Researched by: Sara Varghese

First, the big global picture

Ten-minute delivery startups have mushroomed around the world in a matter of months. Each aiming to disrupt the $2 trillion-a-year global grocery market. In just India, grocery retail is valued at $600 billion. 

• The global star of the super-speedy delivery business is Getir—which first pioneered the model six years ago in Turkey. It opened in six European countries last year—and plans to expand across the US in 2022. In just six months, Getir raised nearly $1 billion to fuel this worldwide expansion.
• And their valuations are eye-watering. Getir is valued at $7.7 billion—but that’s modest compared to Philadelphia-based Gopuff ($15 billion) and Instacart ($39 billion).
• And investors love them. China’s Xingsheng Youxuan raised $3 billion earlier this year—marking the biggest ever funding round for a grocery startup.
• The most crowded and competitive market is London—with at least eight startups offering superfast delivery times.

Point to note: This doesn’t include all the industry big boys—who are adding 10-15 minute delivery verticals to their existing services. Example: Uber Eats in the US or Swiggy closer to home.

Quote to note: As The Morning Context (paywall) wryly observes: 

“In the past few months, the race to deliver groceries to your doorstep has been moving from an hour to 45, 30, 15 minutes, or even less. At this point, same-day or even two-hour delivery is for losers.”

Meanwhile, in India…

According to Reliance, the instant delivery market is a $50-billion opportunity. So it’s hardly surprising that so many are scrambling to dominate the space.

Swiggy’s Instamart: is the tortoise of the bunch, offering to deliver your groceries in 15-30 minutes. The company recently raised $700 million—making it a decacorn, valued more than $10 billion—to make “meaningful investments” in its Instamart service, which is now available in 19 cities. 

Not far behind: Dunzo which unveiled a 19-minute “ultra fast” grocery service last year—which in turn attracted big Reliance moolah this month. The $240 million cash infusion—for a 25.8% stake—marks the entry of Indian retail’s big daddy into “quick commerce.” Expect Dunzo to also team up with all the kirana stores on JioMart to offer them speedy delivery.

The new kids on the block: Zepto—founded by two 19-year olds and backed by global funds like Glade Brook Capital. This is India’s first 10-minute delivery startup. The company is valued at $570 million—and plans to become a $20 billion company. While they’ve raised $60 million, their operation is still small. Zepto delivers 8,000-10,000 orders—compared to Instamart’s 150,000-160,000.

Older kid with a new name: Blinkit—formerly known as Grofers—which rebranded itself in December to signal its big pivot to superfast delivery. Announcing the change, founder Albinder Dhindsa said: “Today, we are surging ahead as a new company, and we have a new mission statement—‘instant commerce indistinguishable from magic.’” The service is available in 40 cities as of now—and plans to expand to 100 cities by March. Grofers had recently attained unicorn status—crossing $1 billion in valuation—after raising over $120 million from Zomato and existing investor Tiger Global Management. So you can see it as Zomato’s bet against Swiggy. Blinkit plans to become a $100-billion business.

The 10-minute model explained

There are three key differences between a normal delivery service and the superfast kind. 

One: Everything is hyperlocal to deliver on the 10-minute promise. 

Two: They own their inventory—which is kept in small warehouses called “dark stores”:

“Dark stores look like mini warehouses located closer to customers than the conventional fulfilment centres of online retailers, but they are much more than just storage places. Digitisation and automation are their key pillars.”

And unlike larger warehouses of big delivery companies like Amazon—or big grocery stores—they only carry a limited number of items that you might find at a corner store. Stuff like chips, fruit juices, bread, flour, oil and pulses—plus veggies and fruits. 

Here’s MoneyControl’s description of operations inside one of these stores:

“An alarm rings from a speaker placed next to a computer everytime a new order comes in. Once an order is accepted, a timer is ticking down to delivery time, starting from as high as 120 minutes to as low as 15 minutes… Goods are collected, segregated by order, packed in a brown paper bag that is sellotaped, ready for dispatch.”

Three: Contrary to popular belief, they do not rely on gig workers—but employ full-time staff:

“Executives say that employing a dedicated staff to deliver their companies’ own inventory of products allows them to offer faster delivery times and a more consistent quality of service compared with existing delivery companies, which typically employ gig workers to ferry products sold by third parties.”

The key reason: Customers expect consistency and reliability—which isn’t possible if you are sending gig workers to other companies’ stores. 

About those delivery workers…

Employees who work within the warehouse—be it in London or Delhi—say the working conditions are far better than those offered by gig work. In India, it offers a fixed salary in relatively clean and safe environments. For example, Devender who used to collect road tolls at a booth until he became an order manager at a Colaba dark store—which also employs a man who used to load luggage and meals for IndiGo. But they all acknowledge the intense pressure for speed.

The counterpoint to note: The drivers who have to navigate hazardous road conditions—especially in India—are far less happy. In 2021, the World Bank estimated that India had a death every four minutes on its roads. Also this:

“All the 13 drivers for Blinkit and Zepto whom Reuters interviewed in the key cities of Mumbai, New Delhi and Gurugram said they faced pressure to meet delivery deadlines, which often led to speeding, for fear of being rebuked by store managers. ‘We get five to six minutes and I feel tense and fear for my life,’ said one Blinkit driver, who sought anonymity.”

The companies’ response: Blinkit founder Dhindsa insists the concern is overblown:

“Dhindsa clarified in his post on Saturday that the company’s dark stores are located within 2 kilometers of their customers which allows the company to deliver in 10 minutes. ‘Our stores are densely located that we can deliver 90% of the orders under 15 minutes even if our riders drove at 10km/ph,’ he wrote. ‘Our riders are not (dis)incentivised to deliver orders fast. They do it add their own pace and rhythm.’”

Do we really need 10-minute delivery?

The pandemic—which made leaving the house both rare and tedious—created the big push for asap delivery of everyday items. Also feeding the demand in India: 

“Over the past few years, buying habits have shifted away from larger, monthly purchases to smaller, weekly ones. The number of single-person households interested in time-bound deliveries is increasing, as is unplanned ordering.”

But will we pay for it? That’s the big question in India—where there are no delivery fees for quick commerce, unlike the West. The Morning Context (paywall) crunched the numbers to arrive at a cost estimate of more than Rs 70 per order, noting: “It is next to impossible to recover that kind of money per order, either through margins on the items sold or through delivery fees.” 

This is why some of the “slowpoke” big grocery retailers like Big Basket remain sceptical: “With free delivery, the business is unlikely to be viable. And with a delivery fee that makes it viable, the market size is likely to be small.”

Also sceptical: Many big name global investors who have not jumped on the quick commerce bandwagon. For example, Christian Angermayer:

“It’s very challenging to get the unit economics to work in this sector, and just a few will survive. I regard the current valuation of those companies extremely exaggerated and hyped.”

Point to note: None of these companies are anywhere close to being profitable. Investment analysts call the current mania to raise and burn vast amounts of cash “blitzscaling”: “It’s a race to get market share at the expense of profitability.” Even one of Getir’s investors admits: “Ten-minute delivery sounds deceptively simple, but the newcomers will discover that raising money is the easiest part of the business.”

The bottomline: Another Indian startup StanPlus recently raised $20 million to cut down the response time of its ambulances to from 15 to eight minutes. That sounds like a far more sensible and useful investment of energy and money.

Reading list

• Wall Street Journal (paywall) and New York Times offer a good global overview of the speedy delivery gold rush.
• The Morning Context (paywall) offers a detailed analysis of the fast delivery biz model.
• MoneyControl profiles the teen founders of Zepto—and reports on dark stores in three big cities.
• Sifted has more on the toxic culture spawned by the pressure to deliver asap at the Berlin startup Gorillas.
• Reuters has a very good report on road safety and other issues in India—while Quartz looks at whether the model will result in even greater exploitation of delivery workers.
• The splainer team had a lively discussion on delivery times and gig workers on our podcast Press Decode.