Can Quick Commerce Scale Beyond 10,000 Dark Stores? Blume's Sajith Pai Weighs In

When discussing metros, it is important to consider the definition of a metro. There is no standardised definition. However, if we look at cities with a population of more than a million, there would be a certain number of such cities in India—perhaps 50 or 55. I am not completely certain of the exact number. 

Beyond that, Blinkit is already operating in 85 cities or towns, with some locations having more than two stores. My perspective is that quick commerce platforms have the potential to expand beyond metros, provided there is sufficient population density in these areas and adequate affluence.  

Affluence, in this context, refers to purchasing power. As long as these two conditions are met, the environment is favorable for quick commerce. Even in areas with relatively lower density, platforms can still perform well if there is enough affluence, as they can offer higher-value SKUs. This includes not just groceries but also electronics and other product categories, which can contribute to profitability.  

I strongly believe that expansion beyond metro cities is possible. Quick commerce platforms could potentially operate in 100 to 150 cities.

However, as Blinkit has stated, 8% of their top-performing cities contribute to 80% of their total sales. A significant portion of revenue continues to come from a small number of cities. 

While there may be some changes over time, it is unlikely that the overall distribution of sales will shift drastically. Even within large cities, variations exist. For instance, an analysis by HDFC Securities of Blinkit’s stores in NCR found a power law distribution. The top one-third of stores generate the majority of the volume, while many smaller localities in certain areas do not attract enough traffic and sales.  

City-wide differences are not the only factor; variations exist within cities as well. Different localities will exhibit distinct consumer behavior. For example, the purchasing patterns in Indiranagar will be significantly different from those in another area.

As long as they triple, it is acceptable. However, when they do, they will realize that some localities are not suitable as they do not generate sufficient order volume to justify operations. In such cases, they may need to make adjustments. They might shut down certain locations or focus more on areas with better performance.

We will see some of that happening. I believe tripling is reasonable over the next three to four years. However, expanding much beyond that—such as projections of 10,000+ stores—seems excessive at this point. It may evolve over time.

‘Quickish Commerce’ refers to the growing trend where traditional e-commerce players like Amazon are shortening their delivery timelines to compete with quick commerce. 

Once speed has been introduced in quick commerce, the sector will not wait. Quick commerce will take the approach of moving faster before it gets disrupted or faces competition.

For example, in Noida, where I stay, I have received deliveries from Amazon within six hours. If I place an order in the morning at 11:00 AM, I receive the item by 4:30 or 5:00 PM, sometimes by 6:00 PM. These have been for items like socks and similar products.

This shows that rapid delivery is possible. However, companies will need to rethink their warehousing strategy. Currently, they have large warehouses designed for scale, but they might need to transition to a more boutique-style model to meet faster delivery demand.

It has already started. One approach is franchising, which is a relatively simple model. In fact, Blinkit has mentioned this, and Zepto has also adopted it. In this model, the franchisee provides the real estate and manages the staff while adhering to the company's terms, protocols, guidelines, and service delivery standards. 

However, to clarify, the franchisee does not hire the workforce themselves. The employees are still Blinkit’s staff, but the franchisee is responsible for managing the space and handling operational issues related to those employees. If there are any staffing concerns, they have to address them, but the hiring itself is done by Blinkit.  

Franchising is one method. Another question is whether these platforms will ever partner with Kirana stores. I am not sure, but it is a possibility. Zepto initially started as Kirana Cart and collaborated with Kirana stores, but maintaining a consistent experience with them is challenging because inventory varies across different stores.  

However, a hybrid model could emerge—where a Kirana store is allocated a section specifically for Blinkit products. This way, Blinkit could ensure certain items are always in stock, and their teams would pick up the orders. How this model evolves remains to be seen, as there are multiple potential combinations.  

I do see partnership models expanding including franchising and possibly collaborations with Kirana stores. If government regulations mandate partnerships with Kirana stores, companies may be more open to adopting this model.