Flipkart's dark-store dash for quick commerce takes the fast lane

Walmart-owned firm may set up thousands of them across major cities in next few months

Flipkart may set up thousands of dark stores across major cities in the country as the Walmart-owned e-commerce firm gears up to launch a quick-commerce (q-commerce) service in the next couple of months, according to sources.

A dark store is a brick-and-mortar warehouse dedicated to rapid online order fulfilment. Flipkart is planning to collaborate with various entrepreneurs and kiranas to set up these dark stores and will not own any of them. This may also create a significant number of jobs.

“Q-commerce is gaining a lot of traction from customers as they want their orders to get fulfilled fast,” said a person familiar with Flipkart’s strategy. “The firm knows that it needs to reinvent itself constantly to be relevant, and q-commerce is part of that strategy.”

The demand for q-commerce service that Flipkart is witnessing is not just for grocery selections such as fruit, vegetables, and staples, but for products related to beauty, electronics, home décor, and wellness as well.

According to industry sources, 15-20-minute deliveries provided by players such as Zepto, Instamart, and Blinkit are taking a major portion of the sales of products away from Flipkart and Amazon. Flipkart may provide 15-30-minute deliveries as part of its q-commerce service, according to sources.

To enable that, the firm is deploying capital to expand its infrastructure, seller support ecosystem, and the latest technologies. 

This includes using artificial intelligence to identify trends and patterns in consumer behaviour and better forecast demand for products and keep them ready.

Flipkart recently raised nearly $600 million in fresh funds from its parent company, Walmart, and another investor. It is in talks with investors to raise a total funding round of about $1 billion, according to sources.

Over the past few months, Flipkart has made several investments to enhance its delivery capabilities, including adding same-day delivery in 20 cities. This covers mobile phones, essential items, electronics, home appliances, fashion, books, and lifestyle products.

Flipkart has been delivering more than 120 million packages a month. It has invested in building a robust supply chain to reach customers across the country, even in very remote pincodes.

“In the dynamic landscape of retail and e-commerce, one trend has emerged as a game changer: the meteoric rise of q-commerce in India,” according to a report by Kushal Bhatnagar, associate partner, Redseer Strategy Consultants.

“Q-commerce, with a $2.8 billion current market size, is set to become a disruptive force, poised to reshape the retail industry as we know it.”

With India’s burgeoning urban population and rising disposable incomes, the demand for convenient, on-demand shopping solutions has never been greater.

Q-commerce platforms have harped on this trend and relentlessly executed instant product deliveries (eight-20-minute time frame), striking a certain chord with their target users: the GenZs and millennials residing in metros.

“Q-commerce success in India has surprised many industry experts, primarily because of multiple failure stories of similar models globally,” said Bhatnagar in the Redseer report. “With q-commerce market leaders also reporting forward movement on the path to profitability, India is poised to emerge as the pioneer of q-commerce success around the world.”

Redseer said that q-commerce has been able to sustain the pandemic-led momentum it received between 2019 and 2022, by registering 77 per cent growth in its gross merchandise value last year. This is despite 2023 being a slow consumption year, which led to nominal growth of the overall e-commerce market.

GenZs and millennials residing in cities/regions like Bengaluru, Delhi-National Capital Region, and Mumbai continued to be the flagbearers of this category.

Q-commerce platforms have mastered understanding their target customers’ purchase patterns and accordingly customising the selection and experience, according to Redseer.

Event Days in the last six months is one of the best examples of this effort. Almost all leading platforms reported record sales on days like the Cricket World Cup Final, New Year’s Eve, and Valentine’s Day.

Q-commerce firm Zepto recently said its membership programme, Zepto Pass, has got 1 million sign-ups within one week of launch.

Zomato’s quick e-commerce arm, Blinkit, recently said its gross order value grew 28 per cent quarter-on-quarter and 103 per cent year-on-year.

Instamart, Swiggy’s q-commerce business in 25 Indian cities, made “rapid strides” as customers drove growth in orders, Prosus, the food delivery firm’s largest investor, said last year.

DELIVERY, ON-DEMAND

• Flipkart planning collaboration with entrepreneurs and kiranas for setting up dark stores
• Will not own any of the dark stores
• 15-20-minute deliveries from competitors (Zepto, Instamart, Blinkit) impacting sales for Flipkart and Amazon
• Flipkart considering 15-30-minute deliveries as part of its quick-commerce service