Companies

With Grofers entering the whistle-stop delivery space, Swiggy, Dunzo could feel the heat

Yatti Soni Bengaluru | Updated on July 29, 2021

In a company blog post, Grofers co-founder and CEO Albinder Dhindsa announced the launch of its 15-minute deliveries in Gurugram

With the grocery delivery platform Grofers launching rapid deliveries within a time frame of 15 minutes, the instant grocery delivery space could see a turf-war among the contenders.

The pandemic has brought a shift in consumer behaviour from seeking discounts to choosing convenience. This has opened up the market for instant grocery delivery services like Dunzo and Swiggy Instamart. While Swiggy plans to invest heavily in its non-food delivery verticals, Grofers announced on Wednesday that it will also foray into the market.

In a company blog post, Grofers co-founder and CEO Albinder Dhindsa announced the launch of its 15-minute deliveries in Gurugram. “Our work over the last five years allowed us the tools and the privilege of enabling an ecosystem that could promise to deliver groceries to every household in Gurgaon within 15 minutes,” Dhindsa said.

Commenting on the importance of speed in the instant grocery delivery or quick commerce segment, Mukesh Kumar of RedSeer told BusinessLine that European quick commerce companies like Gorillas are able to offer 10-15 minute deliveries. However, in India, getting to 10-15 minute delivery time is logistically challenging.

“Given, our infrastructure is not built that way and we have traffic problems in most cities, the quality of roads are not good and so on. However, 20-minute deliveries are possible here, which in some cases are done by Dunzo and Swiggy Instamart,” he added. Dunzo and Swiggy Instamart claim a delivery time of about 30 minutes on their website.

Key factors in establishing dominance

Further, talking about the key factors that would help any player establish dominance in the quick commerce segment, Kumar said, “speed, selection, and reliability are the key aspects to win the market in this segment.” The consulting firm’s consumer surveys with mid-to-high income households in Bengaluru, Delhi, and Mumbai showed that convenience of ordering and speed of delivery are the most important criteria for customers making unplanned purchases online.

In an attempt to build such an infrastructure, Grofers has been using its network of partners in Gurugram to directly source products from brands. The company has also started an express partners program to set up micro-fulfilment centres or dark stores across the city. Express partners are required to have a ground floor commercial property with over 2500-3500 square feet parking space for about 20 bikes, and space to park a 14-foot truck or canter. The 2500-3500 square feet micro-fulfilment centres or dark stores are characteristic to companies operating in quick delivery space.

“The second most important factor of a quick commerce business is a network of dark stores or micro-fulfilment centres. Both Swiggy Instamart and Dunzo started with a marketplace model for quick commerce deliveries but are now moving towards a dark store model (for instance, Dunzo started Dunzo Daily), where they are able to control the availability and quality of their product catalogue,” said Kumar.

The Grofers’ announcement comes in the background of Swiggy’s commitment to double down on its non-food delivery businesses like Instamart. Swiggy’s CEO Sriharsha Majety recently said in a press statement that they will be investing a big part of their $1.25 billion fund-raisings in non-food businesses. Majety added that these verticals have witnessed tremendous growth in the past 15 months of the pandemic.

Grofers’ Dhindsa also noted a growing consumer demand in his blog post. He said, “when the first wave of the current pandemic hit…we recognised that our users’ needs were distributed throughout the month when they needed to access grocery services for many use cases.” The company claims that over 7,000 households in Gurugram have used Grofers’ quick delivery product on July 26.

Published on July 29, 2021

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