1 in 4 Indian households that shop for groceries online is using Quick Commerce apps to buy last minute essentials and indulgence foods

February 18, 2022, New Delhi: Since the 1st phase of the pandemic in March 2020, many households have taken to eCommerce sites and apps for all types of shopping needs, getting what they need delivered at home and minimizing contact with others. The emergence of quick commerce has changed the on-demand delivery landscape by reducing delivery time from 12-24 hours to 10-60 minutes. While traditional online grocery suppliers now include Big Basket, Amazon Fresh and Jio Mart, the quick commerce or fast delivery services are being offered by Swiggy Instamart, Blinkit (earlier Grofers), Flipkart Quick, a new platform Zepto. Ola Dash and Big Basket Now are also piloting fast grocery delivery. Quick deliveries for many of these platforms are being made through ‘dark stores’, which are warehouses closer to end customers. However, it has been reported multiple times that delivery partners of the fast delivery or quick commerce apps are under tremendous pressure to make deliveries within the given time, which has led to speeding and other traffic violations.

Many consumers across the country and especially from metros and large cities have been using some of these services and discussing them on the LocalCircles platform. To better understand, what matters to the consumers and how they are using some of these online grocery and quick commerce platforms, LocalCircles conducted a national survey and a pilot consumer rating study in Noida. The survey focused on what matters to consumers when shopping for groceries online and to understand the most important factors for consumers while shopping for groceries online. Further, the exercise tried to understand what percentage of households have started using quick commerce and for what category of items. The survey and the pilot study received over 30,000 responses from household consumers residing in 272 districts of India. 61% respondents were men while 39% respondents were women. 49% respondents were from tier 1, 33% from tier 2 and 18% respondents were from tier 3, 4 and rural districts.

86% of those who buy groceries online say top criteria for them are selection, availability and value; for 8% it is fast delivery

The first question in the survey asked consumers about the most important factors for them to shop for groceries online among availability, selection, prices and delivery time. In response, 21% of consumers said it is “selection and availability focus”, another 21% said “value focus”, and 8% said it is “fast delivery focus”. Breaking down the poll, 28% said “selection and availability is primary and delivery time & value is secondary” to them. 16% said it “value is primary, and selection or availability and delivery time is secondary”. 6% of consumers couldn’t say. On an aggregate basis, 86% of those who buy groceries online say the top criteria for them is selection, availability and value, while 8% say it is fast delivery. This question in the survey received 9,397 responses.

When it comes to online grocery delivery, fast delivery is low on the priority list

If the factors important to consumers shopping for groceries online are evaluated in the order of priority, it was found that 49% believe “selection and availability” are the most important factors. 37% of citizens believe “value focus” is important while only 8% said ‘fast delivery focus,” indicating that it is low on the priority list of consumers.

1 in 4 households that shop for groceries online is using fast delivery or quick commerce apps each month; 1 in 10 is placing over 10 orders a month

The second question in the survey asked, “As a household, how many orders are you placing each month with fast delivery apps (delivery within 10 minutes -2 hours)?” In response, 8% said “15-20” and 2% said “10-15.” 7% of the households each said “5-10,” “3-4” and “1-2.” On the other hand, 38% said “none” while 31% said “not applicable” as they don’t use fast delivery apps to order anything. On an average, 1 in 4 households that shops for groceries online is using fast delivery apps each month; 1 in 10 of them is placing over 10 orders a month. This question in the survey received 10,439 responses.

Of those households that are using quick commerce or fast delivery apps, 71% are using them to purchase last minute essentials or indulgence foods

The next question in the survey asked household consumers who shop for groceries online about what category of items they are ordering using fast delivery or quick commerce apps (delivery within 10 minutes- 2 hours). In response, 37% of the households said “1) last minute essentials (milk, bread, eggs, curd, fruits, veggies etc.) 11% of the households said 2) Indulgence items (soft drink, ice cream, chocolate, paan etc.). 23% of the households said “1&2” while 29% said “all my groceries.” On an aggregate basis, of those households that are using fast delivery apps, 71% are using them to purchase last minute essentials or indulgence foods while 29% are using them to order all their groceries. This question in the survey received 10,070 responses.

So, while 1 in 4 households that order their groceries online are using quick commerce or fast delivery apps, only 1 in 10 households are really active users of them and placing 10 or more orders each month. The top use case for using these apps basis the qualitative consumer feedback and findings of the survey remains last minute essentials (milk, bread, eggs, curd, fruits, veggies, etc.) at 60% followed by indulgence foods (soft drinks, icecreams, chocolates, aftermint/paan, etc.) at 34%.

To understand the consumer feedback in a bit more detail, LocalCircles also conducted a small pilot study amongst over 650 consumers who used one or more of these services in the city of Noida between September 15, 2021 to Feb 15, 2022. Based on feedback from consumers regarding the most important factors for shopping groceries online and using quick commerce, household consumers were asked to rate various providers on selection, quality, value as well as the average delivery time from 1 to 5, with 1 being the lowest and 5 being the highest. Service referred to customer service, returns, refunds and grievance redressal while value ratings indicated value for money delivered to them. At least 100 responses were received for each service provider. The grocery service providers included BigBasket, AmazonFresh, Jio Mart, Flipkart Quick, Grofers/Blinkit and Swiggy Instamart. The results revealed that while Grofers/Blinkit and Swiggy Instamart provided fast deliveries, both of them rated poorly on value for money and customer service/redressal. Their quality and selection wasn’t impressive to consumers either. Flipkart Quick delivered products within 2-4 hours and rated between 3-3.5 on a scale of 5. Jio Mart and Amazon Fresh had their strengths and weaknesses. While Amazon Fresh was rated a 4/5 on Service, it rated 3.5/5 on all other parameters of Quality, Value and Selection. Jio Mart on the other hand rated low on parameters of delivery time, quality and service with the exception of value and selection, where it rated the highest at 4 on a scale of 5. One of the top concerns people had with Jio Mart was the long lead time of 36-72 hours and that not being sustainable as many consumers said they tend to forget what they even ordered as far as fruits and vegetables go in that much time. With that, the high rating of selection may not be sustainable unless it reduces its delivery time considerably. Finally, Big Basket had the top most rating on selection scoring a 5/5 and a high rating on service with a 4/5. It rated 3.5/5 on both quality and value. On delivery though, consumers aren’t happy with the 9-12 hour long delivery time, atleast where the study was conducted and want Big Basket to lower it considerably.

Some key takeaways for platforms from this pilot study are:

• • Quick Commerce or Fast Delivery apps are driving change in consumer expectations. The 9-12 hour delivery window was acceptable to most a year ago but isn’t any more to many.
• • The primary use case of Quick Commerce apps remains last minute essentials and indulgence foods for now. However, if they want to become the primary grocery app for consumers, significant work needs to be done to improve selection, quality, service and value. Both Instamart and Blinkit are lacking on these fronts.
• • Flipkart Quick seems to be in a unique position with 2-4 hour delivery time. If it improved the same to 30-75 minutes and further improved selection, it could take marketshare from others.
• • For Jio Mart, the key is improving delivery times along with quality and service. Without 3-6 hour delivery atleast, it does not stand a chance to win marketshare. It may likely need to migrate from serving from existing Reliance Retail Stores to dark stores. The earlier publicized model of using kirana as a partner to deliver fast is likely already outdated because of the expectations set by quick commerce platforms.
• • For established players like Amazon Fresh and Big Basket, it is all about reducing their delivery times and implementing a model of 30-75 minute delivery. They aren’t going to wait any more for urgent items and more and place the order with Quick Commerce platforms and if their selection and pricing improves, Amazon Fresh and Big Basket will likely lose marketshare.
• • What all of this means for local kiranas is loss of business is on the horizon if its already not happening where these services are active. If they have some business scale, converting the store into a dark store is an option that some must consider. They can continue to operate till these platforms don’t start servicing their neighbourhoods because it will be really difficult once they arrive.

Amongst all of this, one thing is clear, the consumer will be calling the shots and be treated like a king or queen!