India’s quick commerce market is growing at a blistering pace, with groceries, medicines and even electronics reaching customers in under 10 minutes.
But the companies that pioneered this business are suddenly facing their biggest challenge yet.
Shares of Eternal, the parent company of Blinkit, have fallen about 28% from their all-time high in October, while Swiggy has slumped around 47% from its peak in September. Together, the two companies have lost more than $15 billion in market value as investors grow increasingly concerned about intensifying competition, according to a Bloomberg report.
The reason isn’t slowing demand. Instead, investors are worried that Amazon and Walmart-owned Flipkart are aggressively expanding into quick commerce, triggering what could become a prolonged battle for market share.
According to Bloomberg, Amazon and Flipkart are rapidly expanding their network of “dark stores”—small warehouses located close to customers that enable deliveries within minutes.
Amazon recently announced plans to expand its Amazon Now service from just over 15 cities and towns to more than 300 across India. Flipkart Minutes has already scaled to around 1,000 dark stores across 130 cities and plans to increase that to 1,500 stores in more than 180 cities over the coming months, the report said.
The aggressive expansion means established players such as Blinkit and Swiggy may have to spend even more on new warehouses, delivery networks and customer discounts to defend their leadership.
For consumers, more competition usually means better offers and faster deliveries.
For investors, however, it raises concerns about profitability.
Quick commerce is an expensive business. Companies need to continuously invest in dark stores, logistics, delivery executives and promotional offers. If competition intensifies, profits could take even longer to materialise.
“The challenge right now is that the competition is really high, so near-term profitability is depressed. The risk is the duration of the competitive intensity,” Franklin Templeton fund manager Yi Ping Liao told Bloomberg.
The heightened competition is also casting a shadow over Zepto’s proposed IPO.
According to Bloomberg, the company is planning to raise as much as $1 billion through its public offering. However, investors are becoming more cautious as deep-pocketed rivals enter the market and the battle for customers intensifies.
Shares of Zepto in the unlisted market have already declined more than 32% since February, reflecting growing concerns over valuations and profitability, the report added.
Brokerages believe the competition is unlikely to ease anytime soon.
Macquarie analysts, quoted by Bloomberg, said they expect “rising and persistent competitive intensity for years, not quarters” from players including Amazon Now, Flipkart Minutes and omnichannel retailers such as Reliance Retail. The brokerage has also lowered its target prices for Eternal and Swiggy.
Reliance Retail is also expanding its quick commerce business through JioMart, leveraging its network of more than 3,100 stores spread across over 1,200 cities, according to Bloomberg.
Despite the pressure on listed companies, the outlook for consumers remains positive.
According to an Emkay report cited by Bloomberg, quick commerce demand is expanding beyond metros into Tier-2 and Tier-3 cities, showing that the model has found acceptance across India. However, the brokerage also warned that the sector remains in a “land-grab phase”, with companies prioritising growth over profits.
That means shoppers are likely to continue benefiting from discounts, faster deliveries and wider product choices.
For investors, however, the picture is less straightforward. As Amazon, Flipkart, Blinkit, Swiggy, Zepto and Reliance battle for dominance, the biggest question is no longer who can grow the fastest—but who can build a profitable business while doing so.