The Quick Commerce (Q-Commerce) market in India is expected to grow by ten to fifteen times in the next 5 years and reach $5 billion by 2025 from the current ~$0.3 billion. This is according to the latest report titled ‘Quick Commerce: A $5 billion market by 2025’ by consulting firm RedSeer. Quick commerce refers to the delivery of consumables via Dunzo, Swiggy Instamart, etc. within a span of 45 minutes by paying a nominal delivery charge.
Unplanned purchases account for two-thirds of India’s consumables spend, with the consumables market in the country expected to reach $1 trillion by 2025, the report adds. This has been attributed to: Increasing willingness and ability to pay a premium for superior quality products; a growing market for easy-to-cook foods and at-home delivery, driven by the increasing requirement of convenient and hassle-free experience; demand for healthy and nutritional food & beverages, due to stronger focus on healthy lifestyles & fitness; rising consumption of newer items through global experiences.
Metros and tier-1 cities are expected to drive the market for unplanned purchases on the back of increasing spending by mid to high-income households. These households are seeking convenience and spending across consumables categories, the report states. These consumers make top-up / unplanned purchases much more than the rest of the country, and the trend is fuelled by the shift in consumer preference for weekly, small-sized purchases and improved supply-side facilities of quick deliveries (few hours to ~2 days).
Big players like Big Basket, Grofers have reduced delivery times and helped in consumer education /awareness about instant needs. Further, the rise of instant delivery platforms like Dunzo, Swiggy Instamart has allowed consumers to complete top-up/unplanned (on-demand) purchases within an hour of ordering, as per the report.
Online Consumables market penetration is set to grow exponentially in the next 5 years to become $30 billion by 2025, and ~50% of the online market is expected to come from Metro and Tier-1 cities. As per the report, growth drivers for this are: COVID driven adoption towards convenience has created a big surge; leading online grocery platforms have been investing and optimising their supply chain; the rise of instant delivery (TAT<45 minutes) platforms has allowed consumers to get unplanned consumables promptly creating a disruptive alternative to kirana stores.
The report has identified four customer types for consumables purchases in mid to high-income households within Metro and Tier 1 cities. These include; Gen Z - Impulse purchasers (<25 years); Ambitious Millennials (25-35 years); Gen X - Active Buyers (35 years+); Gen X - Passive Buyers (45 years+). Gen Z-Impulse Purchasers and Ambitious Millennials dominate in unplanned purchases and their fulfillment methods are based on speed and convenience.
Customers increased their unplanned consumables purchases in the last 12 months and are inclined to further increase their unplanned purchases in the future. Customers make unplanned purchases across retail channels, and for customers making unplanned purchases online, the convenience of ordering and speed of delivery are the most important criteria, the report adds.
Unlike traditional e-grocers, Quick Commerce provides more convenience to customers with its curated selection of products, simple UI (user interface), and instant doorstep delivery. The report states that ~20 million households are addressable by Quick Commerce in India with estimated addressable market size of $50 billion in 2020. Further, Quick Commerce penetration within the online consumables market is ~7% and is expected to grow to 12-13% by 2025.
“Quick Commerce is emerging as one of the fastest-growing e-commerce models serving the need for faster delivery among convenience-seeking customers. With high fill rates and 30-45 mins delivery service for unplanned orders, mid-to high-income households in Metros are increasingly replacing traditional kiranas with Quick Commerce Platforms like Swiggy’s Instamart and Dunzo,” said Mukesh Kumar, engagement manager at RedSeer.