Walmart-owned Flipkart, Amazon are squeezing India’s quick commerce startups

The quick commerce sector in India is witnessing a remarkable surge, with demand for fast-delivery services soaring for various players. However, the aggressive strategies implemented by industry giants Flipkart and Amazon are escalating competition in an already saturated market, where the quest for profitability has become increasingly challenging. Flipkart, a key player in India's e-commerce landscape, has recently accelerated its foray into quick commerce, surpassing 800 dark stores—distribution hubs for online orders—as of this week. The company's ambitious plan aims to double this number by the end of 2026, as reported by UBS. This expansion comes at a time when the quick commerce sector is entering a highly competitive phase, prompting various companies to reevaluate their strategies amidst rising operational costs. Despite entering the quick commerce arena later than competitors like Blinkit, Swiggy, and Zepto, Flipkart has made significant strides with its service, Flipkart Minutes, launched in August 2024, which promises deliveries in as little as 10 minutes. Currently, over 6,000 dark stores are operating across the country, resulting in substantial overlap among providers in major urban areas, intensifying the competitive landscape, according to a Bernstein report. While Flipkart's network still trails behind market leader Blinkit, which boasts over 2,200 dark stores, Flipkart plans to extend its reach beyond metropolitan centers to fuel growth. This strategy contrasts with Blinkit's focus on scaling to 3,000 dark stores by 2027 while concentrating on its top 10 cities. According to Satish Meena, founder of Datum Intelligence, Flipkart's aggressive expansion reflects its 'Walmart DNA,' which emphasizes broadening market opportunities to achieve dominance. Notably, Flipkart is already seeing a shift, with 25-30% of its quick commerce orders originating from smaller towns, showcasing its strategy's potential beyond urban areas. Despite this progress, demand for quick commerce primarily remains concentrated in larger cities. Bernstein's analysis indicates that the top eight cities in India operate over 3,800 dark stores among the five largest players, with the potential for profitability largely driven by these urban markets. Karan Taurani, executive vice president at Elara Capital, highlights that metro areas present better return ratios and profitability due to higher customer density, which optimizes dark store efficiency. However, some analysts remain optimistic about growth prospects in smaller towns, suggesting that broadening product offerings could lead to significant gains. Currently, quick commerce operates in about 125 cities, with dark stores taking between six to 12 months to mature and achieve profitability, according to Aditya Soman, a senior research analyst at CLSA. Many newer stores in smaller markets are still in developmental stages. Amazon, having entered the quick commerce scene shortly after Flipkart in late 2024, is also ramping up its efforts, operating around 330-370 dark stores out of approximately 450-500 launched so far, as detailed by UBS. To remain competitive, Flipkart is not only expanding its dark store network but is also pursuing aggressive pricing strategies, offering discounts of approximately 23-24% across various categories. This approach aims to draw in users in a market where price and convenience are vital. Recent insights from brokerage firm JM Financial indicate that Swiggy's quick commerce division finds itself in a precarious position, caught between growth ambitions and profitability challenges, raising concerns about potential shareholder impacts. Meanwhile, shares of Eternal, which owns Blinkit, have declined by about 15% this year, while Swiggy's stocks have plummeted over 29%. In contrast, Zepto is preparing for its public debut on Indian stock exchanges. As Flipkart and Amazon reshape the competitive dynamics of the quick commerce sector, industry experts like Ankur Bisen from Technopak Advisors note that the landscape has evolved beyond its startup roots, signaling a shift towards dominance by larger players. The current economic environment and limited differentiation among services could lead to further consolidation in the market as companies vie for the same customer base in an increasingly discount-driven environment.