A 10 MIN READ.
--ATHUL C NAMBIAR
Quick commerce in India is booming, a rise from 0.04 billion USD to 2.3 billion USD of *GMV in 5 years is no joke. And the fact that a consumer can gain access to any commodity within a few minutes by sitting at home, is a really compelling proposition.
The concept of a quicker delivery is nothing but a nudge towards maximising consumption, simply by altering the notion of utility in the minds of the consumer. And this is the golden rule of the *FMCG market, to increase the *AOV by finding new fancy ways to lure the customers into buying more.
Look closely, right from the brick and mortar stores we’ve been visiting, every pricing deal, every change made in the layout of the store, the colourful chocolates at the checkout counters, the reward mechanism for a higher order value and many more of these innovative ways were made only to reach higher consumption ratios. And the reason for this is pretty simple, in a market segment like the FMCG the profit maximizing curve shows an exponential arc after reaching a threshold amount. Hence the efforts to push the AOV’s higher and higher.
But think of it this way, the quick commerce has constantly been cashing on the concept of faster delivery to push consumption levels, and yes it is repeatedly working as it is a fairly new proposition for the market, but what happens when a 10 minute delivery becomes the new normal?
There just wouldn’t be any more utility drive left to nudge the consumers into buying more.
So what should one do while valuing a quick commerce, can the cagr of 24.3% yoy being currently projected be bought or is it just a number pulled out of thin air.
Ask me and I would say it is nothing but gimmick, unless they come-up with a way that can actually create a sustainable selling proposition, and create value, it is a ticking time-bomb. Some crazy Valuation metrics, Zepto (5 Billion USD) Blinkit (13 Billion USD)
Hope we don’t have to write any more stories of a valuation crisis like that of Byjus!
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