I think zepto, blinkint still not able to match dmart prices. also, in dmart case, atleast in pune, it is 49 rupees minimum delivery charge irrespective of your cart size. only thing as you said is delivery time which I hope giant will wake up to someday…until then it is accumulation time.
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Now Ola too started quick commerce
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Many people are comparing DMart to quick commerce companies, but I believe this is like comparing apples to oranges. Their operating models are entirely different, and one cannot significantly impact the margins of the other. Quick commerce mainly offers a limited range of items, such as packaged goods and consumables, but not durables, bulk purchases, or electronics.
Brick-and-mortar stores now often match e-commerce prices and provide more reliable, authentic, and new products. For example, buying a laptop or mobile phone from an e-commerce site can sometimes result in receiving a returned item or old stock.
Most quick commerce companies are currently burning through cash. Remember when Zomato and Swiggy first started? They offered lower prices and discounts compared to direct purchases from restaurants. Now, they are 5-10% more expensive, and you often need to subscribe to a plan to avoid delivery charges. This model is not sustainable in the long run.
If quick commerce delivery starts to impact the business of DMart, Tata, and Reliance stores, they can either develop their own solutions or partner with delivery companies like Dunzo. These large companies have deep pockets and won’t sit idly by while their revenues are threatened.
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While agree to your post, but to be fair…revenues are already threatened specially over last 1 year by stupendous rise of QC in top cities.
With personal experience, I feel QC also impacts impulse buying at physical stores. So its a double whammy.
Plus QC is currently adopted by less price conscious consumers who would have otherwise had a bigger basket had they gone to physical stores.
So damage has already begun and in progress…need to see the extent and how things pan out.
I agree with you that incumbent physical owners have means to tackle such threats though…
Disc. Physical retail stocks one of top holdings. Biased & critical. Not a buy/sell recommendation.
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The same can be said for brick and mortar shops. And you can’t get every mobile phone variant (different RAM and internal memory combinations) in a shop. Not just variants many phones itself will not be available offline. Price too can’t be cheaper than online. Online platforms allow 7 to 10 days return / replacement if the customer finds the product not meeting expectations.
QC started delivering electronic items too.
Apple iPhone 16 series sale is also live on quick-commerce platforms like Blinkit, Zepto, BigBasket and Flipkart Minutes.
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True that QC delivers/intend to deliver many things in the future. My thesis is based on the following 2 points
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Customer behaviour on buying certain things only from physical stores. Zudio is quite successful and has become a cash generating machine despite threat from Myntra and other online retails. For me QC is more for emergency need.
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Secondly none of the QC is currently generating positive cash flow despite increasing revenues. How long they can burn cash is a big question mark. The day they resort into delivery charges or premium plans, people will shift to other means. I believe QC is eating into Kirana stores more than large wholesale stores. To counter that local Kirana stores have already started doing home delivery these days
My 2 cents and anti thesis is welcome.
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Local Kirana store rates will always be higher than what these retail chains provide, and the variety of products available in those retail chains will not be available in Kirana stores. Current competition is the same as what it was with Food Panda, Swiggy, Zomato, and even Amazon entering this space at that time, so I do not think QC is a threat to retail chains.
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Your 2nd point is quite important.
The day these QC companies are able to generate profits and FCF will be the day companies like Avenue Supermarts will need to really start worry. Till then, it would be temporary disruption to revenue and profit due to deep discounting / offers by the QC players. To increase profits, delivery charges need to increase and discounts need to reduce.
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I might be wrong but My two cents is that inorder for Swiggy/Zomoto to became profitable in QC segment they will slowly start introducing different charges for customers, For example
- Delivery Charges
- Packaging Charges
- Platform charges(which they already charging for food delivery)
- GST based on purchases items
- Surcharge based on climate and traffic based on the location.
They will charge as much as they can to earn maximum per order.
DMart can expand across tier-2, tier-3 where zomoto/swiggy not there also
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Agree on point one but disagree on point two.
Explanation -
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There is no one customer behaviour, as in some customers can buy same things online vs some prefer offline. Also sometimes same person can buy one thing online and another thing offline. There is a certain share (%age) of things being bought online. Now question is whether that %age is growing or constant? Even if worstcase, I assume it to be constant i would say GDP growth will increase the size of pie itself. I think that the share is growing and will grow as long as benefits of QC outweigh those of physical stores. (some benefits outlined below)
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I think the current burn rates/amounts and cash in balance sheet can be used to calculate the time. Also i think benefits/habit of qc far outweigh the delivery charges (which they already are applying btw).
Very brief outline how QC is better business model than kiranas and dmart’s etc.
Consumer perspective -
- Save time, energy, hassle of traffic, cost of physical movement etc. some people value these things more and some less but point is that overall sum total of value of these intangibles is ever increasing in a growing country like India. e.g. with increasing traffic, lesser people are able to bear the hassles associated with that
- More choice and ease of browsing/shopping - similar to u going to theatre vs OTT
- Better or equivalent prices
Seller perspective
- Less rent - not premium places and no space to give to movement of customers/parking etc. so less rent per sqft and less total space rented.
- Better margins with wholesale level of procurement - faster feedback to manufacturers on scaling any item/brands
- Income from personalised (theoretically infinite) Digital advertising > physical advertising
- Better data and faster feedback on what/how much to procure etc. vs a physical store
P.S. - Have mentioned many things briefly and might be wrong on some.
Disc. - Invested in q-comm players and biased
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Can any one tell me how to calculate the growth mentioned above 12%-15% how and that basis.
On the contrary, QC do not offer any discount/offers and yet people in top urban cities going for them. Convinience is getting habitual and amazing. I ordered a flipflop for a kid visiting us from blinkit. Initially family said that size issue may come but when 300 rs flipflop for kis size available in 10 minutes…I felt worth taking a chance.
All were amazed the way it came and fit. I used to be regular of star bazar or even sometimes dmart but last 1 year have not visited any of them. We shifted home and in immediate vicinity there were none so we started blinkit as a saviour which gradually turned out habitual and now even if the physical store opens store we would still use QC to large extent.
Above is just personal experience and holds not much value. Inspite of above experience I have been holding on to existing phyaical retail stocks and even purchased some recently. Not a buy/sell recommendation.
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We needed a color printout and in a hurry. We could do that on Blinkit within 10 min! It was a great experience, which saved the day.
I used to feel that Quick Commerce is a fad. After such experiences, I’m starting to believe it is here to stay (if they could run these profitably). However, I’m yet to see how they can make me buy my monthly groceries.
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It’s all depend on choosing convenience or Bhaav bhagwan che (famous gujrati proverb meaning price is god). Those who have good amount of money living in cities can choose QC. Price sensitive middle class indian can opt for offline dmart store if cheaper products are available. Both are going to stay as market place is very large in india.
Disclaimer: Not holding Dmart. Will delete this post in 24 hour.
You answered the question, dmart is not for all these printout and al those stuff, its competency is in groceries and it will dominate in that field, apparel is value addition in their portfolio which helps them to increase the profit margin.
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Yes, clothes are a different segment altogether. Almost everyone prefers to touch and feel the material and try the size and fit before buying. That’s why physical retailers will continue to thrive in certain segments like clothing and jewelry, despite any tech advancements in the future.
Groceries and daily essentials are like a commodity trade at this point. It doesn’t matter from where I buy my toothpaste and tea, because it’s the same brand and quality everywhere. Low price + high volume is the reason DMart has won customer loyalty for so many years. But quick-commerce has started to negatively impact the volume side of that equation by matching its low prices.
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Financial results for Dec 2024 quarter
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just adding my experience, from Pune. (you can say IT crowd) - since more than a year, most of our groceries and other essentials come via QC. We have been to shops (star bajar, local organic shops, local fruit/vegetable guy) only a handful of times in the year. Most of those too when we were out for a stroll near our home and thought of picking up something on the way. Dont ask me if its cheap or not, my wife does all the ordering and what i have heard from her is that the prices are comparable or sometimes cheaper. I haven’t verified it.
But sure things from my side are - I fear entering a dmart store looking at the rush there. And also I feel lot of time gets wasted travelling to dmart, finding parking, shopping there, waiting in line, loading in the car and driving back home.
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people prefer QC now as they give some discounts and free delivery etc like what other food aggregator platforms were doing initially and slowly they raised the price .