Daybreak - Why the Big Billion Days sale can make or break Flipkart's quick-commerce dreams

Episode Date: September 16, 2024

Last month, a Twitter post a Bengaluru-based IT professional about getting a laptop delivered from Flipkart went viral on social. The reason? Flipkart’s quick delivery arm called Minutes that went live in select cities had delivered it to him at a Starbucks cafe in 13 minutes.But Minutes is Flipkart’s third attempt at quick delivery. And the real test is actually around the corner when the Big Billion Days sale goes live at the end of this month. During the sale, daily order volumes usually go up by nearly 140%, which makes delivery delays unavoidable. Flipkart’s delivery partners who work with its logistics and supply-chain arm, Ekart Logistics, are stretched thin. And now its going to get even more challenging because Flipkart is going use the same delivery personnel for Minutes.Not only is Ekart going to help Flipkart with quick delivery, it is also supposed to be helping it manage its dark stores. Can Flipkart finally strike the right balance between its e commerce and quick commerce business?Tune in.Don't forget to send us your recommendation for this Thursday’s Unwind segment. The theme is “comfort food at your fav spot in the city.” Send them to us on WhatsApp as a voice note or as a text message. The number is [phone]. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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Hi there. Before we begin today's episode, here's a gentle reminder for you to send in your recommendation for this Thursday's unwind segment. The theme is comfort food at your favorite spot in the city. You can send us your recommendation

on WhatsApp as a voice note or as a text message, whatever you find comfortable, the number is 8971-08379. I'll repeat that again, it is 8971-08379. Looking forward to hearing from you, and now on to today's episode. Last month, a Twitter post by a Bangalore-based IT professional about getting a laptop delivered from Flipkart went viral on social media.

The reason? Flipkart's quick delivery arm called Minutes that were, went live only in select cities had delivered it to him at a Starbucks cafe in 13 minutes. But minutes is Flipcott's third attempt at quick delivery. Maybe it will get third time lucky. We will know soon because the real test is actually around the corner. At the end of this month, Flipcott's famous big billion days sale will go live. Now, during the sale, daily order volumes usually go up by nearly 140%, which makes delivery delays unavoidable. Flipkart's delivery partners who work with its logistics and supply chain arm called E-Cart logistics

are stretched thin during this period. And now it is going to get even more challenging because Flipkart is going to use the same delivery personnel for minutes. Not only is E-Cart going to help Flipkart with quick delivery, it is also supposed to be helping. it manage its dog stores. So will Flipkart finally be able to strike the right balance between its e-commerce and quick commerce business? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickda Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rahal Philipose and I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 17th of September. Let's begin by

looking at Flipkart's past attempts at quick delivery. During the Big Billion Day sale of 2023, Flipkart actually had to pause its grocery operations through its platform supermarket for two to three days. And that is because it had to make a choice. The choice was to divert manpower and supply chain assets to fulfill deliveries of consumer electronics. This happens to be a high revenue category for Flipcott during the sale period. A former grocery executive told my colleague Nooha Burbri how eventually it had to shut down the business that it had been running for five years. The problem is even more pressing now, given that creating a practical hyperlocal platform

has been a six-year-long, unfulfilled dream for the company that has pioneered e-commerce in India. The company's second failure was Flipcott Quick, which was a new year. a hyper-local delivery service launched in July 2020. It had a 45-90-minute's delivery promise. But with Swiggy Instamod, Zomato's Blinket and Zepto playing the 10-minute delivery game, this just wasn't good enough. Despite its best attempts to fix the hyper-local delivery question,

the closest Flipkart quick could get was 30 minutes. So it began shutting down by November 2022. Plus, initially, Flipkart's parent, Walmart, didn't really trust the hyperlocal business, so no investments came from it then. And then in April, Flipkart tried to pull off a shortcut and began exploring the option of acquiring a majority stake in Zepto. This two did not see the light of day. This time, though, if Flipkart manages to pull off the 10-minute delivery,

the quick-commerce market is up for a shaker. because like a minute's store manager told the Ken, after all, Flipcott has everything, the customer base, the seller base and the categories. This time, Flipkart's delivery strategy for minutes also happens to be quite different from its peers. But there is a slight problem. Stay tuned to find out.

Instead of a separate platform, Flipkart has added minutes to its own app and is using labels like Express, the same-day service or one-day delivery. It is doing so even in locations where Minutes is not live yet, all to attract more consumers. The Minutes tab allows users to access products from 7,000 to 10,000 stockkeeping units under categories like grocery, household essentials, electronics and beauty and personal care. Now, usually all QuickCommerce players stock up their dark stores by getting products from larger warehouses managed by. third-party logistics players like delivery.

In Flipkart's case, products are shipped from large warehouses dotted along the city's outskirts to its fulfillment centers within the city. That's also why its earlier hyper-local avatar, Quick, which worked with third-party delivery partner Shadowfax as an external partner, could hardly reduce the delivery time to 30 minutes. But now, Flipkart moves products from these fulfillment centers within the company. the city to dark stores for quicker delivery in areas where Minutes is life. But here is where things get a bit tricky. Two managers within Minutes told us that half of the Quick Commerce vertical is made up of

E-CART executives, including First Mile and Fulfillment Center operators. E-Carts, first and middle-mile management attends to both FlipCarts and minutes. And for the last-mile delivery, it's working on creating on creation. a separate team for minutes with external riders. This is similar to how Zepto partners with third-party logistics companies like Shadowfax apart from having its own dedicated fleet. But until that happens, minutes will continue to use E-Card's logistics team as a stopgap. Now, this is in contrast to other quick commerce companies like Blinket and Instamort,

which have separate fleets dedicated to 10-minute deliveries. A FlipCard executive told again that what it needs right, now is for its leaders to rethink almost the entire business. Even Zomato and Blinket do not share delivery fleets for their respective food and quick commerce orders. In comparison, Swiggy and Instamot do share their fleet, but their use cases are different. Quick commerce and food delivery are not very different from each other. So what is Slipcard doing about all this? It is using the only option it has. An E-Cart executive told us. Flipkart has basically expanded its fulfillment center capabilities to store even items like frozen food and groceries. Here, the fast-moving inventory

is managed based on AI-generated data from the large volume of orders that FlipCard gets. E-Cart's employees have to look after the supply chain for minutes. But the problem is that E-Cart was traditionally built to support Flipkart's two-day delivery system. which makes investing in a 10-minute system pretty challenging. Another senior Flipcott executives said that its structure is too rigid, and that is what has made large bureaucratic organizations like Amazon and Flipcott late to the Quick Commerce Party. Nevertheless, Flipcott is expanding minutes in phases, starting with dark stores in three cities.

Mumbai already has nine of them, Bangalore has 17 and Delhi 14. And that is how electronics, one of the top-selling categories on FlipCart, could become the most crucial segment for minutes. A FlipCard's minutes manager explained it to us. They said, and I'm quoting, what do people think of when they open FlipCart? It is Electronics. If we can deliver them in 10 minutes, we can build a platform to rival other players in other categories too. But here is the issue with that. Electronics alone cannot set the platform apart.

People buy groceries way more than they buy phones. So if you buy groceries from a platform, you have more stickiness towards that platform and you shop more, which means that the platform's chance to sell you more products is higher. So to really break into the quick commerce scheme, FlipCard will have to nail grocery sales. The challenge here is to build a recall among consumers in metro and Tier 1 cities, Flipkart is traditionally seen as a consumer electronics company

and not as a grocery or food delivery company. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the Ken website.

Today's episode was hosted by Snickda Sharma and edited by Rajiv Siyah.