Remember when you could stop thelaywalas on the street to purchase some fruit, vegetables, or even fish? Now they’re marketed as tech startups. Due to the epidemic, a number of e-commerce businesses have arisen offering to deliver groceries and other items in 30 minutes or less.
And the investors appear to agree. And are prepared to invest in it, as recent global mega-rounds like GoPuff’s $1.5 billion or Turkish Getir’s $1 billion illustrate.
Airlift secured a $85 million Series B and Krave Mart announced a $6 million pre-seed round for 10-minute delivery less than a month after launch. Then there’s Pandamart, which debuted in late 2020 and has developed significantly since.
But, how does it work? Logistics is a big burden for e-commerce firms of all sizes, but to accomplish it in under 30 minutes with a fleet of independent contractors? Isn’t it difficult to secure product availability, packaging, pick-up, and delivery in such a short time frame? Companies acquire stuff and put it in dark shops – type of tiny warehouses in the midst of cities that are significantly cheaper than retail locations because to their no-fringe strategy. Depending on delivery time, more dark shops must be erected, and the radius reduced.
For its 10-minute offering, Krave Mart — formed by former Daraz CCO Kassim Shroff, Swvl General Manager Ahsan Kidwai, and Foodpanda executives Haziq Ahmed and Hammad Bawany — will require more outlets spread out across smaller radii. “By the end of the month, we will have 30 dark shops running in a 2.5-3km radius,” says Krave Mart CEO Kassim Shroff.
Airlift, on the other hand, claims to serve eight Pakistani cities plus Johannesburg, Cape Town, and Pretoria in South Africa as part of its worldwide growth. Pandamart, on the other hand, has 51 dark shops spread across five cities, each servicing a 5km radius.
Having your items delivered in under 30 minutes is certainly handy, especially when a venture capital company is ready to subsidise your impulsive purchases. But how many goods does a buyer really need in such a short time?
A monthly raashan, top-ups for things that have run out, and adhoc, which is like urges that demand immediate satisfaction. The second and third categories have a smaller product choice and a lower average order value, but users are ready to pay a premium. Contrarily, the first is more organised, typically a family affair, and more cost conscious, according to Bykea founder and CEO Muneeb Maayr. Unlike the other participants, the business has long fought for a hyperlocal strategy that requires less capital and does not necessitate cash burn. That means you may use their app to choose from a basic selection of 800 SKUs, and the rider will purchase and deliver it from a local shop.
Other players, though, disagree. “You need to manage your supply chain,” Mr Shroff explains. Ibad Ahmed, Director of New Verticals at Foodpanda, used a hybrid approach. “We have two models: dark stores, which is essentially Pandamart, and shops, which is what we began with immediately after the pandemic,” he explains.
“Both methods have advantages, one has greater long-term benefits and the other has more immediate profits. But the union of the two is vital to our platform of choice. In terms of adoption, we want to ease customers into the lifecycle of having their favourite brands bring food to their door. There are some things we can give via dark stores that are not readily translatable in shops. The most apparent is that if you collaborate with someone, you don’t have access to their goods. “With Pandamart, what you see is what you get,” says Mr Ahmed.
To assure inventory management and profits, Bykea has collaborated with Chase Up to construct a warehouse, acting as the lead generation and last-mile supplier while Chase Up manages the warehouse operations. However, the delivery time is guaranteed to be between one and two hours. With a present 75-25 balance of mobility and commerce, COO Rafiq Malik tells Dawn that the company is shifting towards delivery.
In any case, concerns about the narrow product variety and tiny average basket size remain unaddressed. After all, how many products do you or I need delivered in such a short time? They couldn’t add up to much, can they? Theoretically, yes, but current players haven’t actually confined themselves in terms of SKUs. For example, Pandamart’s ‘shops’ vertical presently has 20,000 goods available, ranging from chips to hair straighteners, accounting for a quarter of Foodpanda’s gross retail value. Similarly, Airlift used to offer iPhones at a discount to increase average order value.
Mr Ahmed sees it as a logical extension of the consumer experience. “No one knew there was a need until it was met,” he adds. “If I had asked them what they wanted, they would have replied quicker horses,” says Krave Mart COO Haziq Ahmed.
Who am I to complain as a customer when my goods is delivered quickly and frequently at a discount? May the capital frenzy always finance my impulsive purchases.
