“The delivery apps reshaping life in India’s megacities”
MIT Technology Review, June 21, 2022
Humans and technology
by Edd Gent
“Local shops are integral to how urban Indians buy fresh food and other essentials. A host of well-funded “quick commerce” companies want to eat their lunch.”
From 7 a.m. until well past dusk, seven days a week, N. Sudhakar sits behind the counter of his hole-in-the wall grocery store in the south Indian city of Bangalore. Packed floor to ceiling with everything from 20-kilogram sacks of rice to one-rupee ($.01) shampoo sachets, this one-stop shop supplies most of the daily needs for many in the neighborhood. It’s a carbon copy of the roughly 12 million family-run “kiranas” found on almost every street corner in India.
The shop is on a busy street in the Whitefield district, formerly a quiet suburb but now a major hub for the city’s booming IT industry. When Sudhakar, who is 49, opened the store 20 years ago, offices had just started going up. Business picked up quickly thanks to an influx of construction workers, followed by IT employees. Now apartment blocks loom behind his shop, housing hundreds of workers employed in the tech parks that dominate the surrounding area.
These days, the same technology industry that helped Sudhakar’s business thrive is presenting stores like his with a new challenge. Across the road, a steady stream of delivery drivers line up to grab groceries from a “dark store”—a mini-warehouse located in the heart of the city and built to enable ultra-fast deliveries. It’s run by Dunzo, a Bangalore-based startup, and the service is in such wide use it’s now a verb unto itself—Bangaloreans who need something ferried across the city will “dunzo it,” using the company’s app to book an on-demand motorcycle courier.
Dunzo lets users order pickups from nearby shops, but more recently it has pivoted into the rapidly growing market for instant groceries. It’s an increasingly crowded space. Borrowing from the playbook of Western companies like Instacart, Gopuff, and Gorillas, which deliver daily essentials right to your door, a slew of local firms are vying for a piece of India’s $620 billion grocery market, many of them now promising delivery times of just 10 minutes. Their goal in many cases is explicit: they want to eat into the kiranas’ dominant share of “top-up” purchases that customers make in between bigger bulk shopping trips.
They’ve got a long road ahead. Today, kiranas account for more than 95% of India’s grocery market, according to research published in March by the consulting firm Redseer. Modern supermarkets still account for only about 4%, even though they first appeared 30 years ago, and online groceries haven’t cracked 1% in a decade. Roughly two-thirds of India’s 1.3 billion people live in rural areas largely untouched by these more modern forms of retail.
But in India’s megacities, change could come quickly. Years of aggressive marketing, steep discounts from e-commerce players like Amazon and home-grown Flipkart, and a heavy dose of covid lockdowns have gotten the urban middle class hooked on online shopping. These shoppers make up a fraction of the population, but their spending power is considerable, and in more affluent pockets of big cities the battle for India’s street corner is well underway.
Sudhakar is dismissive of the hive of activity across the road from his shop and says he doesn’t really see Dunzo and its ilk as an immediate threat. But he admits that around half his customers now shop online, and he does worry what this trend could mean for his business and others like it in the future. “It will affect us,” he says. “They have more investment. They have more money. They have a better network.”
About the Author:
Edd Gent is a contributing writer for MIT Technology Review.