India’s tryst with express delivery began when popular QSR (Quick Service Restaurant) chain Domino’s, claimed that it could deliver a pizza within 30 minutes or else the pizza is free. The fact that a pizza company hurrying through jam-packed roads of India could precisely deliver within the said time, added to its popularity.
Cut to 2021, where the e-commerce space is crowded with an influx of online companies emerging in the space of pharma, retail and food giving more or less similar products and services. The competition to deliver goods to consumers at a quicker pace has grown immensely which has resulted in becoming the point of differentiation. Startups are now excessively focusing on express delivery of 4-hour or 1 hour or even same day.
According to a report by RedSeer, quick commerce deliveries in less than 45 minutes is projected to be a $0.3-billion market in 2021 and is expected to grow 10-15X in the next five years -that is, $5 billion by 2025.
Why do e-commerce companies want to join the express delivery rush?
In an offline shopping experience, people get to take the product home instantly after purchase . To replicate the same, E-commerce companies are building their capacities on express delivery to up the game of customer satisfaction. The rate of customer satisfaction in online shopping is linked to the shorter turnaround time. Moreover, essentials like medicines and perishables like dairy products remain fresh for a short time.
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According to a report by RedSeer, quick commerce deliveries in less than 45 minutes is projected to be a $0.3-billion market in 2021 and is expected to grow 10-15X in the next five years -that is, $5 billion by 2025.
E-Commerce brands entering the express delivery bandwagon
Grofers
Grofers has recently launched a 15-min online grocery delivery service in Gurugram after witnessing the quicker delivery models adopted by e-commerce majors Amazon, Flipkart and JioMart.
BigBasket
Tata-owned online grocery startup BigBasket is aiming for express deliveries within 1 hour by setting more dark stores, bringing inventory and warehouses closer to the customer locations and ensuring the efficient running of cold chains to deliver perishable products with ease.
1mg
Online pharmacy startup 1mg which was already delivering within 4-5 hours of order placement in New Delhi and Gurugram but is keen to bring the delivery time to one hour and will gradually expand its quicker deliveries to rest states in India.
Netmeds
Reliance-backed pharma delivery startup Netmeds offers a standard delivery time of 24-48 hours. The pandemic has created decent demand in express deliveries especially in medicines and healthcare-related products.
Instamart
To build its hyperlocal grocery service Instamart, Swiggy has raised a whopping $1.25 billion recently and plans to invest in businesses other than food deliveries.
What lies ahead for the companies foraying into express delivery?
Express deliveries in e-commerce demand flexible and agile operations. Companies will experience a spike in the costs of operation while fulfilling express deliveries in multiple locations.
For faster deliveries, companies are keeping no minimum order value. This means that for a smaller ticket size, the costs of faster delivery will be expensive. Profits from the express delivery model will be visible after a long time with its major hurdle being small ticket size. The smaller order value will hurt margins more when the same comes for returns or exchanges.
Therefore, e-commerce startups here require patience for a minimum of 4-5 years for break-even. Till now, the companies are conditioned to a 3-4 days delivery model and plunging into express delivery will demand adequate capital investments.
