As many questions about the need and sustainability of 10-15 minute deliveries in India, Deliveroo’s VP Engineering and Country Head India, Sashi Somavarapu, said that it is too early to be judgmental about the growth of quick commerce in India.
Deliveroo is a UK-based on-demand delivery company that started by delivering food orders from local restaurants in 2013 and later expanded to grocery and rapid medicine deliveries. The company currently operates in 11 markets which do not include India. However, Deliveroo set up an engineering centre in Hyderabad earlier this year.
“It is too early to be judgmental about whether quick commerce companies will make money or whether they will exist or not. For players, that have sharpened their tools during the pandemic, I think they have a good growth story ahead. We have seen customers pay for instant deliveries in mature markets like the UK and the US. I expect the same to happen in India as well,” Somavarapu told BusinessLine.
He sees a parallel between the e-commerce growth trajectory and hyperlocal delivery space, especially in food and quick commerce deliveries. The instant delivery customer is very different from the millennial or Gen X customers. “Patience is the key and growth will come to the sector,” he added.
The sustainability of quick commerce players like Swiggy Instamart, Blinkit, and Zepto is often questioned because of their high cash burn business models and Indian consumers’ unwillingness to pay a convenience fee. Experts say that while some sections of the Indian consumers have gotten used to paying for commerce, it is still a very limited user base.
Somavarapu noted that Deliveroo charges a delivery fee on all orders. “Though I can’t comment about the Indian segment, we do charge customers for quick commerce in all our operational markets. At end of the day, it is a customer equation that one needs to crack, and are customers willing to pay for deliveries, most probably, the answer is yes. We have seen that happen in the e-commerce segment as well,” he said.
According to consulting firm RedSeer, India’s quick commerce market is expected to witness a 15X growth by 2025, reaching a market size of nearly $5.5 billion. This market size would put India ahead of other leading markets (including China) in terms of quick commerce adoption. The total addressable market (TAM) for quick commerce in India stands at about $45 billion, and metro and tier 1 cities drive this market.
No plans of India foray
Commenting on Deliveroo’s plans to enter the Indian market, Somavarapu said that there are already a couple of players in India’s quick commerce space, and Deliveroo does not generally enter an already crowded market. However, Deliveroo did open an India Engineering Centre (IEC) in Hyderabad earlier this year and wants to hire 150 people in India across tech and product by the end of this year.
The employee numbers can grow substantially in the subsequent years, Somavarapu added. In 2023, the company might consider adding more offices outside Hyderabad, depending on whether there is a cluster of its team around a particular metro or city.
Deliveroo said it has over 190,000 riders, 160,000 restaurant partners, and 13,000 grocery sites, which have helped it clock 301 million deliveries in 2021. The company also has over 300 edition kitchens, which are delivery-only or cloud kitchens set up in partnership with restaurant brands.