Mumbai: Reliance Industries said an analysis of the cost structures of some of the players in the quick commerce market suggest that acquisition does not make sense.
"We do not want to leave any pocket where we are not competitive. Organic versus inorganic is an interesting one. It is very difficult to integrate somebody with your existing network. We have been focusing on building our network organically. And we have a big customer base which is already there with us," added Dinesh Taluja, CFO at Reliance Retail, at a post earnings call, adding it only sets up dark stores where there is enough order volume, but its store cannot support it, or has no presence.
"So, economics is much better for me because I am able to leverage existing infrastructure. And most of my dark stores are in places where the order volumes are high and dark stores are a positive contribution margin from day one," he said.
In India, the contribution of quick commerce to ecommerce sales has been doubling every year on a small base and accounts for 3-6% for most consumer goods firms. While the channel started off as a top-up service for last-minute purchases for groceries and small-ticket items, it is now the fastest-growing sales channel, especially for premium portfolios.
India's quick commerce sector has rapidly scaled into a $10 billion gross merchandise value market with 30 million monthly users, but metros drive 80% of the total sales, and unlocking profitable growth across non-metros has been a challenge. Despite large players in ecommerce including JioMart, Flipkart and Amazon, the quick commerce space belongs largely to Zepto, Blinkit and Instamart.
During the quarter ended June, Reliance said its daily orders in the quick hyperlocal commerce grew 68% quarter-on-quarter and 175% from a year ago.
According to a recent report by Redseer, quick commerce continued to grow at 150% year-on-year during the first five months of this calendar year, driven by dark store footprint expansion, selection growth, category diversification, and fierce competition - all contributing to the provision of product assortment to consumers at lightning-fast speed.
However, the retail business of Mukesh Ambani's Reliance Industries said its own stores will be the backbone of its quick service model and dark stores will supplement and help fill the gaps. Initially, Reliance was focusing on the next day delivery but realized that customers want convenience and immediate gratification and most of its competitors were focused on the metro and tier one cities, it said.
"We do not want to leave any pocket where we are not competitive. Organic versus inorganic is an interesting one. It is very difficult to integrate somebody with your existing network. We have been focusing on building our network organically. And we have a big customer base which is already there with us," added Dinesh Taluja, CFO at Reliance Retail, at a post earnings call, adding it only sets up dark stores where there is enough order volume, but its store cannot support it, or has no presence.
"So, economics is much better for me because I am able to leverage existing infrastructure. And most of my dark stores are in places where the order volumes are high and dark stores are a positive contribution margin from day one," he said.
In India, the contribution of quick commerce to ecommerce sales has been doubling every year on a small base and accounts for 3-6% for most consumer goods firms. While the channel started off as a top-up service for last-minute purchases for groceries and small-ticket items, it is now the fastest-growing sales channel, especially for premium portfolios.
India's quick commerce sector has rapidly scaled into a $10 billion gross merchandise value market with 30 million monthly users, but metros drive 80% of the total sales, and unlocking profitable growth across non-metros has been a challenge. Despite large players in ecommerce including JioMart, Flipkart and Amazon, the quick commerce space belongs largely to Zepto, Blinkit and Instamart.
During the quarter ended June, Reliance said its daily orders in the quick hyperlocal commerce grew 68% quarter-on-quarter and 175% from a year ago.
According to a recent report by Redseer, quick commerce continued to grow at 150% year-on-year during the first five months of this calendar year, driven by dark store footprint expansion, selection growth, category diversification, and fierce competition - all contributing to the provision of product assortment to consumers at lightning-fast speed.
However, the retail business of Mukesh Ambani's Reliance Industries said its own stores will be the backbone of its quick service model and dark stores will supplement and help fill the gaps. Initially, Reliance was focusing on the next day delivery but realized that customers want convenience and immediate gratification and most of its competitors were focused on the metro and tier one cities, it said.
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