10-min delivery boom: Companies to watch out for profit, regulatory hiccups

MUMBAI: From stocking up on breakfast staples milk and eggs, packs of noodles and chips to satisfy midnight cravings and buying iPhone 16 at the tap of their smartphones, Indians shopped their way through quick commerce platforms last year.
10-minute deliveries will continue to be the flavour of 2025 as companies add more categories, expanding consumer use cases; people especially in the bigger metros do not mind paying some extra amount to get grocery and other supplies delivered at their doorstep and save up on time. But as players spend billions of dollars to scale up and enter smaller cities, all of which may not fetch high returns on investment, their profitability may come under pressure.
Potential regulatory challenges could be another area firms may have to navigate in the New Year amid demand from trade groups to inspect quick commerce companies for alleged violation of FDI norms and putting small kiranas out of business.
Earlier this week, the commerce and industry ministry met with firms, the first among a series of such meetings to understand their business models and seek comments on complaints levelled against them by FMCG distributors’ association and other industry bodies, sources told TOI.
Purchases of electronics, small appliances and kitchen appliances will increasingly shift to quick commerce platforms going ahead, said analysts. In fact, a wider selection of products has already helped companies expand their average order value (AOV). From about Rs 300-350 before, AOVs have increased to Rs 450-600, said Shivaraj Jayakumar, practice leader, consumer and internet at Praxis Global Alliance.
Over the years, companies in the space have quickly moved beyond grocery to deliver a host of non-grocery items to consumers with some of them like Zepto now testing the potential of 10-minute food delivery with the launch of a separate cafe app. For FMCG companies, about 30% of the online sales have already moved to quick commerce. “From consumers’ point of view, there is definitely the need for quick commerce. The platforms offer a lot of convenience,” said Jayakumar.

The growth of rapid deliveries has nudged e-commerce giants Flipkart, Amazon and even fashion player Myntra to foray into the space. “Myntra has made the move at the right time. Quick commerce is growing fast and even if 10% of the fashion sales move to the 10-minute delivery platforms, it will be challenging for Myntra. They have to be there,” said Satish Meena, adviser at Datum Intelligence. Already, companies ranging from Fabindia and Decathlon to Bata have launched their selection on quick commerce platforms with more brands queuing up to take a bite of rapid deliveries.
The rising influence of the Gen Z in terms of dictating household spends will continue to fuel appetite for quick commerce and companies will only leverage this trend. “Consumption patterns are changing. The younger lot is much more impatient and companies are trying to capture this cohort because the market size then increases for them,” said an industry executive. Quick commerce sector is estimated to surpass $6 billion in sales in 2024 from $3.5 billion in 2023, industry data suggests. “In 2025, consumers will have access to an even broader selection of general merchandise-from pharma, electronics and fashion to kitchen essentials delivered to their doorstep in 10 minutes,” said a Swiggy Instamart spokesperson adding that the company will set up bigger dark stores in tier one and two cities, equipped to house over 50,000 products.
The sector seems to be on a good stead and companies have found favour with investors-Zepto alone bagged over $1 billion in funding in 2024; however, as companies plot their expansion by entering smaller cities, profitability will be a challenge. “People in smaller cities do not consume very high AOV categories. For instance, an item like liquid detergentwhich is popular in metros offer better margins than detergent which finds space in more households in smallercities,” said Jayakumar.
Beyond cities like Kochi, Jaipur which house tech talent with spending power, scaling in tier two and three cities may be difficult and as companies expand, profitability may be a challenge which is what happened with food delivery as well, said analysts. Major players Swiggy (Instamart separately is also in losses) and Zepto’s businesses remains in the red, filings showed. While Swiggy posted consolidated losses of Rs 625 crore in the Sept quarter, higher sequentially, Zepto’s FY24 losses stood at Rs 1,200 crore. Blinkit reported higher adjusted EBITDA losses in Q2 sequentially.