Sector focus: Quick commerce in a sweet spot – Here’s what’s driving it

Sector focus: Quick commerce in a sweet spot – Here’s what’s driving it

  • 22.03.2025 18:39
  • financialexpress.com
  • Keywords: High Growth, Market Expansion

Quick commerce, a fast-growing e-commerce segment valued at $3.5 billion, is projected to reach nearly $9 billion by 2028. Driven by frequent targeted purchases, especially for groceries and FMCG products, it attracts brands seeking higher sales but faces challenges like limited store sizes and competition from traditional Kirana stores in non-metro areas.

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Context

Quick Commerce Market Analysis: Key Insights and Market Implications

Market Overview

  • Quick commerce is a rapidly growing sub-class of e-commerce with a current market size of $3.5 billion.
  • Projected to grow at an over 40% CAGR, reaching nearly $9 billion by 2028.
  • Driven by rising shopping frequency and shorter wait times post-orders.

Consumer Behavior

  • Loyal quick commerce consumers shop 10-12 times a month, primarily purchasing groceries, with gradual growth in beauty & personal care, household care, kitchen appliances, and gifting items.
  • Targeted purchases dominate: 40% of searches on quick commerce platforms are direct product searches vs. 60% category exploration, sharply different from e-commerce platforms.

Competitive Landscape

  • Brands are rushing to onboard onto quick commerce platforms due to the appeal of higher inventory turnover.
  • Quick commerce platforms (~3,500 sqft) are selective in onboarding brands compared to modern trade channels (~40,000 sqft).
  • Balancing a mix of consumer-ordered labels (established giants) and smaller new-age brands is critical for quick commerce platforms.

Non-Metro Market Dynamics

  • Non-metro markets show non-linear performance due to uncertainties in unit economics, product assortment, and throughput per store.
  • Kirana stores remain relevant in tier II/III areas due to:
    • Credit period features (more relevant in smaller cities).
    • Fewer working professionals per household.
    • Higher volumes of low-sachet products, which negatively impact quick commerce’s average order value.

FMCG Dominance and GMV

  • FMCG products dominate 80% of sales on quick commerce platforms, with even higher penetration (over 90%) in smaller cities.
  • Quick commerce platforms are expanding into other product categories to boost average order values.

Kirana Store Competition

  • Large Kirana stores have accelerated home delivery services, potentially increasing competition for quick commerce platforms.
  • Margin pecking order: Kirana > Modern Trade > Quick Commerce.

Future Outlook

  • Quick commerce is poised for sustained growth, with strategic considerations around brand mix, category expansion, and non-metro market penetration.
  • Regulatory impacts and long-term effects on supply chain efficiency, consumer behavior, and competition with traditional retail channels will shape the sector’s evolution.