Blinkit stays ahead, but cracks emerge in India’s quick commerce growth story

The quick commerce landscape in India is entering a more competitive phase, revealing signs of growth moderation for key players as they continue heavy spending to capture market share. Recent data from Swiggy’s Instamart shows a decline in Gross Order Value (GOV), which fell to Rs 7,881 crore in Q4, down from Rs 7,938 crore the previous quarter. This slowdown coincides with mounting competition within the sector. Zepto, a rapidly emerging competitor, has received SEBI approval for an IPO, despite reporting significant losses that surged 177% year-on-year to nearly Rs 3,300 crore for FY25, compared to Rs 1,249 crore in FY24. This highlights the substantial cash burn involved in the quest for rapid growth in quick commerce. Meanwhile, established players like Flipkart Minutes, Amazon Now, and BigBasket are broadening their reach, albeit with more cautious strategies compared to the earlier aggressive expansion tactics. Analysts suggest that the industry is transitioning into a phase where balancing growth ambitions with operational efficiency and profitability is crucial. Blinkit stands out as the only profitable platform among major players, with its Net Order Value (NOV) rising to Rs 14,386 crore in Q4 from Rs 13,300 crore in the prior quarter. However, even Blinkit is experiencing a slowdown, as its NOV growth rate decelerated to 95% year-on-year for Q4FY26, down from 120% in Q4FY25. CEO Albinder Dhindsa indicated that this moderation was anticipated due to the company's larger scale. Dhindsa noted that Blinkit achieved a 104% compound annual growth rate (CAGR) in NOV from FY23 to FY26, with expectations of maintaining growth above 60% CAGR over the next three years. He emphasized that quick commerce penetration in India remains largely concentrated in the top 15-20 cities and specific categories, indicating substantial room for further growth. As companies become more cautious about growth strategies that rely on deep discounts and incentives, Swiggy recently discontinued its no-fee promotional campaign, signaling a shift towards more sustainable economic practices. The company acknowledged that while increased incentives might boost growth temporarily, such strategies are not viable long-term due to the high operational costs inherent in quick commerce. With the demand for instant delivery rising, companies are now challenged to enhance unit economics, branch out from grocery-centric strategies, and maintain user engagement without excessive reliance on discounts. Aakash Agrawal, Head of Digital and New Age Business at Anand Rathi Investment Banking, remarked that the quick commerce sector is maturing after a period of explosive growth over the past few years. He pointed out that penetration in affluent urban areas is already high, which is naturally leading to a moderation in growth rates. Agrawal suggested that the next wave of expansion will likely focus on increasing wallet share, improving purchase frequency, and penetrating Tier-2 and Tier-3 cities rather than merely adding metro users. He clarified that the current moderation in growth for Blinkit and Instamart should not be misconstrued as a decline in structural demand but rather as a response to heightened competition and a normalization after previous rapid growth. He further explained that the sector is shifting from a ‘land-grab mode’ to one where execution quality, product assortment, and unit economics become more significant than the speed of expansion. On the topic of profitability, Agrawal noted that quick commerce economics hinge on factors like order frequency, average order value (AOV), and basket assortment. While logistics and delivery efficiencies have improved, the next hurdle for platforms is enhancing the quality and value of customer baskets. Blinkit’s superior profitability is attributed partly to its higher AOV, and for other players, increasing AOV by 20-25% is essential for better economic outcomes. Additionally, profitability can be further bolstered by improving basket assortment, particularly through higher-margin categories, and increasing purchase frequency among existing users. Agrawal believes that future growth for quick commerce may extend beyond groceries to higher-margin segments such as beauty, pharmacy, electronics, pet care, and lifestyle products, which are already gaining traction. He forecasts that over time, quick commerce could evolve into a broader convenience infrastructure rather than being limited to grocery deliveries.