10min Grocery Delivery?
Is that even possible, can a business be built ?
I am Aarihant Aaryan! Welcome to the Iron sharpen Iron newsletter, Every week I share my homework from my startup journey, books, case studies and sometimes I share my opinions and thoughts.
Over the week have observed on Twitter and Linkedin, people questioning the importance of 10min delivery and the concept especially.
After thinking and trying to understand the space, I have a different perspective towards this business model, which you would love to learn about.
What is 10min delivery?
Few tech companies like Zepto, Grofers have been delivering whatever you order through their app in less than 10mins! Many have been impressed by the service but yet are questioning the business model and idea.
How do they deliver in 10mins?
This is where very things get very interesting, These companies set up dark stores across the cities they operate. Dark stores are like mini-warehouses.
Once they receive an order, the grocery or items are packed in < 60secs.
They do have delivery partners but they make their delivery partners operate very differently, each delivery partner is assigned to a particular area and only delivers to his nearest location, unlike agents from swiggy or Zomato.
Well, who are they competing with?
You might think these companies are competing with each other, their primary competitors would be swiggy or zomato, But my friend think like a founder, not a student or an activist.
These companies are competing against offline merchants, India has more than 50M merchants, these include Kirana shop owners, meat shop owners, pharma shops, etc. They are trying to replace Kirana shops from your life.
You might think, But why don’t they just partner with merchants and deliver?
That’s not possible because Kirana shop owners get customers from their specific area also they can’t give commissions for sales due to their less margins per product.
Hence building a dark store and delivering makes more sense. since these companies deliver directly to homes, they get a high rate of margin from manufacturers.
You might say, still why 10 min delivery, Why don’t do they do it in 20mins or 30 mins?
Remember Mummy used to say “Yeh uncle ke dukaan seh lekhe 10min mai aana” The average time taken for you to get groceries from nearby places is > 10mins ( time taken is variable to your grocery list) If you can build an online place to deliver groceries in < 10mins at a reasonable price, people will opt for your service's.
If these companies say, we are competing with Kirana stores, the socialists and activists in people would rise over the internet and keep talking about how the lives of these merchants will be messed up. - Truly India wants capitalism with the blood of socialism.
Instead of saying we are replacing Kirana stores they stated we are a 10Min delivery company which created a lot of buzz and opinions which helped zepto to get 100,000 downloads and to my knowledge they have started spending money on marketing recently.
How do they or will make money?
Margins on selling groceries. Likely to have higher margins because they buy in bulk from manufactures.
Grocery is the right use case to start from, Later they can expand to house utility products, sales of electronics, and personal assistance services.
Since I am a fintech founder, I expect them to build a wallet or BNPL product.
If you found this newsletter insightful, follow me on Twitter & Linkedin and comment your perspective 😁