Why Quick e-commerce platforms like Zepto, Blinkit and Instamart are becoming a Big Hit - A Complete Case Study
Nowadays, most people no longer wait for weekends to refill their groceries. They just order it with a click and get it delivered to their doorstep.
Almost all the groceries, food items, fruits and vegetables are available online on platforms like Blinkit, Zepto and Instamart. Men and women with working jobs have no time to visit shops or markets to get their groceries, in such a scenario, these quick e-commerce platforms come to their rescue and save a lot of their time.
In the dynamic realm of Indian e-commerce, quick commerce firms such as Blinkit, Zepto, and Instamart are making significant strides. These platforms are not only shaking up the industry but are also emerging as formidable competitors to established leaders like Amazon and Flipkart.
Many companies are integrating additional services into their business with the rise in demand for online services. E-commerce website development business has seen a significant increase due to businesses moving online from physical stores.
The rise of quick e-commerce platforms has also increased demand for top e-commerce developers to integrate their websites and enhance the platform.
Let us understand in detail about these e-commerce platforms and how they have evolved over the years.
What is quick e-commerce?
The next development in eCommerce is called "quick commerce," and as the name implies, it's all about speed. Since everyone wants everything in no time and quickly without any hassle of going out.
In general, quick commerce means that the delivery of ordered goods can be expected to be delivered in an hour after placing the order.
Quick commerce is generally best suited for smaller orders. Customers might buy an ingredient for today's meal or a product they realized they unexpectedly ran out of. The delivery is done quickly as retailers rely on online ordering platforms and nearby warehouses with delivery teams available in every nearby area to fulfil orders as quickly as possible.
Quick Commerce and their Benefits
Speed and Convenience
Quick commerce provides delivery within hours or sometimes minutes. The speed and the comfort of getting goods at the fingertips are the most vital benefits of quick commerce.
Enhanced customer satisfaction
Customer satisfaction increases when services are provided promptly and are immediately accessible. Consumers value companies that value their time and provide convenient solutions.
Fulfilling urgent needs
Quick commerce fulfills the urgent needs of consumers whether it is an ingredient for a dinner preparation or when the guests arrive suddenly. It also helps in delivering urgent medical needs.
Personalized customer experience
Q-commerce provides a personalized customer experience tailored to each user’s needs and preferences.
Data-driven insights
Through quick commerce, a lot of valuable data is generated about the user's preferences, behaviour and buying patterns which helps in making critical decisions.
Challenges of quick e-commerce
The companies like Zepto, Blinkit and Instamart faced initial challenges in early 2022. The three main challenges were:
High delivery costs
The delivery costs were much higher for these companies due to poor logistics services which was burning their thin profit margins and turning business into loss.
Low average order value
Most of the consumer's orders were between 250-400Rs which was very low for gaining profit and average order value was decreasing day-by-day.
Low gross margins
The total gross margins were less than 20% which was very low to cover even the delivery costs for these companies
Developing the right e-commerce website with the necessary features according to its scale is also important and challenging for businesses. Selecting the right e-commerce web design agency is very important for developing a website which attracts users.
How Blinkit, Zepto and Instamart implemented strategies to overcome challenges
Increasing minimum order values
The companies focus on increasing average order value by implementing various strategies and offers to attract consumers and encourage them to buy the goods. Offering various coupons, discounts and offers has increased the order values for the companies.
For example, Blinkit has seen an increase in average order value to ₹630, outpacing companies such as Zepto and Instamart. The increase in average order value directly increases the profit margins therefore improving the growth and profitability of businesses.
Prioritizing various segments of India
Targeting the right audience is very crucial for quick e-commerce companies. There are various segments of people living in India based on their income levels. The Indian market is mainly divided into three segments.
Segment 1
The premium class falls under this segment which has higher income levels and they prioritize convenience and are willing to pay any amount for the goods.
Segment 2
Moderate-income level individuals fall under this segment. They try to balance both convenience and cost.
Segment 3
The lower income groups come under this segment. They are very cost-sensitive and focus on lower prices rather than convenience
Quick commerce companies target these segments with different strategies to increase their order values and profits.
Building strong and convenient logistics
The most important part of delivery is strong and convenient logistics services. The companies invest in building smooth and strong logistics so that their orders can be delivered on time and provide maximum satisfaction to the consumers.
Quick e-commerce platforms and their revenue models
Blinkit and its Revenue Model
Delivery fees, subscription services, and commissions from partner stores make up Blinkit's income model. Orders are subject to a delivery cost from the company, which varies based on the order value and delivery area.
Blinkit also has a subscription service called Blinkit Plus, which costs a monthly or yearly charge but offers users special discounts and free delivery.
Blinkit also has innovative and strong logistics which helps in reducing transport costs and providing higher customer satisfaction by delivery on time. The partner stores pay a steady amount to Blinkit based on several sales made through its platform.
Zepto and its Revenue Model
Zepto generates revenue from mainly three sources Commission from consumers and grocery stores, subscriptions and memberships and grocery store advertisements.
Zepto has adopted a dark store model for its business. The necessity of contact-free shopping has played a significant role in Zepto embracing the 'dark store' strategy. Customers can buy groceries in "dark stores" without having to interact with other people or go inside a real store.
Instamart and its Revenue Model
Swiggy Instamart generates revenue through delivery fees, commissions, paid promotions and subscriptions.
In more than 15 cities where the service is offered, the company promises to deliver groceries in 15 minutes or less. Over a million Instamart sales are supposedly made by Swiggy each week.
The main strategy of Instamart is targeting different segments of India with different offers and discounts. Which has proven to be the most successful strategy for the business till now.
In recent years, the online food ordering sector has experienced significant investment and innovation. Additionally, the COVID-19 pandemic has prompted business owners and investors in the online delivery industry to explore integrating new services, like grocery delivery, into their existing models. Regardless of pandemic conditions, grocery essentials remain a constant necessity, for all individuals.
Quick e-commerce businesses are becoming a big hit due to their convenience and the lifestyle of people nowadays which relies completely on speed and comfort. This sector will evolve more rapidly in the coming decades giving rise to more such business models.