Rise of Quick Commerce in India | 18 Jan 2025

India's e-commerce revolution has entered its next frontier with quick commerce emerging as a game-changing innovation. While established players like Amazon and Flipkart dominate traditional e-commerce, ventures like Zepto, Blinkit, and Dunzo are carving out a distinct market in instant gratification retail. However, their meteoric rise and aggressive expansion have drawn scrutiny from government authorities following concerns raised by the Confederation of All India Traders (CAIT) about their business practices and market impact. As India's overall e-commerce market surges toward an estimated $200 billion by 2026, quick commerce represents both an evolution and disruption of digital retail, accounting for nearly $5.5 billion of this growing pie.  

How Quick Commerce is Different From Traditional E-Commerce?  

What are the Key Opportunities Associated with Quick Commerce?  

• Enhanced Urban Consumer Convenience: Quick commerce caters to the growing demand for ultra-fast delivery, especially in urban areas, where busy lifestyles prioritize convenience.  
  • With rising internet penetration and smartphone usage, urban consumers are increasingly relying on platforms like Blinkit, Zepto, and Swiggy Instamart for instant delivery of groceries, medicines, and personal goods.  
    • The rise in demand for quick delivery services, particularly post-Covid-19, has made this sector a crucial part of the urban retail ecosystem. 
  • India's internet landscape is projected to reach over 900 million users by 2025, with rural India driving much of this growth, driving demand for e-commerce services.  
• Boost to Employment Generation and Gig Economy: The rapid expansion of quick commerce is creating significant employment opportunities, particularly for delivery personnel and micro-warehouse staff.  
  • It has also contributed to the gig economy, offering flexible earning opportunities for a large section of the workforce.  
  • NITI Aayog's report on "India's Booming Gig and Platform Economy" projects India's gig workforce to reach 23.5 million by 2029-30, comprising 6.7% of the non-agricultural workforce and 4.1% of total livelihoods. 
  • Also, the growth of quick commerce also opens up part-time or night-shift opportunities, allowing individuals working during the day to earn additional income.  
    • This flexibility further strengthens the gig economy, providing diverse earning avenues for the workforce. 
• Driving Innovation and Technology Adoption: Quick commerce is driving advancements in technology, including AI-powered demand forecasting, inventory optimization, and route planning.  
  • Companies are innovating with micro-warehousing models, dark stores, and predictive algorithms to ensure rapid fulfillment of orders.  
  • This focus on technology integration aligns with the goals of the Digital India Mission, further boosting India’s digital economy. 
  • For instance, Zepto leverages advanced AI and machine learning technologies for demand forecasting, efficient inventory management, and optimized delivery routes. 
    • The sector is also leveraging technologies like drone-based delivery pilots in remote areas. 
  • Swiggy Instamart launched InstaWarmer at CyberHub, Gurugram, offering an interactive and innovative way for visitors to experience instant warmth during Delhi's winter chill. 
• Expansion into Tier-2 and Tier-3 Cities: Quick commerce has immense potential to expand into Tier-2 and Tier-3 cities, where digital adoption and e-commerce penetration are increasing.  
  • This expansion can bridge the gap between urban and semi-urban consumers, enabling smaller cities to access the same level of convenience as metros. 
  • Tier 2 and Tier 3 cities accounted for 60% of India's overall e-commerce demand in 2023, with a projected annual growth rate of 30% by 2025, indicating strong growth potential. 
• Supporting Emergency and Essential Deliveries: Quick commerce plays a critical role during emergencies by enabling instant delivery of medicines, baby products, and other essentials.  
  • During the Covid-19 pandemic, quick commerce platforms proved indispensable in ensuring the supply of essential goods during lockdowns.  
  • Expanding this capability further can provide critical support during natural disasters or public health emergencies. 
  • For instance, amid Bengaluru's water crisis 2024, Swiggy Instamart partnered with Earth Fokus to deliver water-saving aerators within 10 minutes. 
• Contribution to the Startup Ecosystem and Investment Growth: The quick commerce sector adds momentum to India’s booming startup ecosystem by attracting significant venture capital and global investments.  
  • It has become a high-growth sector, with startups valued at billions of dollars, positioning India as a global innovation hub.  
  • In 2023, as venture capital funding for startups dwindled, Zepto defied the trend to become India’s 84th unicorn. 
• Driving Export of Quick Commerce Expertise: As India’s quick commerce companies grow, they have the potential to export their expertise and business models to emerging markets in Southeast Asia and Africa.  
  • This would not only boost India's global presence but also contribute to the export of Indian technologies and logistics solutions.  
  • Companies like Swiggy and Zomato are already exploring market expansion opportunities in regions like Southeast Asia.  

What are the Key Issues Associated with the Quick Commerce Landscape?  

• Worker Exploitation and Unethical Labor Practices: Delivery riders face immense pressure to meet ultra-fast delivery targets, often compromising their safety and well-being.  
  • This gig-based model lacks labor protections and is heavily criticized for promoting unsafe working conditions with adequate social security, insurance, or fixed salaries, leaving them vulnerable to financial instability.  
  • In social media, a video shared by a delivery agent, claiming to earn just Rs 300 for six hours of work on Diwali, sparked an online debate about gig economy working conditions, particularly during festive seasons. 
    • In November 2024, Bengaluru traffic police collected ₹30.57 lakh in fines from delivery riders in a crackdown.  
  • Protests by gig workers demanding better pay and benefits have been witnessed across cities like Bengaluru and Mumbai. 
• Unsustainability of the Business Model: The quick commerce business model heavily relies on discounts, cash burn, and investor funding, making it unsustainable in the long term.  
  • Companies struggle to balance operational costs with profitability, as high delivery expenses and customer acquisition costs erode margins. 
  • Overdependence on venture capital without a clear path to profitability raises concerns about the sector’s viability. 
  • For instance, industry reports indicate that Zepto has burned through approximately Rs 1,200 crore in the last quarter of 2024, averaging nearly ₹400 crore per month. 
    • Despite high valuations, most players remain unprofitable, relying on frequent fund infusions to survive. 
• Impact on Local Kirana Stores: The rapid expansion of quick commerce platforms has adversely affected local kirana stores, which have traditionally been the backbone of Indian retail.  
  • The convenience, discounts, and ultra-fast deliveries offered by these platforms have led to a significant shift in customer preferences, resulting in reduced footfall and sales for neighborhood shops.  
  • Additionally, the disruption of supply chains and dependency on aggregators for survival increase financial strain on small retailers.  
• Strain to Urban Infrastructure and Traffic Congestion Issues: Quick commerce adds strain to already overburdened urban infrastructure, with delivery fleets contributing to traffic congestion and pollution.  
  • The constant movement of delivery riders on two-wheelers, particularly during peak hours, creates inefficiencies in traffic management.  
  • The lack of dedicated delivery lanes or logistics infrastructure further exacerbates these problems. 
  • Mumbai and Bengaluru have been ranked 5th and 10th in the global ranking of urban congestion, contributing significantly to peak-hour traffic.  
• Environmental Impact of Rapid Deliveries: The quick commerce sector is contributing to rising carbon emissions and packaging waste, with most deliveries relying on non-sustainable practices.  
  • Fast deliveries require extensive use of motorbikes and single-use plastic packaging, increasing the environmental burden. 
    • The sector lacks a unified effort to adopt green logistics or carbon-neutral delivery practices. 
  • Though Zomato and Swiggy initiated a move to reduce plastic waste by introducing 100% plastic-neutral deliveries, they failed to implement them.  
    • E-commerce transportation contributes significantly to CO2 emissions, with India accounting for 285g CO2 per parcel, making up 51% of total delivery emissions. 
• Limited Focus on Tier-2 and Tier-3 Cities: While quick commerce thrives in Tier-1 cities, it has largely failed to penetrate Tier-2 and Tier-3 cities, where infrastructure and demand patterns differ.  
  • Poor digital penetration, lower disposable incomes, and logistical challenges hinder the sector’s growth in semi-urban and rural areas.  
    • This limits the scope of market expansion and keeps quick commerce confined to urban hubs. 
  • For instance, while Blinkit offers services in 26 cities, 80% of the new dark-store openings took place in the top 8 cities only. 
• Consumer Protection Concerns: The push for speed in deliveries often results in quality compromises, with incorrect or damaged products being delivered to customers. 
  • Additionally, opaque pricing structures, hidden delivery fees, and inconsistent refund policies harm consumer trust.  
    • Lack of regulatory oversight on quick commerce operations raises issues of accountability and transparency. 
  • A recent report highlights that 48% of online shoppers faced issues with incorrect products due to return and refund policies, while 20% received fake or counterfeit items at least once in the past year. 

How India Can Effectively Regulate Quick Commerce and the Broader E-Commerce Sector?  

• Strengthen Labor Protections for Delivery Personnel: The government must mandate fair wages, insurance, and safety measures for gig workers in the quick commerce and e-commerce sectors.  
  • This can be achieved by enforcing the provisions under the Code on Social Security, 2020, which aims to provide social security benefits to gig and platform workers.  
  • Companies should also be required to offer riders health insurance, accident coverage, and fixed working hours to reduce exploitation and improve their quality of life. 
• Introduce Delivery Time Standards to Ensure Safety: Regulating delivery timelines is critical to prevent overburdening delivery riders and promoting road safety.  
  • The government can mandate a minimum delivery time for non-essential goods to discourage unsafe practices and over-speeding.  
  • A public-private dialogue between regulatory bodies and companies can ensure timelines are customer-friendly yet realistic, balancing speed with rider safety. 
• Environmental Standards for Sustainable Logistics: To address rising carbon emissions and packaging waste, the government can introduce green logistics mandates.  
  • Quick commerce and e-commerce firms should transition to electric vehicles (EVs) and adopt eco-friendly packaging under the FAME scheme and the Plastic Waste Management Rules, 2022.  
  • Tax benefits and incentives could encourage companies to adopt sustainable practices, such as setting up EV-based delivery fleets or using biodegradable materials. 
• Create a Centralized Regulatory Authority for E-Commerce: A National E-Commerce Regulatory Authority should be established to oversee compliance, resolve disputes, and monitor fair practices in the sector.  
  • This body can handle issues like predatory pricing, data protection, and monopolistic practices. 
  • It can also provide clear guidelines for investments in e-commerce and quick commerce to prevent unfair market domination. 
• Mandate Data Privacy and Consumer Protection Measures: India must enforce stronger data privacy and consumer protection laws, especially as e-commerce platforms collect vast amounts of customer data.  
  • The Digital Personal Data Protection Act, 2023 should be strictly applied to regulate how customer data is stored, used, and shared.  
  • Transparency in terms and conditions for consumers, clear refund policies, and accountability for faulty deliveries should also be made mandatory. 
• Certification System for Ethical Practices: The government can launch a certification program for ethical and fair practices in e-commerce and quick commerce.  
  • Companies meeting standards for labor safety, sustainability, and customer satisfaction can be awarded a "Responsible E-Commerce" label.  
  • Linking this certification to public recognition or financial incentives could encourage self-regulation and compliance across the industry. 
• Standardize Grievance Redressal Mechanisms: The government should mandate a standardized, time-bound grievance redressal mechanism for all e-commerce and quick commerce platforms.  
  • Companies must provide transparent escalation processes for issues like late deliveries, damaged goods, and payment refunds.  
  • An independent ombudsman for consumer complaints in e-commerce could help ensure faster resolution and build trust. 
• Promote Tier-2 and Tier-3 City Penetration: The government can incentivize quick commerce and e-commerce platforms to expand into Tier-2 and Tier-3 cities.  
  • This can be linked with schemes like PM Gati Shakti to improve rural and semi-urban infrastructure, enabling better logistics connectivity.  
  • Expansion into smaller cities will ensure equitable growth, reduce pressure on metros, and promote local entrepreneurship. 
• Mandate Transparency in Pricing and Discounts: To address predatory pricing concerns, the government should require e-commerce platforms to disclose the methodology behind pricing and discounts.  
  • Companies must show clear breakdowns of how discounts are funded (e.g., subsidies, retailer contributions).  
  • This will ensure fair competition and protect smaller sellers from being undercut by unsustainable discounting practices. 
• Support MSME and Local Store Integration: E-commerce and quick commerce platforms can be mandated to source a percentage of their inventory from MSMEs and local stores.  
  • The ONDC (Open Network for Digital Commerce) framework can be used to integrate small businesses into the organized retail ecosystem. 
  • This will ensure fair market access for MSMEs and foster localized economic growth. 

Conclusion:  

Quick commerce is revolutionizing India's retail landscape by meeting the demand for instant gratification, offering opportunities for innovation, employment, and market expansion. However, challenges such as worker exploitation, environmental impact, and competition with local stores need careful regulation. Strengthening labor protections, environmental standards, and consumer rights is essential for sustainable growth. A centralized regulatory body, transparency in pricing, and promoting equitable growth in smaller cities can ensure a fair and balanced sector.