10-minute delivery model in non-dense locations will bleed you: BigBasket's Hari Menon

Quick delivery model of e-commerce is economically viable only in areas of high order density, not in entire cities, according to online grocer Bigbasket Co-founder Hari Menon. Menon's views come at a time when several online platforms are scaling back quick deliveries after jumping into the fray in 2021 during India's unprecedented boom in start-up funding.

"The quick delivery model is possible provided you have very very high density.

When you go to a place which gives you a few orders it will never make sense," Menon told Business Today on the sidelines of the Sharrp Summit 2023 organised by Rishabh Mariwala-led Sharrp Ventures on Wednesday in Mumbai.

Beginning with Zepto's 10-minute delivery model in 2021, a host of online delivery players jumped in with promises of quick delivery, but have since increased delivery times or shut it down entirely.

"You have to choose your locations. You may not be able to cover an entire city. You can only cover dense locations. If you go into non-dense locations, you'll bleed," Menon said, adding that a viable number could be between 800 and 1,500 orders a day.

It varies depending on whether the business solely operates only a quick-commerce model, in which case the order density required will be higher, he added.

Following Zepto, Grofers rebranded itself as Blinkit and promised 10-minute deliveries. Swiggy got into Instamart, Ola launched 10-minute deliveries with Ola Dash and Reliance started JioMart Express for 90-minute deliveries.

But as the brands tried to make it more economically viable for themselves, they tried grouping orders from the same areas together, thereby slowing down deliveries or cutting down entirely on quick deliveries deliveries.

Ola shut down Ola Dash, as did Reliance with its JioMart Express. Order timelines on Swiggy Instamart have been increasing, while Zepto's 10-minute deliveries now come with terms and conditions.

"Order value, order density and last mile cost of delivery are very critical (for success of quick delivery) . But that last mile cost of delivery is linked to order density," Menon said, adding that more the number of people in an area, the lower the cost of delivery becomes.

He said the order ticket size or average order value was around Rs 450 for most players.

The players are trying to increase this to make it more economically viable for quick deliveries.

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