What has suddenly gone so wrong in such a short time?

Just about a year ago, quick commerce or the ability to deliver products in a jiffy was all the rage. Things seem to have changed in a very short while. What has gone wrong with quick commerce and why are platforms giving up on Q-COM? 

Commerce yes; quick no

Quick commerce was seen as the big game changer in the ecommerce area. It was all about delivering groceries in less than 20 minutes, perishables in less than 15 minutes and pizzas in a jiffy. The enthusiasm for quick commerce is suddenly missing. The first indication came when India’s largest retailer, RRVL decided to shut down JioMart Express. Retail goods will still be delivered but it would not be at those impractical times being promised. The move away from quick commerce has already been on the works quietly for some time now.

The pressure was not felt by JioMart Express alone. Blinkit, a quick commerce unit acquired by Zomato last year has stopped making time specific claims to its customers. That is a very silent way of not offering crazily quick delivery. The other big competitor in this space, Swiggy Instamart, has also done a very similar thing. They have stopped their promise of rapid delivery and now the delivery happens as per normal routine. Even the likes of Dunzo are becoming a lot more pragmatic in their promises on the delivery front. What has changed for quick commerce so rapidly, and why? 

Impractical in the first place

It was an impractical idea in the first place. With the kind of traffic jams and bad road conditions, quick commerce was never going to be possible on a grand scale. Quick commerce was very capital intensive and promise intensive business. If the time commitment is not adhered to, the entire value is gone. To run a quick commerce it needed a lot of support infrastructure like dark stores, cloud kitchens etc. The incremental gain from quick commerce would never be able to service this capital. The current unwillingness among PE funds to sign blank checks for digital platforms made it much tougher to deliver the promise. Digital outlets like JioMart Express had a very quick learning that rapid delivery was not adding much to their value proposition. It was only eroding value.

Is it the end of quick commerce?

At the end of the day, it is about the sad economics of quick commerce. The gains were never going to be more than the costs, especially when capital was being rationed out. Quick commerce can still work in very niche deliveries for very niche customers where the ROI is the justifying factor. In the next 2 years, most of the digital companies have to either show positive EBITDA or give real evidence of reducing cash burn. There will be no place for companies that are still burning cash to gain top line. Quick Commerce is dispensable for now!