Conveniences come at a cost

At 10:47 pm on a weekday, a Bengaluru-based professional realises that she is out of milk. It is 20 minutes before she needs to leave for the office. Two taps on an app, and the delivery is made in 12 minutes. A few minutes to heat it up, and a minute to gulp, and our happy and satisfied customer is on her way to the office. No planning, minimal waiting, no anxiety. This is now a habit among urban customers, who are hooked to quick commerce. Blink, and it is there.

This shift has translated into rapid market expansion, and astounding growth in revenues of quick-commerce firms. According to RedSeer, the segment clocked $3.3 billion in gross order value in 2023, and may have crossed or neared the $5-billion mark in 2025. The growth is driven by rising order frequency in urban clusters. The market is consolidated around three players, Zomato through Blinkit, Swiggy through Instamart, and Zepto. Among the listed firms, Zomato offers the cleanest financial signals. In FY24, Blinkit’s gross order value growth was over 100 per cent, and its adjusted EBITDA losses declined sharply from nearly INR 1,200 crore in FY23 to INR 500 crore in FY24.

Yet, by March 2024, the firm reached a monthly EBIDTA breakeven. In the October-December 2025 quarter, according to reports, it achieved its first positive EBIDTA of a puny amount of INR 4 crore. We are still talking about gross profits, or earnings before interest, depreciation, and taxes. But one is sure that net profits are around the corner. Maybe, they will take less than 10 minutes, sorry, 10 months. Wiping out the accumulated losses may take more time. Still, the financial direction points to a strong operating leverage at scale.

Despite these signals, there is no denying the fact that sustained profitability in the quick-commerce segment, despite the apparent success of Blinkit, depends on stringent cost discipline, even as money is burnt to expand the stores, reach, and geographies. The problems lie in the operational model, which influences the business and financial models. In essence, the revenue successes are embedded with the potential for overall losses, and the need to burn excessive cash. It leads to a paradox, which generally engulfs most tech firms. Expand to thrive, spend money to add value, and cut costs to survive.

The limitations lie in how the system is designed. Quick commerce depends on proximity. To deliver within 10 to 15 minutes, firms operate dense networks of the so-called ‘dark stores’ located within a narrow radius of the demand clusters. Each store carries 2,000-3,000 stock-keeping units (SKUs), which require staffing and inventory holding-handling, and depends on consistent replenishments. A part of these costs are incurred before the demand stabilises at high threshold levels, and another part needs to be spent irrespective of whether one earns profits. The deliveries are sacrosanct, so is product availability.

Most firms may be able to run such operations, if the revenues followed a value-based trajectory, or big-ticket orders. In other words, if volumes translated into higher values, as the average size of the orders increased with the number of orders. Brokerage houses estimate that the average order value is in the INR 400-600 range, which reflects a small order size, although they may be high-frequency or volume purchases. Revenues are, therefore, driven by frequency growth, and the value per order does not expand proportionately. Hence, volume densities become imperative, not the ticket sizes.

Logically, the business model depends on high-order density within tightly-defined catchments. The trick is to get a higher number of orders within short distances so that 10-minute deliveries are possible. This explains why a new Blinkit store takes 12-18 months to break even. Expansion, which is essential for scale, can defer profits. The dependence on density explains why quick commerce remains an urban phenomenon, or largely limited to the larger cities. The model works best in high-income, high-density neighbourhoods in Bengaluru, Delhi-NCR, and Mumbai, where demand exists within a small radius.

In tier-2 cities, lower density and lower frequency make it harder to achieve viable economics. In rural markets and semi-urban pockets, where purchasing power, infrastructure, and delivery differ, the model is largely absent. India is a price-sensitive market, yet quick commerce relies on consumers accepting the costs of conveniences via delivery fees, slightly-higher pricing, or reduced discounts. This is possible in the metros where time-saving carries a premium, and is worth the extra bucks. Yet, if competition offers lower prices, or higher discounts, or zero fees, the models can go haywire. They become extremely fragile.

This is where capital plays a role. The expansion of dark store networks, delivery fleets, and inventory systems become crucial. The quick path to profitability in quick commerce depends on operational efficiencies, and inflow of large amounts of capital. But investors are shifting focus from order value growth to other metrics such as contribution margins, store-level throughput, and payback periods. Zomato’s valuation is closely tied to Blinkit’s ability to demonstrate that scale can translate into sustainable earnings. One can see the impact. Platforms push higher-margin categories such as electronics and personal care to increase basket sizes. Private labels improve margins.

Advertising within the app is a revenue stream, as brands compete for visibility in a controlled digital environment. These changes help but do not alter the cost structure, which is anchored in proximity and speed. The broader retail ecosystem changes. Local grocery stores, which rely on small-ticket purchases, are losing out to quick commerce. The latter, in turn, competes with the former, and sometimes operates via the local stores. Local shops, which encouraged bulk-buying, are losing the same to the large physical retailers, who offer larger discounts due to scale.

FMCG firms recalibrate strategies, and redesign product formats, and promotional spends to suit app-based discovery. Globally, similar models faced challenges. Getir and Gopuff scaled aggressively, only to exit multiple markets, undertake layoffs, and rationalise costs. The next phase for Indian firms will depend on cost-profit-expansion balance. If order density rises, basket sizes improve, and costs stabilise, quick commerce may emerge as a viable urban retail layer. If growth slows, the model risks being dependent on capital inflows. If capital stays away, there are chances of retrenchment, and lower scales. Quick commerce demonstrates that it can reshape consumer buying. The test is whether the economics catch up, or whether expectation of conveniences push expansion, and higher costs.