Quick commerce players are now looking into expanding their presence in Tier II cities and markets beyond as the festive season approaches. Recently, several big names in the sector such as Swiggy, Blinkit, and Zepto have been widening their reach in smaller cities and regions.
In the last week, Instamart, the quick delivery business of Swiggy, entered 6 new cities and launched in a new market every 33 hours, reported Business Standard. The entity reached out in 11 cities including Kanpur, Udaipur, Ludhiana, Bhopal, Thrissur, Mangalore, Warangal, Salem, and Varanasi, among others over the span of the last two months. Now, Instamart operates in 43 cities.
Meanwhile, Zomato’s quick commerce wing, Blinkit in the last two weeks announced that it is now launching into cities like Kochi, Haridwar, Vijayawada, and Bhatinda. Zepto also has raised more than $1 billion in the last year itself and said that it intends to extend its presence in ten new cities including Jaipur, Ahmedabad, and Chandigarh.
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Problems With Moving In Tier 2 Cities
The challenges faced by the entities for this expansion are multifold. Industry insiders explained that players in the quick commerce sector work on thin margins, and depend on high-order frequencies and elevated average order values (AOVs) to enhance their margins.
To manage these challenges, firms are planning to partner with the local players in smaller regions and provide customers products that they can relate with and are suited to their preference.
Elaborating on the opportunities in Tier II cities, Amitesh Jha, CEO, Instamart, noted, “The enthusiastic demand from smaller towns and cities has been incredibly encouraging. Our expansion into these new locations marks a significant milestone, allowing even more people to experience the ease of having thousands of products—from everyday essentials to electronics and toys—delivered in just 10 minutes from both national and local brands.”