Quick Commerce - Will Ending the 10-Minute Promise Change Anything?

The government’s recent decision to bar quick commerce companies like Blinkit, Instamart, and Zepto from advertising the 10-minute delivery promise has sent ripples through the industry. While the companies involved are adapting their operations, the change marks a significant shift in how quick commerce is marketed to consumers. The 10-minute delivery claim has long been at the core of the quick commerce business, built on the pillars of speed, churn, and the use of dark stores. But with the government now intervening, how will this regulation impact the industry, and will it change anything about the future of quick commerce?

The Government's Ban on the 10-Minute Promise

The 10-minute delivery claim was a hallmark of quick commerce companies when they began in the aftermath of the pandemic. Companies like Blinkit, Instamart, and Zepto argued that back-end logistics, dark stores, and an inventory-based model allowed them to provide lightning-fast delivery. However, this promise has come under scrutiny after gig workers went on strike last year, calling for better pay, social security, and better working conditions, including the pressure created by the unrealistic 10-minute delivery window.

The government’s decision to intervene and ban the 10-minute claim has hit at the heart of the quick commerce business model. Even though companies like Zepto and Blinkit continue to deliver quickly (in an average of 15-20 minutes), the 10-minute marketing claim is no longer permitted. This regulatory move was partly in response to the mounting public and worker pushback, and it certainly changes the dynamic for companies that have relied on speed as their key differentiator.

Outcome 1: Will It Hit Sales of Quick Commerce Units?

When quick commerce first launched, the idea of ultra-fast delivery led to a surge in customer satisfaction, which in turn resulted in repeat orders. As consumers were offered the ability to get groceries, daily essentials, and even more complex items at lightning speeds, quick commerce saw a sharp increase in gross order value (GOV).

The 10-minute promise became a significant marketing tool, making the service seem uniquely valuable compared to traditional e-commerce platforms with longer delivery times. However, as the quick commerce model evolved, the promise of a strict 10-minute delivery became more of a marketing tool than a guarantee.

While the 10-minute claim has now been banned from public advertising, it is important to note that the average delivery time in quick commerce has already shifted to about 15-20 minutes. Despite this, many consumers are still satisfied as long as the delivery remains significantly faster than traditional options.

So, will this regulatory change significantly affect sales? It’s unlikely. The speed and convenience remain embedded in the customer’s mind, even if the marketing around the 10-minute claim has to change. The quick commerce business is built on the foundation of a faster-than-usual delivery experience, and as long as that core value remains intact, the brand loyalty and repeat business will continue.

Outcome 2: Can It Lead to a Spike in Competitive Discounts?

One of the underlying factors that quick commerce companies have leveraged in their growth is the use of aggressive discounting. Discounts were used to attract consumers, incentivizing them to make purchases despite the higher price points for the convenience of speed.

However, as many of these companies face cash burn and operating losses, the prospect of hefty discounts to attract consumers has become a risk that companies are less likely to take. In the early days of quick commerce, heavy discounts were effective in bringing in new customers, but as these companies scale up, sustaining such discounts becomes financially unsustainable.

Quick commerce companies like Blinkit and Zepto are focused on justifying their heavy investments in dark stores and logistics infrastructure, which is more expensive than traditional e-commerce models. While they might offer selective discounts during peak periods (e.g., festivals), it is unlikely that they will engage in aggressive discounting strategies as a long-term model, given the already thin margins in the sector.

Outcome 3: Surrogate Advertising as a Way Out

While the government’s intervention has restricted direct advertising of the 10-minute delivery claim, quick commerce companies may seek surrogate advertising as a workaround. Surrogate advertising has been a well-known strategy used by industries like alcohol and cigarettes in India, where brands cannot directly advertise their products due to regulatory restrictions.

Quick commerce companies might need to adopt a more subtle approach to continue emphasizing their speed of delivery without directly stating it. This could involve associating with events, sponsoring speed-based activities, or collaborating with brands that share similar values of efficiency and speed. For example, sponsoring fast-paced events like marathons, car races, or technology-driven competitions might help communicate the speed element while staying within the regulatory limits.

As restrictions increase, companies often find creative solutions to keep their core value propositions visible to consumers. In this case, quick commerce brands might engage in more strategic brand associations rather than directly advertising delivery speed.

Conclusion

The government’s decision to ban the 10-minute delivery claim has certainly impacted the marketing strategies of quick commerce companies, but it may not fundamentally alter their business models. The core value proposition of quick commerce - fast delivery and convenience - remains intact, even without the explicit 10-minute promise.

While sales are unlikely to be significantly impacted by the change in marketing, the move may spur companies to innovate in their approach, from competitive pricing to surrogate advertising. As the market matures, quick commerce players will need to balance speed and sustainability, ensuring their model remains competitive while managing profitability.

Key Takeaways

• The government has banned quick commerce companies from advertising the 10-minute delivery claim.
• The average delivery time is now 15-20 minutes, which still offers a significant advantage over traditional e-commerce.
• While the ban may not hurt sales, it could affect marketing strategies in the short term.
• Quick commerce companies are unlikely to return to aggressive discounting due to cash burn and sustainability concerns.
• Surrogate advertising could emerge as a creative workaround for quick commerce players to maintain their brand messaging.
• The regulatory intervention highlights the need for sustainable business models in fast-growing sectors like quick commerce.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities or mutual fund schemes.