Story continues below Advertisement Remove AdThe development comes at a time when quick commerce wars are heating up.
Badri has cut his teeth in supply and distribution which gave him the necessary skills for Flipkart’s quick commerce play.
“Flipkart feels there is no merit in going all out and setting up new dark stores for its quick commerce play.
Story continues below Advertisement Remove Ad“Flipkart is instead partnering with neighbourhood kirana stores which will double up as dark stores for the company.
"All quick commerce companies need a capital investor who will put in the money on their behalf.
The move to bank on kirana stores comes at a time when analysts believe Indians will graduate from unorganised retail to quick commerce, thanks to the latter’s growing prominence.
Flipkart’s quick commerce plans are firming up, as competition intensifies in the space.
The Walmart-owned e commerce platform has given Hemant Badri, its SVP and Group Head of Supply Chain, additional responsibilities to spearhead the company’s quick commerce ambitions, people aware of the developments told Moneycontrol.
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The development comes at a time when quick commerce wars are heating up. The sector, where apps offer deliveries of just about anything in 15-29 minutes, has gone from a good to have one to an indispensable one in just over three years, according to analysts.
Badri has been with Flipkart for a little over three years, as per his LinkedIn profile. Prior to joining in 2021, he spent over a decade at Unilever and more than eight years at Colgate Palmolive. Badri has cut his teeth in supply and distribution which gave him the necessary skills for Flipkart’s quick commerce play.
Kirana store partners
While incumbents like Zomato’s Blinkit, Swiggy Instamart and Zepto all operate hundreds of dark stores (micro warehouses) that fulfil multiple orders in several localities, Flipkart has different plans.
The company will partner with existing kirana stores for its quick commerce business, as per sources.
“Flipkart feels there is no merit in going all out and setting up new dark stores for its quick commerce play. There are a lot of costs and regulatory approvals involved which make no sense right now,” an industry executive aware of Flipkart’s plans told Moneycontrol.
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“Flipkart is instead partnering with neighbourhood kirana stores which will double up as dark stores for the company. Flipkart will equip them with technology so they can be fit to meet demands quickly,” the executive added. The company is still working on the delivery timelines with potential dark store partners.
Companies in India cannot technically run and operate dark stores as multi-brand retail is not allowed as per FDI (foreign direct investment) norms. "All quick commerce companies need a capital investor who will put in the money on their behalf. It's similar to renting an asset that does not belong to you," said Sachin Dixit, lead analyst, internet, at JM Financial.
Existing companies like Blinkit and others also operate on franchise models. "The landlords generally get a cut from all the sales that happens but that depends on the agreement between the two parties."
Flipkart confirmed Badri’s appointment to Moneycontrol but refused to comment on its quick commerce plans.
The move to bank on kirana stores comes at a time when analysts believe Indians will graduate from unorganised retail to quick commerce, thanks to the latter’s growing prominence. “India is likely to graduate directly from unorganised retail (Kirana stores) to quick commerce…this is driven by the fact that quick commerce imitates most attributes of unorganised retail in India,” the analysts at HSBC said in a report.
The growing importance has made quick commerce a $5 billion annual sales channel in just about three years, according to Goldman Sachs.
The sector already represents around 8 percent of the e-commerce industry and is poised to account for 20 percent of the market by end of FY29, as per analysts at UBS.
That is understandable as quick commerce divisions are now becoming the driving force for large new-age companies, as per Swiggy and Zomato's top bosses. "Over the last 12 months, our FY25 GOV estimate for Blinkit has seen a 40 percent increase, with Blinkit implied valuation at $8 billion now vs $2 billion in Mar 2023," Goldman Sachs said in its note. Even Zepto is back in the market to raise funds in less than six months after it raised $230 million.
To be sure, quick-commerce as a sector has not worked in other economies but has already become a mainstay in India. Across the globe, companies like Jokr, Fridge No More and others have shut shop but the Indian ecosystem continues to thrive. A large part of that is because of Indians’ spending habits. Households in the country opt to shop more frequently and make smaller ticket purchases instead of stocking month long supplies, experts said.
“In general, the number of stock keeping units (SKUs) in an Indian kitchen is far higher than in the West and hence there is always a need for top-up items, which is better serviced from local stores than modern retail,” the HSBC note concluded.
