In Race for Crew & Capacity, Quick gets Quicker

Quick commerce is red-hot, and a new battle is unfolding on two fronts as companies flush from recent fundraises at rich valuations go all out to expand operations. There’s a rush to open dark stores, and an accompanying scramble to find the personnel to manage the expanding infrastructure and supply chain.

There’s fierce competition for the right sites — now increasingly expensive and difficult to find in large cities — to set up these micro warehouses for servicing nearby localities. Meanwhile, the likes of BigBasket, Zepto, Flipkart Minutes and Swiggy Instamart are recruiting aggressively, as well as poaching, people in the know told ET.

Acquiring dark stores and managing daily operations are critical aspects of delivering orders within 15-30 minutes.

“All platforms are in a land-grab mode as they look to almost double dark store count in the coming years,” BofA Securities said in a report dated August 30. Rents for such commercial spaces in central locations are higher than for warehouses operated outside city limits by ecommerce companies such as Amazon and Flipkart.

Aadit Palicha, chief executive of Zepto, which closed a $1-billion round last week, said finding real estate for dark stores in densely populated areas of large cities is challenging, but not in the newer (tier II-III) markets.

It’s a geography-specific issue,” said Palicha. “Deals will be aggressive for getting dark stores in, say, south Mumbai or Koramangala in Bengaluru. (But) adding new stores in markets like Panvel (or) Chandigarh has been easy.”

“It’s really a challenge now to find good real estate in key locations. There’s bidding for multiple floors in the same building so one can double down on the same location,” said the chief executive of another quick commerce company. “Landlords too have smelt an opportunity for grabbing a premium, knowing the funds coming into this sector.”

Apart from Zepto, Zomato-owned Blinkit has started expanding into smaller places, having entered Bathinda in Punjab, Haridwar in Uttarakhand and Vijayawada in Andhra Pradesh over the last few weeks.

To meet the growing consumer demand, quick commerce platforms are increasing stock-keeping units, or different items at the dark stores, to 10,000 and even 25,000, from 4,000-5,000, BofA Securities said in its report. “This has led to bigger dark stores — especially the new ones.”

It’s a convenience-based business, so whoever starts to offer a faster delivery with the right assortment can still take away market share, it said. “Most consumers are generally sticky, end up using one to two platforms to meet their different needs. Only when these users face consistently bad service, do they switch … This is why peers are keen on launching a higher number of dark stores and going after densification,” the report added.

The resulting demand for human resources is another confrontation. “The hiring activity in quick commerce is at all levels. There are at least five big digitally native players competing for the pole position,” said Anshuman Das, founder and chief executive of search firm Longhouse Consulting. “The winner of this space is likely to capture the biggest ecommerce category — grocery.”

The chief of another quick commerce company emphasised the need for people to figure out the logistics and move goods. “Yes, it’s an operations-heavy business. Engineers can ship new product tweaks, but what runs this business is logistics,” he said.

Pointing out that this was why ecommerce companies took longer to enter fast delivery, the CEO said, “Now that platforms are aggressively selling up to 20,000 items, connecting large warehouses outside the city to dark stores in an optimal manner will be critical.”

Flipkart, which ventured into the space with Minutes, has hired for many roles from companies such as Tata-backed BigBasket, which is also moving to a fully quick-delivery model.

ET reported on August 27 that BigBasket will retain its large warehouses, about 60, to be able to carry certain large appliances and high value products.

Flipkart senior vice-president Amitesh Jha, meanwhile, joined Swiggy Instamart as chief executive, replacing the IPO-bound company’s cofounder, Phani Kishan Addepalli.

Poaching is happening at all levels across marketing, operations, supply chain management and finance, a Gurgaon-based quick commerce executive said.

“Senior executives as well as mid-level managers are in demand,” he said. “There are a few roles where past ecommerce experience helps… but the game is very different in quick commerce. The requirements in category management are to be much more aggressive than horizontal marketplaces.”

Industry executives said Zepto has been aggressively hiring too. “Zepto is hiring folks from companies such as Amazon, Flipkart, Zomato, Swiggy, Ola and Urban Company,” said an executive. “Several people from marketing and brand roles at Zomato have joined Zepto … while category management and inventory management personnel are joining from companies such as Amazon, Flipkart and Meesho.”

Palicha said he plans to bring in 500 executives in the coming weeks. Zepto is shifting base from Mumbai to Bengaluru, increasing its personnel requirement.