Quick commerce promised electronics companies a spark, delivered a glitch instead

Kolkata | Bengaluru: "Quick commerce doesn't break your sales funnel; it breaks your backend," Boult Audio cofounder Varun Gupta wrote in a recent social media post.

Blinkit and Zepto pushed sales initially "through the roof", much like a dream, for the headphone and smartwatch maker, he wrote. The euphoria fizzled out soon as the company found it too tough to keep pace with the dynamics in a market promising doorstep delivery of online orders in 10-15 minutes.

As quick commerce platforms lay the red carpet for electronic companies to shore up their revenue and margins, brands, from suppliers of small electronic devices to large home appliance makers, are quickly realising this channel needs a different approach which they had not attempted till now.

While some dark stores, or micro warehouses, of the platforms were overstocked, others ran out of stock and the company's systems couldn't sync the inventory fast enough, Gupta said.

"This model doesn't just need speed, but also a different kind of madness. You are expected to forecast demand like a data giant, move like a logistics company and stock like a kirana store...All in real time," he wrote. "And if you fail once? Customers are gone. No second chance."

Brands are finding out that the promise of quick delivery alone doesn't work, especially when large-ticket items are involved.

For Havells India, efforts to sell its Lloyd ACs on Blinkit in the Delhi-National Capital Region failed miserably. When the company went back to the drawing board, the reason was found to be a lack of choice on the platform--from Lloyd as well as other AC brands. "Consumers like choice before making a purchase which was not there," a senior executive at Havells said. "The problem is a quick commerce dark store can store only a few models."


While the limited size of dark stores is an impediment for companies selling large appliances, their numbers pose another challenge. Quick commerce platforms operate hundreds of dark stores in each metro, a tough proposition for an electronics company without such widespread distribution muscles.

In comparison, the top two ecommerce platforms, Amazon and Flipkart, have 80-90 warehouses across India, while big electronic retail chains run 20-40 nationally at the most.

And quick commerce is fast expanding into cities beyond the top 20, making it even more difficult for brands that deal in large home appliances.

Industry executives said quick commerce needs more of an FMCG approach, right from product assortment to frequent distribution.

As a result, electronic companies are now doing things which they have not done earlier: tracking inventory on a real-time basis, replenishing stocks on a daily basis instead of 7-15 days for others, linking backend with dark stores, and forecasting locality wise demand as there are challenges listing the entire portfolio. FMCG companies, which have seen the most traction on quick-commerce platforms, have been doing this for the past 12-18 months.

“Quick commerce needs a FMCG kind of approach. It will mostly work in low involvement purchase like a hairdryer whose ticket size is up to Rs 3,000. For large appliances, consumers take time to decide,” said Haier India president Satish NS. “It can also be a logistical nightmare including instant installation. Which is why we didn’t go ahead despite proposals,” he said.

Havells, which sells Lloyd ACs, is now shifting its focus to selling small appliances and daily electrical products on quick commerce instead of large products.

A Zepto spokesperson said procurement is led by demand forecasting, and in the instance of an exceptional spike, the platform mobilises additional supply from partner brands. “That agility is what defines quick commerce,” the person said.

Other major quick commerce companies did not respond to request for comment.

To be sure, ecommerce contributes up to 45-50% of total sales as in the case of smartphones to as low as 10-12% for refrigerators, led by large marketplaces such as Amazon, Flipkart, online ventures of retail chains and brands. Separate quick commerce data for these products weren’t available.

While makers of big appliances and some electronics device companies are seeing challenges, quick commerce is quickly emerging as the fastest growing channel for products like small kitchen appliances, electronic personal care and beauty gadgets, headphones and wearables, as well as daily life gadgets like iron, steamers, vacuum cleaners and accessories.

Platforms like Blinkit, Swiggy Instamart, Zepto, Flipkart Minutes, BigBasket and JioMart are expanding into more categories such as smartphones and laptops, though the portfolio is still very small.

For Boult quick commerce is nearly 15% of its total revenue already while for rival Noise, it's around 8%. Noise founder Amit Khatri says ecommerce is still its primary business.

“Everyone sees the top-line spike, but no one sees the backend bleed,” Boult’s Gupta said. “Q-commerce can work only if your operations are paranoid, your tech is neurotic, and your team is half-insane.”