Blinkit, Zepto ignite the quick commerce firestorm

After a tentative start, quick commerce (q-commerce) is ablaze, with Blinkit and Zepto slugging it out in a market distinct from other competitors.

The latest entrant is Flipkart, which is ramping up its infrastructure in around 12 cities where it will launch the service in the next six to eight weeks, taking on existing players such as Blinkit, Zepto, Instamart, and BigBasket, among others.

According to data analysed from Sensor Tower by BofA Global Research, the daily active user (DAU) base of Blinkit has grown by 58 per cent between February 2023 and February 2024.

However, Zepto has been far more aggressive, growing DAU at 86 per cent in the same period, offering one of the lowest delivery rates, and BB Now (from BigBasket) which grew at 14 per cent.

The numbers repeat the same story on the growth of monthly active users (MAU) on the quick-service platforms — Blinkit MAU went up by 64 per cent in the same period, Zepto was up 93 per cent, and BB Now was up 18 per cent.

But in both cases, in subscriber numbers, Blinkit is still far ahead — though Zepto has been closing in.

In February 2024, Blinkit had, for instance, 23-24 million MAU compared to Zepto at 16-17 million — a gap of over 7 million.

BB Now, which had between 9 million and 11 million MAU on February 24, recently revamped its delivery system to ‘supersaver’ in 40 cities to fulfil orders in less than two hours.

Also, Blinkit has been able to migrate customers from lower to higher average order value — for the company it is Rs 635, which is Rs 185 higher than its no. 2 competitors, according to BofA Research.

BofA, which recently called multiple industry participants and independent consultants for an in-depth discussion, says that the addressable q-commerce market currently is at around 25 million households who could likely spend an average of Rs 4,000-5,000 a month.

Based on plans of the top three players, they say that q-commerce will be available in 45-55 cities in three to five years from the current 25 cities that it is collectively available in.

They project that with a lot of competition, the market share of the top three would veer between 25 per cent and 35 per cent and one would not see a disproportionate market control of 50-60 per cent by one player in this space.

That quick service has come of age is reflected in the fact that the top three players already have over 650 dark stores across the Delhi-National Capital Region (NCR), which is expected to expand to 2,000 soon.

The top four q-commerce players have already built over 1,600 quick stores across their cities.

What is interesting is the geographies which provide better buyer unit economics — Chennai, Bengaluru, Hyderabad, Mumbai, and Pune followed by Delhi-NCR.

BofA points out that a regular user orders three to four times a month and interestingly has high retention rates of 60-65 per cent.

But what is more startling is that top users are already doing 30-40 transactions a month, reflecting die-hard users growing.