who typically charged 10-15% premium over average ecommerce marketplace prices for instant deliveries, industry executives had told ET.

A recent ET study of prices of 30 commonly used products in daily necessities, discretionary groceries and other categories, including electronics and toys, in both ecommerce and quick-commerce platforms reveal the pricing disparity has been bridged. “The pricing premium which quick commerce used to charge for instant deliveries is gone with these platforms now joining a race with large ecommerce to offer competitive pricing to shift consumer loyalties,” B Krishna Rao, senior category head at biscuits major Parle Products had told ET.

The increasing competition is putting pressure on ecommerce majors to reduce delivery time.

“Price matching by quick commerce is to acquire market share and is part of market acquisition cost even when it might not be profitable at a per unit transaction level,” Devangshu Dutta, CEO of consulting firm Third Eyesight, had told ET. “They may have to sacrifice margins in the short term to get customers shopping more frequently.”

After challenging kirana and modern retail, e-commerce is the next frontier for quick commerce companies.

The challenge shaping up for e-commerce giants

With Swiggy, Zomato and Zepto raising a huge amount of money, the war between quick commerce and e-commerce is likely to turn bloody, besides increasing internecine competition among quick commerce players themselves.

Quick commerce, which began with the delivery of groceries and essential items, has now expanded to include a diverse range of products. This includes electronics, clothing, cosmetics, household goods, medicines, pet supplies, books, sporting equipment, and more.

E-commerce sector offers a vast opportunity for growth of quick commerce business. The Indian e-commerce market is projected to grow at a compound annual growth rate (CAGR) of 21% and reach $325 billion in 2030, as per Deloitte’s report released on Monday. This huge potential is luring big players. The Tata group’s ecommerce venture Neu is set to enter the quick commerce segment branded as Neu Flash, rolling it out to select users selling grocery, electronics and fashion, ET reported last month. Mukesh Ambani’s Reliance, leveraging its vast network of supermarkets, is expanding into the 10–30 minute delivery segment. Ambani wants to ensure quick commerce helps bolster its business ahead of an IPO of Reliance Retail, which was last year valued at $100 billion, and has backers including KKR, sources told Reuters recently.

Besides entry of big ones like Tata and Ambani, the deluge of fresh investment into business by the incumbents such as Swiggy, Blinkit and Zepto will pose a big threat to large e-commerce players Amazon and Flipkart. Swiggy has recently hired two Flipkart executives to boost its senior leadership. They have joined two other executives that Bengaluru-based Swiggy had hired from the Walmart-owned ecommerce major in the past few months.

Swiggy and Zomato are both assessing several new services as they diversify beyond their core businesses, ET has reported a few days ago. Swiggy is all set to launch a pilot programme for a services marketplace, labelled ‘Yello’, which will host professionals such as lawyers, therapists, fitness trainers, astrologers, dieticians, according to sources. It is also testing a premium membership service called ‘Rare’, for affluent customers providing them access to high-end events such as Formula 1 races, music concerts, upscale art exhibitions, in addition to VIP hospitality and priority reservations at luxury restaurants.

Zomato has previously been bold in its diversification moves by buying Paytm’s events and ticket business for Rs 2,048 crore. It is now trying out a concierge-like service to help users place online food orders over WhatsApp. Human customer relationship agents will provide the Gurgaon-based company’s new service instead of its usual approach of deploying chatbots, a person familiar with the move has told ET recently.

Apprehending challenges by quick commerce players, Flipkart has already started its own quick commerce business Flipkart Minutes. While still far behind its established rivals, Flipkart Minutes hit daily orders of 50,000-60,000 during its Big Billion Days sales, people with knowledge of the matter told ET last month.

Further investment and bigger players entering the sector will heat up competition among the quick commerce companies even as they will grapple with new challenges such as logistics as they expand. But a bloody war could soon be seen on the e-commerce battlefield as emboldened by huge popular response the quick commerce companies start invading on the well-guarded turf of Flipkart and Amazon.

(Published in Economic Times)

Viveat Susan Pinto, Financial Express

May 16, 2023

The country’s top two organised retailers, Reliance Retail and DMart, are shifting focus to the large but fragmented pharma retail market in India in their quest for growth. The Rs 2-trillion domestic pharma retail industry is largely dominated by mom-and-pop stores, much like the fast-moving consumer goods market and kiranas.

On Saturday, Avenue Supermarts, which runs the DMart chain of stores, said it had set up a new subsidiary called Reflect Healthcare and Retail to launch pharmacy shop-in-shops. Reliance Retail, on the other hand, proposes to step up the launch of offline pharmacy stores under Netmeds, the e-pharmacy company it acquired in August 2020. Netmeds is now a subsidiary of Reliance Retail.

The plan with Netmeds, according to persons in the know, is to open around 2,000 standalone pharmacy stores in the next few years. Reliance Retail already has around 1,000 shop-in-shop pharma stores across Reliance Smart Bazaar and Smart Point outlets.

During Reliance Industries’ fourth quarter earnings call last month, Dinesh Taluja, chief financial officer of Reliance Retail, said standalone pharmacy stores by the company would be positioned as destinations for pharma and wellness products. The aim, Taluja said, was to leverage omni-channel capabilities to serve customers better.

DMart, on the other hand, has launched one pharmacy shop-in-shop in the Mumbai Metropolitan Region (MMR) for now. But the future plan, according to industry sources, includes rolling out at least four to five more of such outlets in the MMR region in the next few months.

“While e-pharmacies are a growing concept, there is a large population out there that still prefers to go to a nearby pharmacy or medical store to purchase drugs or medicines prescribed or buy over-the-counter products,” said Devangshu Dutta, founder and chief executive of retail consultancy Third Eyesight.

“The number of organised retail chains in the pharma space in the country are limited. This presents an opportunity for organised players like DMart and Reliance Retail to expand their presence in the market,” Dutta said.

Apart from Apollo Pharmacy, which is India’s largest omnichannel pharmacy chain with over 5,000 outlets, the organised pharma retail space in India largely has regional chains or popular standalone outlets within cities catering to a captive market, say experts. So, organised retailers such as Reliance Retail and DMart can disrupt the market if they begin growing their presence.

Analysts at brokerage firm Kotak Securities, however, see DMart’s foray into pharma retail as a pilot programme, which could be scaled up in the future. “This is another pilot that is expected to boost footfalls in DMart’s brick and mortar business using existing store infrastructure,” they said.

(Published in Financial Express)