Hello friends, welcome to today’s article. So take a look at this particular chart and you will find out what is the evolution of delivery systems in India. First, we had companies like FedEx. It used to take a day to deliver a piece of a letter or article to your home. Then we went to Amazon. This completed the one-day delivery system. Then we moved on to something like Zomato and Swiggy, which are taking less than 30 minutes to deliver food to your place.
Now we’ve reached a point where companies and VCs are pouring insane amounts of money into developing systems that only take ten minutes to deliver a particular item to you. What will happen next? Do let me know in the comment box.
My answer would be that you will dream something like that I want to get up and have butter paneer, masala or dosa and suddenly someone will read your mind and that food will be delivered to you. So that the future outlook is very good. Seriously, in this short article, I’m going to help you figure out three things. One, what is this ten-minute delivery system and is this business model sustainable? Second, why is it that companies like Swiggy Zomato are spending so much money on this and would it make sense for them to invest and build this model? Third, and most importantly, I will discuss at the end of the article how you can benefit from it through this model. So please stay tuned to this article.
Quick Delivery Business in India
How is this quick delivery model being implemented?
So let’s cover this story in four simple basic points. Point number one is how is this delivery model being implemented and why was it needed in the first place? So this was a tweet by Mr Dependent Goyal and he covered the fact why people need this ten-minute delivery. So he’s saying it very well, very diplomatically, and I would read it as consumers increasingly demanding quick answers to their needs. So essentially, if I speak in a very raw, direct, honest way, people have gone LOKO. So LOKO is the word for today. Tell me, what does this mean? This is a very interesting word.
So just google it and understand the meaning. So essentially, people have gone LOKO, people just need to meet their demands tomorrow. So now people don’t have patience. And Mr Deepinder Goyal thinks that, hey, if Zomato enters this space, they may be able to break this model in the food tech space. And this will make Zomato a very profitable company as it gives the real winning advantage to a company like Zomato. Because if people are loco and they have no power to wait, a company that can deliver goods in ten minutes, two minutes, 30 seconds, 5 seconds, and then we will reach a stage. As soon as you order food, someone will pack it at home and throw it from your kitchen and it will reach your home.
So maybe someday we will reach that point. But the bottom line is that consumers don’t have the patience. They want convenience, they want all the good things. And Zomato sees this as a great business opportunity. Therefore, this ten-minute delivery model is now being demonstrated in the food tech industry. Also, now comes the obvious question, well, how does this model operate?
How does this delivery model operate?
Because I keep reading the news that if I am walking down the street and I have these ten-minute delivery boys running in their bikes, they will probably crush me with their bikes and it will become a nuisance to me. So will it happen? Or will some poor delivery person himself get into an accident due to fast delivery of food? So let’s get to that discussion very quickly. So for this, you have to understand two keywords. One is called hyperlocal delivery and the other is called dark stores. So I want to give a very quick, easy to understand commentary on this. So hyper-local delivery simply means that, for example, when you go to the US, you’ll have big, big stores like Walmart that are located out of the main city, right? So would be the main city. And Walmart, a much larger store, will be based in the suburbs of that city because they are able to run that store at a much lower cost. And there are more perks in terms of running that store, so what did Amazon do? So what Amazon does was it created some sort of fulfilment centre within the cities themselves. So it moved within the city, it created fulfilment centres. And essentially what Amazon does is that it gets a lot of stuff from companies like Walmart and a bunch of other retailers, and they keep it in their fulfilment centre and they deliver it to you. But this whole coordination and process take some time. What happens in a hyper-local network is that suppose you are currently living in this particular locality, here you will rent very small units and you will stock some material here. And this two to three-kilometre radius becomes like a hyper-local network where all the delivery, fulfilment, etcetera happens. So essentially hyperlocal network means that you have created very small hubs in all the cities and you are able to deliver goods faster. So that’s what’s happening in that ten-minute delivery system. So in technical terms, these little stores are called dark stores, right? That’s why it is called a dark store. So let me present you with a clip that will help you see what this dark store means.
Essentially, as you saw from the clip there is no branding in these stores. If you go to your neighbourhood and try to find a dark store, you probably won’t be able to find that dark store because they are hidden so to say. But what they are doing is that they act as a local fulfilment centre and they are able to meet the demands of the area within that two to 3 km radius very quickly and easily.