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Are 10-minute deliveries failing?

The much hyped yet disputed ‘10-minute delivery’ concept seems to have been relegated backstage with a new battle brewing among quick commerce and food-delivery players for delivery agents.

May 17, 2022 / 11:12 AM IST

In the last few months, Zepto, BlinkIt and Zomato have gone out of their way to promote ‘10-minute delivery’ even as they faced a lot of criticism from netizens, restaurant partners and delivery partners among others.

However, let alone 10 minutes, deliveries are taking longer than usual thanks to internal and external competition among quick commerce and food delivery players, which is leading to high attrition of delivery partners, hurting the prospects of 10-minute deliveries. Moreover, delivery executives going back to their pre-pandemic jobs, which yield higher pay, is also hurting quick commerce and food-delivery companies.

Moneycontrol spoke to one of Zepto’s delivery partners who delivered an order in 14 minutes.

“Was I late?” said Vijay when he was asked if he knew that the delivery time was changed to 14 minutes from 10 minutes. The partner, Vijay K, said that his compensation depended on the time taken to deliver, and that late delivery would yield a lower delivery fee.

 “If the delivery is delayed, I get a pay cut from my per-delivery fee,” Vijay added, requesting a five-star rating as a good rating would help him get more orders.

In Bengaluru, Zepto, which claims to deliver groceries in 10 minutes, has been taking longer to deliver in most parts of the city, which was not the case earlier. The estimated delivery time shown on Zepto’s mobile application has gone up to 15-20 minutes from 10 minutes earlier. The Y-combinator backed company, however, continues to market itself as a 10-minute grocery delivery application through various advertisements.

 “Our average delivery time continues to be under 10 minutes for most of our orders. However, in a few cases where certain areas experience a surge in demand or unforeseen weather conditions that are not conducive for 10-minute delivery, the safety of our riders takes precedence. To the extent that they are not shown the promised delivery time, ensuring that they do so in the safest timeline possible,” said a spokesperson for Zepto.


 Where are the riders?

Last week, Moneycontrol reported that these companies are taking several measures apart from strategic deals to curb the attrition of delivery partners and tackle the shortage of gig workers. These platforms have also been registering a surge due to the IPL, a festival, and also offices opening after Covid.

 “These are just PR tactics. Let’s take Goyal’s Rs 700 crore donation. Do you think a delivery boy will stick in a company for 5 years to get those benefits?,” says Shaik Salauddin from the Telangana Gig and Platform Workers Union.

“And these players are even testing drones, which has created fear among these boys. There is no future for these jobs.”

A person closely tracking this space said, "This was a humanitarian problem a year back but today it has become a business problem. When they started using social media to share their grievances, those were genuine issues which could have been dealt with at that point. Supply wasn't an issue then because many were losing jobs due to Covid.”

“Now, there is a shortage, which is why they are announcing a slew of measures.”

Commenting on why these players are facing a shortage, Naman Pugalia, founder of Peppo, a restaurant ordering and discovery platform, said, “Firstly, reverse migration. During the lockdown, opportunities were limited so many joined as riders because there were no restrictions. Now, they are rejoining their old jobs.”

This issue has also coincided with festival time when a lot of these workers visit their hometown. Many are hoping that the severity of this problem will come down in the coming months.

“Inflation is also a real problem. Fuel costs have risen and so have durable asset costs. Because of these additional expenses, many are reluctant to join as riders now. Even the compensation has not been redone to reflect the increases,” added Pugalia.

A spokesperson for Zomato acknowledged that delivery partners who joined its fleet during Covid were going back to their pre-Covid jobs after the third wave of the pandemic. “That said, we have not seen an increase in our churn and are witnessing high order growth. We are hiring more delivery partners to meet this increase in demand and are also incentivising our existing delivery partners for referrals to increase our delivery partner base,” the spokesperson added.

Workers are increasingly listing on multiple platforms, which we earlier saw with Ola and Uber drivers, and are constantly looking for better pay and incentives, say experts.

Although Swiggy does not claim to deliver food or groceries in 10 minutes, it has also been taking longer than usual to deliver. For food deliveries, the time taken by the application to assign a delivery partner has gone up to 15-20 minutes, typically on weekends, when demand for food delivery goes up. Earlier, a partner would usually get assigned in 5-7 minutes.

For Instamart, Swiggy’s grocery delivery platform, too, the case is similar. Moneycontrol spoke to an Instamart delivery partner who said that usually on weekends and on days when there are IPL matches of popular teams, the demand for Instamart services surges.

“Swiggy offers big discounts in the last five overs or something, so there are good offers that attract customers, and so while watching IPL a lot of people tend to order stuff on Instamart,” the partner said, requesting anonymity.

“In a city like Bengaluru, where the roads are not great, and the weather is unpredictable, partners often avoid accepting deliveries, especially longer-distance deliveries. But then someone from the company (Swiggy) calls and partners have to accept deliveries,” the partner added.

BlinkIt, which has ventured into 10-minute deliveries, now takes up to as much as 36 minutes, from 10-12 minutes earlier, especially in the prime areas of Bengaluru. To be sure, BlinkIt is active only in a few cities currently and its services are not available in many parts of some metro cities, including Mumbai.

Zomato, which is riding on BlinkIt for its grocery delivery, launched 10-minute food delivery in certain parts of Gurugram in April and is now looking to launch the offering ‘Instant’ in Bengaluru soon, after being successful in Gurugram, said a person aware of the matter.

Food vs Grocery tussle

To meet the 10-minute delivery promise, the players are luring delivery executives with better incentives, which is also why it is increasingly becoming the preferred choice, thus leading to higher attrition.

“Grocery has higher advantages. First is the incentives, second is the shorter radius, which means lower fuel costs,” said Pugalia.

Earlier, Abhishek Bansal, founder of logistics firm Shadowfax, had also said, “Delivery executives love 10 minutes. It involves short travel, which means less fuel as there are dark stores set up every 2 km. So you deliver more orders in less time with more incentives.”

Pugalia adds, “With food, that's not the case. Over a period of time, aggregators have increased the radius. For the player, the advantage is that it gives the users more choice and the delivery rates are also higher, going up to Rs 150.”

Experts have even started criticising the fact that the same players are offering food and grocery leading to more internal competition in addition to the growing external competition. While a few say that the players are following the Chinese model of becoming super apps, many are criticising this as the players cannibalising their own business.

“This has come as a surprise for both the aggregators and their investors. Going forward, the cost of running a fleet is going to be much higher. The aggregators have asset-heavy models. So, now to retain a rider, incentivise and compensate, it will start getting expensive. This comes at a time when aggregators have lowered discounting and started cost cutting.”

To be clear, customer acquisition and delivery are two of the major costs for these players. Swiggy has been looking at cost cuts and its business revenues as it has initiated its IPO work. Zomato’s stock price, on the other hand, dropped to Rs 56.20 on Monday, well below its issue price of Rs 76.

“These incentives and higher pay outs are not sustainable. To push their marketing initiatives they first make all these offers but they gradually die down. Right now these players do not have bargaining power and a player like Zepto has to grow its presence in multiple cities,” said an expert tracking the space.

“10-minute delivery was anyway not sustainable. To do a 10-minute, you need to open more dark stores, which again requires more delivery executives. It has to be 30 mins at least to sustain the unit economics,” the person added.

Other experts added that at this point, even offline dining and QSR outlets are opening up, which will further hurt these online players, leading to more cash-burn.

Salauddin of the Telangana Gig and Platform Workers Union, however, is clear, “We will always prefer to work with companies that will look after our welfare.”
Sanghamitra Kar
Nikhil Patwardhan
first published: May 17, 2022 11:12 am
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