Grocery Delivery In 10 Minutes, Alright, Great, But Why?
For what the prize is, it appears too much investor money and delivery partner calories are being burned to get items to customer in under 10 minutes.
For the students of urban planning, the concept of a ‘15-minutes city’ is not alien. To put it simply, a 15-minute city is an urban concept where residents can accomplish or access all their daily necessities in less than 15-minutes, but by either walking or cycling from their homes.
In India, the one complete city that resembles this phenomenon is Chandigarh where the planned sectors enable this accomplishment. Several pockets of Bengaluru, Gurugram, Noida, Pune, and some second-tier cities can also be classified under the same concept. Realistic, achievable, but voluntary on the part of the individual without any cost attached.
Perhaps it is this very concept that is serving as an inspiration to several e-commerce companies operating in the FMCG space. However, aiming to go one better, some companies are now promising grocery deliveries in less than 10-minutes and are already on it in several cities.
The escalation in ETAs is significant, for we have gone from delivery in minimum 4-6 hours from two-three years ago to merely a few minutes today, and deliveries that were transferred to the next day for orders made in the evening are now primitive as customers can now avail the 10-minutes delivery service as late as the primetime.
Intrigued, the author decided to conduct a little experiment in one of the densely populated regions of NCR, thus placing seven orders, over the course of a week, at different working hours, and for different products, for variety is always great.
To give a little more context to the experiment, the residence is in one of the biggest housing societies, has a market complex within the premises that sell almost every daily necessity product there is, and is not located on the outskirts, but rather the centre of the city.
The first order, worth Rs. 67 and no delivery charge, was placed at around 10:00 PM. For an hour, the status of the order remained unchanged, and eventually had to be cancelled an hour later.
The second order, worth Rs. 47, again with no delivery charge, was placed around 7:00 PM, and was delivered in merely 12-minutes.
The third order, worth Rs. 55, but this time with a delivery charge of Rs. 19 was placed around 2:00 PM, and delivered in 15-minutes.
The fourth order, worth Rs. 87, and a delivery charge of Rs. 19, was placed around 1:30 PM, and delivered in 13-minutes.
The fifth order was a costlier one at Rs. 200 and hence was without delivery charge, but again delivered in 14-minutes.
The experiment returned the most interesting loopholes and observations in the final two orders, but an important conclusion first.
By no fault of the company or the delivery partner, can the orders be delivered in 10-minutes always. None of the five orders I placed were delivered in the promised time.
From the moment of receiving the order, the delivery partner has to reach the store where the items are being packed. Assuming the items are packed, in the correct quantity and quality, the delivery partner picks them up and begins the journey towards the residence. This is followed by at least a two-level security check in societies, first at the gate and then at the building, and then there is the waiting time for the lift in high-rises.
Apart from this, there are varying externalities like traffic on the roads, congestion at the society gates, weather conditions, and delay in packing of the order. The 10-minutes delivery promise is brave, but not feasible in most cases. Anywhere in India, a short spell of rainfall, a delayed traffic light, or a small jam on the road, or a broken lift, or a diverted road can disrupt and derail this service.
Yet, the final two orders, worth Rs. 88 and a delivery charge of Rs. 19 and worth Rs. 240 without a delivery charge, arrived in 6 and 9 minutes respectively.
However, there was a catch. In both cases, the delivery partner called before reaching the residence, requesting permission to mark the delivery as completed, only to deliver it 10-minutes later. Thus, in both the cases the order arrived more than 15-minutes later, but was marked delivered in less than 10-minutes.
On inquiring, the delivery partner revealed that it was a tactic suggested by the local team leader who was accountable to the seniors, and eventually the top management making such hefty promises.
There are three sides to this newly discovered fad.
One, that of the delivery partner, who is being confused for a Formula One driver by both the employer and the customer. Yes, the delivery partners’ incentives have been hiked, from Rs. 50-odd to Rs. 90-odd per order by the company in question for the area stated above, but is it really worth it? Not only delivery partners flouting the traffic norms is a common sight, the wrong ways and traffic signals jump they make pose a threat to other commuters as well.
To add to that there is the tremendous stress they have to go through, even going as far as begging the customer to allow for the delivery to be marked even when they are 10-minutes away from the delivery completion. There is also the imminent possibility of accidents. For some, completing the delivery under 10-minutes is necessary as it otherwise hampers the performance metrics set by the company, impacting their incentives, raises, and even employment in the future.
Two, that of the customer. From the beginning, the customer is being lured into the false promise of a 10-minutes delivery, and as any delivery partner or even an entrepreneur would vouch for is the fact that customers can be difficult.
In the conversations with several delivery partners, the author learned how certain customers threaten to complain upon orders being late by a few minutes, or simply cancel them, thus jeopardizing the performance evaluation of the employee in question.
From the customer perspective, them being difficult is justified to an extent, for they already have companies willing to deliver in 20-minutes to 4-hours, and therefore, if they are opting for a 10-minutes delivery, it must be the urgency dictating the order, or because they accept paying a higher fee for faster delivery. What the customers do not realise, in most cases, is that they are being sold a marketing gimmick, not the service.
Three, that of the company. For the company, Grofers in this case, the challenge is to acquire a competitive advantage in an already crowded marketplace. Against the likes of Amazon, Tata, Walmart, and Reliance, what can the company offer that nudges the customer to opt for that service. Reliance, going forward, will offer delivery services from the stores they own and run offline in 20-minutes, so what is the ball game for any new player?
Assuming 10-minutes deliveries are indeed possible, as some delivery partners affirmed to the author, what is the cost they come at?
In two separate conversations, one delivery partner stated the company was looking to establish a small store for every kilometer square of serviceable territory, and the other stated that the company was looking to build a large store, the size of four medium-sized apartments, for every five-square kilometer of serviceable territory.
Even taking their estimations with a sack of salt, the company, going forward will require physical stores at short distances to cater to its 10-minutes promise. Thus, it can either convert existing physical stores, run by traditional retailers, into its branded outlets or seek partnership with them. If all else fails, it can simply establish a store from scratch. Private labelling by online players is not alien to India’s FMCG business and Grofers has attempted the same in the past.
However, this raises another question. What business exactly will such companies be in? Are they in the physical store business, which means hefty investments in real estate? Are they in the delivery business, which means hefty investments in a delivery fleet as e-commerce grows further in India, or are they in the online retail space, where the likes of Amazon, Reliance, and Tata are already doing well.
The economics of 10-minutes delivery, at this point, makes little sense either.
For the incentives being offered to the delivery partners, the delivery fee being charged is too less. Unlike Tata and Reliance, which have delivery fleets capable of catering to multiple orders at a time, sometimes even hundreds, like in the case of Milkbasket that was acquired by Reliance earlier this year, the 10-minutes delivery firms would need more delivery partners, thus upping their overhead costs, and eventually, having to up the delivery fee which many customers may not be happy to pay, assuming the likes of Swiggy Instamart and Reliance may be able to deliver for free in as less than 30-minutes.
Perhaps, the customers are naive and they do not realise that they can usher a significant change and unprecedented happiness in their lives with 10-minutes delivery, but for what the prize is, too much investor money and delivery partner calories are being burned. An average customer puts quality of products, packaging, and delivery over the time taken to deliver, but again, in this brave new world, whatever sells, even if its utility comes with a big question mark.
Come on, it's just milk and biscuits, not medicines or emergency healthcare services.
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