ET attempted to order multiple times on Blinkit and competitor Zepto, which started operation in April 2021, but it took more than ten minutes and sometimes half an hour to get the deliveries. On at least two instances in Mumbai and in Pune, Blinkit delivered the next day.
Seven months of capital-fuelled rapid rise of the buzzy quick delivery sector in India, the instant delivery promise is turning out to be what many experts feared: an advertising gimmick.
On the back of continued expansion, Zepto has seen its median delivery times increase from eight minutes in October last year to 9-10 minutes (from order placed to arrival at the doorstep), according to a person in the know, who added that despite the roadblocks faced by the startup, it had no plan to change the ten-minute delivery promise.
Swiggy, which is betting big on Instamart, has stopped highlighting delivery timing altogether. In January this year, the company changed its credo from “groceries in 15-30 minutes” to “groceries in minutes”. Before that in November, it went all out in advertising its 15-30-minute message as it transitioned from 45-minute deliveries, the first iteration of Instamart. In an interview with ET in November, chief executive Sriharsha Majtey said the company was aiming to fulfil a majority of its orders in less than 15 minutes.
ET reported on May 11 that food and grocery delivery companies were facing an acute shortage of delivery workforce, leading to longer wait times. The same pool of workers is now in demand not just for delivery, but also for packaging within dark stores. Swiggy even had to temporarily shut down its pick-up and drop service, Genie, in big cities.
Delivery workforce shortage is only one symptom of the larger problems plaguing the quick commerce industry. Rising fuel costs, high losses due to aggressive dark store expansion, operational challenges like surge times, and the lack of appetite from investors towards such cash-guzzling exercises with no profitable unit economics in sight, are also adding concerns around sustainability of the ultra-fast delivery model.
The hazards of 10-minute delivery have also caught interest from politicians.
Mahua Moitra, an MP from West Bengal, slammed the 10-minute delivery model, saying “no civilised society can be incentivising delivery executives to break traffic rules and put own and others’ lives at risk”. She tweeted that she would raise the issue in Parliament.
Multiple executives and stakeholders in the quick commerce space ET spoke with said companies are adapting to the changing funding environment and tweaking the way they are operating. The death of 10-minute delivery could be an early sign of things to come.
Blinkit, in a statement, said the company has not made any changes to its business model, but did not clarify why it has stopped marketing its 10-minute promise.
A Zepto spokesperson said it continues to deliver orders under 10 minutes. “The safety of our riders takes precedence in a few cases where certain areas experience a surge in demand or unforeseen weather conditions that are not conducive for 10-min delivery. Going ahead, we will continue to build on our tech, data, and fleet capabilities to optimise the model, enhance the customer experience as we grow, and fulfil Zepto’s promise of 10-min delivery,” the spokespersons added.
Swiggy did not respond to ET’s request for comment. Zomato, which was piloting its 10-minute food delivery service, was re-evaluating the delivery time amid a rider shortage, ET reported on May 13.
Ultrafast delivery’s profitability relies on orders a driver can fulfil per hour. Keeping that high and the delivery time low is a tightrope these companies need to walk. And to become profitable and bring down costs, they are trying to club multiple orders, which is adding to the delivery timelines, said a source from Swiggy who did not wish to be named.
In the 10-minute model, it should ideally take two minutes to pack the order and seven to eight minutes to deliver. But by waiting for another 20 minutes, companies can find another order to club the first order with. “When batch order comes in … your unit economics gets a lot better. You pay a driver per kilometre but if you pair two orders, costs reduce,” said the source.
Dark store expansion slowing
Multiple sources told ET that despite companies’ announcements of opening hundreds or thousands of dark stores, or micro fulfilment centres, there has been a slowdown to conserve capital. Quick commerce firms are finding out that it takes at least three months for a dark store to adjust its inventory to the likings of a particular locality.
The ideal metric is at least 2,000 orders per day per store. Hence, they have cut down on expansion and started prioritising better unit economics before expanding further. At one point, Blinkit was opening a dark store every four hours, according to a former employee.
According to a person from Swiggy aware of the matter, the company had planned to open 500 dark stores by March this year, but it slowed down on expansion and operated 327 stores as on June 6.
Surge and crowding
Quick commerce companies are also realising that just like food, grocery delivery also has peak times.
According to a person associated with Blinkit, early mornings before breakfast, afternoon hours and post-work periods see a spike in demand. To deliver in 10 minutes during these hours, these platforms require additional workforce: both pickers inside the store as well as for delivery. “Maintaining an additional delivery fleet and a picker team inside the store for surge hours creates wastage of labour and adds to costs,” said the person, adding: “After the peak hour, many of these workers can be seen sitting idle.”
Overstaffing could also lead to declining pay-outs for delivery partners. According to a Zepto delivery person ET spoke to, incentives for partners are linked to the number of orders they are delivering.
Clubbing of orders, rising demand and a slowdown in the expansion of dark stores have all led to crowding outside dark stores, which again adds to the delivery timelines. Since most of the dark stores are situated in the heart of the city, parking of two-wheelers has also become a major constraint, with some drivers having to park the vehicle far from the dark store, which adds to the delivery time.
This has also started creating problems in the neighbourhood where some dark stores are located.
Ashutosh Sharma, director at market research firm Forrester, said quick commerce companies on back of continued expansion may be seeing one of the three scenarios playing out in the market: hitting capacity in some locations, being underutilised in others and failing in non-metro cities due to lack of demand density.
“As the demand picks up, the scale for which you had built for earlier may not be sufficient. From that point you will have to calibrate the investments that you need to make in that model and capability in terms of supply of grocery and delivery partners,” said Sharma. “This is the second phase of quick commerce companies are struggling with; the first phase ended very quickly.”