The unit economics of quick commerce businesses, that promise delivery within 10 to 15 minutes, does not work, BigBasket co-founder and chief executive officer (CEO) Hari Menon said.
Big Basket chief's comments come as the company ramps up its efforts to expand its offline presence.
“The economics just don’t work at 10-15 minutes, which is frankly the fact. The consumers did not want it either, it was thrust upon them and they said why not,” Menon said during a session on the e-commerce landscape by 2030 at the Sharrp Summit in Mumbai. Unit economics refers to a specific business model's revenues and costs in relation to an individual unit.
The BigBasket chief believes businesses within the space should chase delivery within 15 to 30 minutes, which is more sustainable.
BigBasket joined the quick commerce market in late 2021 after competitors like Zepto, Swiggy, and Blinkit had already doubled down on their express delivery services.
“We have a lot of common products, and our warehousing is also common. There are many things that we are leveraging. Separate business only for quick commerce becomes harder,” Menon said on the sidelines when asked how BBNow is growing in light of the unit economics issue.
The Bengaluru-based company, which is part of the Tata group's super-app offering Neu, expanded into offline retail, with its first store opening in Bengaluru in 2021, but the company's focus remains on the online business, it said earlier.
He also added that quick commerce will also face a roadblock while scaling in tier two and three cities.
“There are certain dynamics there that are required for unit economics to work which means you need a high density of orders, so it will cut off at some point. The Big Basket model will scale, but quick commerce without density doesn't work,” Menon said.
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