These platforms offering deliveries in 10-20 minutes have been trying to get consumers to shop more each time for better unit economics. Flipkart and BigBasket had earlier started offering discounted products for larger cart sizes.
BigBasket, which has pivoted to quick deliveries with BB Now, has now started offering discounts to customers making purchases of over Rs 1,500 in one go.
Others are also making similar offers.
Zepto has launched a feature offering discounts to customers with a cart size of over Rs 1,000. In some locations, it offers discounts on minimum orders of Rs 799. Flipkart has made its wholesale service available on its main app.
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“This can actually become profitable much faster,” the chief executive of an online grocery firm, who is aware of the bulk-purchase cost dynamics, told ET.
For the delivery platforms, this results in cost savings in terms of fewer trips and reduced packaging expenses, while also increasing competitiveness with value retailers such as Dmart.
“Consumers typically take advantage of bulk ordering incentives from supermarkets like Dmart by consolidating their purchases … that’s the playbook that quick commerce is also looking to replicate. While large offline retailers try to make up for high rental costs, quick-commerce players have to justify increasing expenses on account of deliveries and packaging,” a quick-commerce executive said.
“It (larger order size) is a win-win for consumers and the platforms,” said the CEO cited earlier. “Even on same-day or next-day delivery, this is something online grocers pushed. The ability to make money on this order size vs a Rs 500-600 will obviously be higher.”
The quick commerce industry executive echoed the same, saying this is essentially a way to leverage the fixed cost per order after the investments in setting up a dark store.
Basket sizes in numbers
So far on an industry level, the average order value (AOV) for quick-commerce platforms has stayed under Rs 500 and hasn’t grown rapidly.
Market leader Blinkit’s AOV for the July-September quarter was Rs 660, up 9% from the year-ago period. According to the latest available public numbers, Swiggy Instamart’s AOV for the June quarter was Rs 487, up 10% year on year. Both Zepto and BB Now customer’s average basket size is also learnt to be around Rs 500 currently.
Zomato-owned Blinkit, similar to its pole position in market share, is a proxy to the range of AOV in the industry. The food delivery AOVs for Zomato and Swiggy are in the range of Rs 430-440.
The growth in AOVs for quick commerce has been tepid despite the fast overall volume growth and expansion by platforms into categories with items of higher ticket sizes than grocery. These include segments such as electronics, toys, smartphones and home furnishing items.
Industry executives and analysts suggest that when compared with etailers, kirana stores and modern retail outlets, quick commerce has the lowest proportion of users buying large basket sizes.
A Morgan Stanley report dated November 13 said on the basis of a survey, around 51% of quick-commerce users had AOVs above Rs 750. The same metric for online retailers and supermarkets was nearly 70%.
The report estimated a bear and bull case for the quick-commerce market at $25 billion and $55 billion, respectively, by 2030. Currently, it is estimated to be around $7 billion.
“For Zepto, the (bulk) business is growing steadily and there is actually promising scale starting to emerge,” a person aware of the matter said.
In an interview with ET earlier this month, Zepto CEO Aadit Palicha said while impulse buying was coming to quick commerce, bulk and routine purchases were still largely happening with other channels such as kiranas.
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