quick commerce
Do any grocery stores sell vegetables like a kit, for example you want to make a curry, here are the 5 other things you need along with this main vegetable. Buy as a standalone, so that you can do the whole thing instead of having to mix and match different things needed with it or go along with the choice/commitment (of a recipe - especially where its true for people that they love a recipe and not a vegetable) of spicy or onion gravy base that you have decided on. Makes cooking and grocery shopping accessible.
Is unbundling like code accumulating which needs pruning?
goes live with a new dark store
fashion becomes a day zero failure.
operated dark stores and Zippy operated last mile fleets. And we we we feel that it's super important for us to control both these pieces uh before the order reaches the customer in order to maintain reliability across the network.
it for multiple brands and so you have dark
is an early investor in consumer tech and I understand Sanjay that you are also interested in companies that are the quick commerce journey both from an horizontal and from a vertical and a point of view uh and it's fairly interesting so as a VC you have your thesis so you kind of jump in saying that there is potentially something uh end of this say if it if it's a decadel kind of a view uh now what e-commerce did 15 years back can quickcommerce do something significantly different from a consumer adoption point of view 10 years from now, right? So, so, so that's that's how my first our first investment in Slick happened. Got it. I must say that we are recording on 27th May and today morning there was a press release that hit uh Rohin's inbox and my inbox that Slick Club has raised another $10 million as part of a funding round as well. So, clearly others are also looking well timed. This is the kind of PR you can't buy. But yes, well done. I think I have a question first before we even begin to doing 10-minute delivery the big question that everybody said is who wants you know ata in 10 minutes who wants grocery in 10 minutes who wants diet cook in 10 minutes and it turns out all those people who said that were the ones who ended up buying all of those things in 10 minutes. Then the questions became even more existential and absurd which is who wants air conditioners in 10 minutes? Who wants refrigerator refrigerators in 10 minutes? Turns out for some reason people are doing that too. I don't understand why but they're doing it. So I think the question that I have for the two of you is that as a consumer and as all the consumers who are listening to this podcast today, if I want something from ATA to groceries to refrigerators to air conditioners to PS4s to print outs, I go to either a blanket or an Instamat or a Zeppto and I get it within 10 minutes, 20 minutes, 30 minutes, 60 minutes. Why is that going to change 2 years from now, 3 years from now? Why will that not continue to happen? Clearly the two of you believe something and you don't think it's going to happen otherwise you both would be working at a Zeppto or an Instamart etc. Clearly there is something some other kind of a future that you are saying is going to happen. What is this future? So I can take a stab at it in terms of from a from a VC angle. The way we kind of see it is um what we have seen in the last 15 years or 20 years of e-commerce. You know when I joined Myntra when we were in Myntra together I'm just going to reflect back on that. That's true. Droia Sanjay and I were colleagues at Myntra in the very early days of Myntra. The joke I say is that I joined Myntra like 20 minutes after they got VC funding and so yes go on. Yeah. So when we kind of pivoted from being a personalized merchandise kind of you know we used to sell those to a fashion e-commerce website series A uh I remember at that point in time the task given to me as head of marketing and to my team was how many shoes can we sell on a daily basis and the first men's target I still clearly remember was 10 shoes a day was a target given can we actually sell in the year 2010 10 shoes a day 300 shoes a month uh to this Indian audience which is absolutely used to uh buying fashion very very differently and if at that point in time both VCs and the founding team and the leadership if you have asked this question how big can Myntra be I think give or take people thought of a 100 million $200 million kind of a business from the the the vantage that you had from this 10 shoes right so to a billion dollar plus of annualized GMV was not something that people thought is kind of possible so market forces I think works in ways that nor the founders nor the VCs can actually envisage and that's my big learning both as an operator and a VC you can kind of say that there are lots of tailwinds for a sector there are lots of things that will kind of pan out but beyond that you let market forces kind of decide so what we why I want to kind of go to that space was when I when I kind of come back here to quickcommerce I was in the same boat 3 years back why will I need something in 10 minutes so first and foremost I don't think quick commerce equal 10 minutes in my mind quickcommerce is possibly the fastest possible delivery within that category and I think that over the next 2 to 3 years will kind of stabilize somewhere okay whether it's 10 minutes for grocery 60 minutes for fashion could be you know same day for you know consumer durables I don't know but it'll kind of currently everybody's in this rush of 10 15 minutes but I think that will kind of stabilize for at a category level but verticalization is a way to go uh what does that mean when you what do you mean by verticalization we when when you kind of start buying something as a consumer I think the you actually buy a brand a product or design in most of the categories. That's our thought process. You're not buying um you're not except for groceries which you kind of buy as a basket. Everywhere else as a consumer, you're thinking through a need state. That's how consumers buy. I need a shirt. I need there's an occasion. I need something in fashion. I need a jewelry. I my my my x amount of, you know, my something in the BPC category is over. So, I'm replenishing that. Right? So, that's largely how consumers kind of think. you're not thinking basket heterogeneously typically when you kind of buy something. Uh so horizontal e-commerce did two things very very well. One is educating people in terms of everything that is possible in each category. So you learned as you kind of went to Amazon or the Flipkart. But now if I want to kind of buy something product design uh brand first it's extremely hard because you're spending 25 30 minutes just figuring out in this ocean in terms of how do I buy those right so I think need state you know what we say as vertical e-commerce is that there needs to be now I think you've gone through absolutely nothing to lots of everything to I think you'll find a midpath in terms of what commerce or you know a curated kind of a marketplace does which is in fashion do you need so any SKUs and line items or can it be very highly curated in terms of what is trending what do you like what is trending in Bangalore so on and so forth so I think verticalization for us when you look at fashion that's the lens similar thing can happen in other categories but other than groceries everywhere else it's kind of bought very very differently you don't buy consumer durables is very very different purchase right it's a very clear need state when it comes to consumer durable so you when I say you know think of where you want to buy your refrigerator from. If you ask a consumer, he or she is going to say five places and five destinations from where they will kind of buy this. It could be online, it could be offline, um and a multibrand kind of a retail outlet, right? Or a brand store. Okay. So we all consumers think like that and currently in the last you know decade and a half very very clearly there seems to be at least I struggle when I go to Mntra or a Flipkart my you know companies that have worked I struggle to find certain product categories because it's just way too much and I don't think tech is able to solve that. So we genuinely feel there is curation is the key and delivery the faster you deliver I think that consu consumer aha moment is just there for everything. So that's the way we kind of see verticalization. Got it. So I understand what you're saying. What you're really saying is that well I understand that there is going to be this this horizontal kind of quick commerce places like a blinket instamart etc where you can get everything but you see ultimately quickcommerce becoming specialized where consumers get evolved enough to say like oh instead of I buy like in e-commerce I go and buy makeup from Myntra sorry from Nika or I go and buy say furniture from urban ladder but I may not even though furniture and all of these things are available in like a flipkart or Amazon there's going to be a consumer propensity city to go to specialized places and you see something similar playing out in quick commerce. I'll be really honest. I'm very skeptical but I'll come to the reasons why I'm skeptical. Madav suppose I asked you the same question which is there is a Zeppto, there is an Instammart, there is a blanket I am a consumer 3 years from now all of us will be buying from the same place. Do you agree or do you think that's going to change? Some categories will need separate interfaces uh in terms of speedier consumption. A few of them that I can state at the back of my head right now are a fashion and I'll give you reasons behind each of these categories, right? B pharma, c gifting and d furniture and sleep, right? uh fashion just by virtue of the number of SKUs as we call it on this side of the world, right? SKQ stands for a stock keeping unit or an individual product that you can see on a website, unique article, unique article to be fair, right? Uh so one blue t-shirt of Aridas in an Excel size is one SKU for context, right? So fashion runs in thousands and tens of thousands of SKUs, right? So for you to create a subcategory on a horizontal platform of fashion would not do justice to the category and to the consumption pattern. So it's very important for you to have a different interface for a category like fashion. Similarly, um pharma will need a separate interface not because uh of the number of SKUs but because of compliance also in certain cases, right? The dark stores that need to be enabling speed for a lot of this speedy pharma will will be totally different from the dark stores that will churn out say grocery, fashion, food, all of these kind and offer something that's been super uh insightful for us at Zippy has been the gifting category. Gifting occasions are increasing by the day. Every day is a festival in India now, right? Every day is a day to gift in India. People actually go on a blanket and start searching for gift gifting hampers etc. and don't end up finding something that sort of serves the need. There are going to be platforms we see whether it's a phones and petals or an IGP or a gift studio a bunch of them right converting and moving towards verticalized quickcom in the next few months. Definitely not a year. Hm. And you said there was a fourth category which is essentially furniture and sleep again different infra requirements and uh like fashion has a try and buy feature attached to it. fashion has a problem attached to it which is it's very high on returns. Right? Similarly, each of these categories have their own compliances protocol and problems associated with the category which makes it very important for them to have a a different interface and b a different backend infrastructure which may mean different uh sizes of dark stores and different sorts of last mile. Pharma and fashion may work on two wheelers, right? But a furniture and sleep category will need a three and a four-wheeler supply chain attached to it. So hence I think we'll see a lot of these categories go into verticalized um quick commerce. But then there are some categories which I absolutely don't feel will get into verticalized quick commerce such as electronics right mobile phones chargers accessories phone covers all of these categories will absolutely not get into verticalized uh quickcom is what I feel as of today. Hm. What's the what's the thinking behind that mother? Why do you say like I mean not to be specific about electronics but when you look across all these categories and you feel that some will not go into the 10-minut verticalized space and some will what is it that differentiates those who might the ones that might from the ones that might not? I'll tell you a again no compliance required. B um SQU width is not that heavy in this category. C curation is very easy. It's very easy to define the parto of what sells in what quantity in what pin code at what time of the day, right? And D from a supply chain requirement, it doesn't need a separate back end. All it needs is maybe in certain dark stores a strong room if you're keeping some high value selection, right? But in cases of your chargers and accessories and speakers and headsets, you don't even need a strong team. I just want to get Rohin in because I know Rohin has strong points of view about Amazon and its selection. So, I mean, for what it's worth, I think, you know, I'm increasingly impressed by I' I've done another 180 degrees and I'm increasingly impressed by Amazon's quiet focus and execution as compared to um I mean a bunch of other companies, right? But but I want to essentially go back and you know I mean before we dive too deep into the 10-minute model and like you know the supply chain behind it the store architecture infrastructure etc. I want to go back to what we started this conversation with which is essentially Sanjay said 3 years ago if you asked me I wouldn't have believed that right so it's the consumer um behavior approach right and we know that in some sectors it's or some categories it's happened I mean uh greatest example being Instammart Blinket Zeppto etc which and let's let's largely admit that they're selling groceries FMTG goods etc and stuff like that right um I'm Now that's one point, right? Second point is it doesn't look to me that 10-minute commerce or 60-minute commerce or x minute commerce is essentially coming over and above the rest of commerce, right? Overall things have been slowing down in India and it looks to me like a zero sum game, right? That some of you know when people buy something from an instart or a flip card or sorry a flip card minutes or a zeppto it's possibly something that they would have bought somewhere else, right? So that's that's the other part and so therefore when so these are my two ways of looking at it and then I get everything that's happened till now but even while we were speaking when we were talking about Slick Club I opened up the Slick Club website and I was like browsing through um you know the closing range the shoes selection um the accessories etc and stuff like that and I was trying to figure out what is the and and there are very interesting things and I want to kind of go deeper into it like for example Example in Bangalore slip club uh offers try or buy essentially somebody will bring it to you you try it on and you return it and now it sounds fantastic but all of us know it's it's potential impact on like you know what happens to those items when they use tried back the cost of sending it the cost of getting etc. It couldn't be easy. It also offers a 7-day return period for items which are not tried and bought. Right? So, there's a significant cost incurred there as well. And the promise is 60 minutes. Now, I'm trying to figure out two things and I'd love to hear this from Sanjay, right? Who are these folks who want fashion in 60 minutes, right? And what is the cost of profitably addressing those people? because most of the brands that I saw I couldn't recognize but then again I'm too old I don't recognize most newer brands anyway so I don't know right um and I say this because today we just did a fantastic story on the ken about flipkart and kalyan krishna morti and the numbers that flipkart's losses are still last year's fi24 losses were 4,200 crores right so the context is think guys who are doing at scale in most efficient ways are still not making profits in horizontal e-commerce So help me understand what's the thinking behind verticalized fashion e-commerce who is it targeting and how will it ever make money and get profitable understand okay please I sorry last point I do know the margins in apparel are higher right we've been hearing that ever since PGK joined the ken saying that hey myntra you know what if you want to pick a category to disrupt you better pick apparel cuz it offers the highest gross margins let me say that Sanjay is the one who told me that when I joined So it's all suggest well he didn't lie. Okay. Go ahead. Okay. So there are two parts, right? So let me address the first part. Um fashion by nature, right? Uh is significantly different in terms of how we buy fashion, right? From a mind state, the lots of what kind when you kind of both offline and online. So let me just kind of touch upon online out here, right? So curation plays a part. The kind of brand choices you have know plays a part know so on and so forth. So fashion definitely I cannot buy fashion in the same place I'm buying organic potatoes and tomatoes right so my need state when I go to a zeppto or an instamart is very very different I'm buying groceries for my home packaged goods and vegetables vegetables largely unbranded my only filter is whether it's organic or not and a price point at which I'm going to kind of consume so that's how typically people buy vegetables right so you that's a need state now when it comes to fashion very very different uh there are multiple sets of consumers and their way they kind of buy into fashion is very very different right largely when we looked at Slick and when we spoke to a whole bunch of consumers their first largest cohort has been Gen Z very very young so the the kind of mix that you will see uh in terms of brands if you are old I am maha old right so for me it is uh so so but I do kind of follow fashion as a as a sector deeply uh my daughter is a consumer that's how old I am but she kind of consumes from uh wait I cannot let this challenge go unjal like you know defended right. How old are you Sanjay? I'm 52. Ah damn missed you by about two and a half years. All right let's continue. So um so the fact is for Gen Z uh I think among lots of things that's been written about this cohort of consumers there are few things that I've seen uh I think and I kind of agree with Madav. One is their last minute shopping, right? Uh and the need state for last minute is almost like uh you know too many in a week and many more in a month. So there are lots of occasions that my daughter goes to in terms of her engagement. It could be birthday parties. It could be just catching up with her friends. Could be reunion. It could be somebody's birthday. It could be prom night. just the number of times that they have and every time they are like can I buy something that's affordable for that evening right and they do kind of go to slick and kind of see the brands that's kind of on offer and they kind of buy it number one so I think that need state has kind of just increased so the positioning of slick club is largely it's your last minute fashion app and I think across categories what we are seeing consumers need state right now with the evolution of quick commerce is the fact that number of people who are spontaneously buying into something has kind of increased. It could be that it's the same share of wallet which I it would have gone somewhere else but I'm spending it here but it's not anymore thought through considered you know a week or 10 days in advance and I'm going to buy into something it is just that I feel like buying into something because I have a Friday evening to attend I'm buying it right so that's a set of consumers who are number one at at least in the year of you know slick so far and hence you will see that bit second that we have seen is gifting is a big big driver all right by nature Indians we gift toward the last moment even us that cuts across the age group from whether Gen Z or millennials when we say we need to go for somebody's you know XYZ there's an occasion we're like you know the family decides what do we get and is always last minute and right now I think quickcommerce enables a far more curated very very nice set of things that you can carry for the location fashion in this case slip kind of you know does that very very well especially for genz's right I think that's number two Number three, I think 20 25% of current Slick users use the try and buy offer. Uh, right, which is you pay a small premium, right, for somebody to kind of I kind of pick up five items. I might try all of them. Three of them kind of fits me well. I return the other two. And you do that then and there. Then and there. Okay. Right. So the person is waiting for you. So then and there, you know, the product kind of goes back. Now in terms of the question of how well it kind of gets feature used to exist on horizontal uh or at least fashion platforms I don't know if it still does or not. I I I don't think it's particularly controversial. I think I don't think it's particularly controversial to say that myra did try and buy. Uh I think it's fair to say does it still do it? Myntra currently I mean seeen I don't think there is a real time try and buy but when you kind of buy something because I can return I Yeah. Yeah. I get that. I get that. I'll tell you what it is. The reason I'm asking is why they turned it off. They turned it off because it got super expensive. The cost of reverse logistics was insane. There was another reason why. Another thing that they tried before that. The other thing that they tried before that was they did the multiple sizing. So if you're buying say medium, you could get a small and a large all three products at the same time. No, no. Yeah. Yeah. I I I've seen that. But my point is uh so you're saying myra removed try and buy because reverse logistics cost was high and this is a person who's already gone there and designing the return path for that person and you're are we assuming that this goes away in the context of x minute commerce. Yeah, it's very different the logistics here and I think again mad pointed out to that right. So fashion if I'm if somebody is kind of building purely for fashion right in Slick's case it's purely fashion. The duck store is designed for fashion. It once a consumer says no, it goes back to the dark stores immediately, right? And gets restocked. You kind of clean it up, steam it, whatever. It gets restocked. It's fine and repackaged into uh sort of envelope and then rebin onto the racks and then empty goes live again and next customer places. What does this cost typically? I mean, if you were to give like a range, I'll tell you. I I I'll get to economics. Uh so average cost of forward delivery of a fashion order in 60 minutes within a 7 to 8 kilometer radius is approximately 80 rupees at not so high efficiency. Um bringing it back is the same cost because any lighter going had to come back. Correct. Right. But processing the order again and putting it onto the shelves, it's it's a very simple math. If I need a separate tailor at the store to do this and the store is processing 500 orders a day, right, 50,000 orders a 15% of the orders come back, you're essentially processing about 20 to 50 orders on return. divided by 30 days. It's about 70 75 orders a day. Um your cost per order to process it is approximately 15 to 20 rupees per and and and on this you already spent forward and reverse logistics even if it was 80 bucks right because net realization on this article is zero. While the customer may have ordered three articles, retained one article, returned two articles, those two articles coming back at the store being refurbished and rebined eats into the bandwidth of the tear at the dark store along with maybe some picking packing bandwidth, right? Um, so about 15 rupees per article is a fair assumption. Sanjay, correct me if I'm wrong. Yeah. Yeah, it's ballpark. It's you're right. It's it's pretty much in that range. Now, just one more question to Mother if you don't mind. Mother, do you um offer fashion uh quick commerce um or do you have clients who do fashion e-commerce? We work with the three fashion marketplaces of the five ones that offer 30 to 60 minute delivery today. Got it. All right. Sorry, Sanjay. Please continue. Yeah. So, that way now this is very different from Myntra. The Myntra reverse logistics is built very very differently as a horizontal marketplace. the lots more that the same SKU travels and hence the cost is very high by the time it gets restocked and resold it's very very different right so hence quickcommerce from if you do it well it's far more efficient out here you know because it goes to the point of sale pretty much immediate right so I think so that's the other piece now going back to I think sorry also the second point is I believe Myntra's try and buy is not quote unquote real time it's not like the person is waiting for you downstairs while you try and You have to try policy. It's a liberal return policy. It's just a return policy. You're trying it up. Exactly. And hence the lots of people who No, no, guys, they don't have try and buy now, right? But when they did have many years ago, when they did have it was actually a live try and buy, the person would wait and of course they stopped it and now they have a return policy. Yeah. Yeah. So, so, so, so there are, you know, few points. One is in the case of Slick, the way it works, the kind of consumers who kind of buy into it, why it's positioned at this point in time as a lastm minute fashion app. Uh why Jenz's kind of love it just the number of occasions, right, for the Gen Z's to not just Gen Z's, even early minilians, right? The number of occasions wherein you want to wear something different, something new and if it's affordable, you end up kind of, you know, buying. So I think that that has kind of increased substantially and we see that increasing as we as the time goes by. That's one. Now the second part is about profitability so on and so forth. I think we are way too early right now to even kind of you know look at you know what that structure would be. Uh right but this is I mean at least one thesis when we wrote the you know when we kind of invested is this right. uh and why again it's going to be very different from you know you quoted the number of either Flipkart or you know others is very very different uh I think cumulatively I think people like Flipkart Myntra over the last 15 years you developed the category educated the consumers there lots of journey that you went through uh when Myntra started I I think we were at sub $200 million I mean 200 million internet users in the country that's how we kind of started right so with absolute absolutely nobody wanting to go buy fashion out there. you have educated I mean currently our 800 million plus you know internet users uh very very wellversed with you know buying online and uh so I think that entire bit of education that first decade went through for flipkart I think even costed them quite a bit in terms of building the category building the belief building the trust right which I guess the next 10 years won't have so have you kind of you know really kind of thought through when this will be profitable no it's still year one for slick but few things that have we've been kind of experimenting with slick right are people willing to pay a little more for try and buy are people willing to pay a little more for convenience right what is the price elasticity out here is it a very clear tier one tier 2 phenomena or is it kind of extendable and those are things when I say market forces will decide I I can kind of keep guessing everything but market forces will decide in terms of you know absorption of any of these and how extendable these are you know in terms of how deep you can kind of go into India but definitely top 10 25 cities is very very clearly this is kind of possible and we see that as what you know the next two to three years for slick could be okay got it I sorry uh can I just come in and like just I I want to reference something that Madav said earlier when we were asking him about like you know what kind of categories work do not etc he had mentioned you know the can you narrow it down through a parado principle to a set of SKUs that will move right and that's one of the reasons I assume you said that electronics is not a category like that because there is like you know just an infinite there's so many products that you can buy. Isn't fashion even worse than that? Isn't the entire promise of fashion that there is just virtually infinite brands and infinite styles? So therefore how does it fit into this model of reducing? And I asked this because I went to I mean with all the disclaimer of me not being the target audience I get it. I'm not one of those people who wants to buy something last minute for a party for which I'd need to get invited to a party. But that said, let's assume there are those people. I mean there the standard brands aren't there. The selection is very tough and stuff like that. So how do you how do you decide you know how do how does this square with Madav's point about like you know the perto um focus on certain SKUs? Yeah. Yeah. So let me kind of address two points right are the brands that you and I wear will kind of come in in the next 12 months time on Slick as well right again I think it takes time for incumbent large brands to kind of adopt right some of them you know they need to kind of see right same thing myntra we had to I had to kind of sit in Puma's office Nike's office to kind of tell them that we are an online destination why don't you give us your brand and I still remember many brands kind of calling us you're a right uh and that was those days right uh to now I think brands take time the national brands will kind of take some time but they will kind of 12 months from now if you're having the same conversation the number of brands that's going to be on slick is going to be fair you know much higher number one uh number two the question is I think way it works is if you're able to kind of really look at consumer behavior and interest at a hyper local level and that's what you're trying to do right and if you can kind of gather all the data and talk to brands uh in terms of what is moving, what is not. I think the curation can be largely about the best sellers, the most trendiest for that particular brand in that particular area is what you're trying to kind of sell, right? So, if I kind of work backwards and let's assume uh let's take a brand out here. Let's say snitch is kind of retailing on uh slick. snitch can over say a 24 to 36 months period really kind of look at and if if slick is present across let's say 15 to 20 markets you can kind of go about saying that my best sellers set is this 80 or 100 products they sell so well in these 20 markets and I can of
