DMart vs Quick Commerce: Is the retail giant losing ground to 10-minute grocery delivery players?

The quick commerce model’s commitment to instant delivery of small, frequently sought-after items stands in stark contrast to DMart’s long-standing emphasis on bulk transactions, posing a challenge to the core of DMart’s business model.

Here is an overview of existing quick commerce businesses like Blinkit, Swiggy Instamart, Zepto, Big Basket, and Flipkart.

What is quick commerce?

Quick commerce, or Q-commerce, is a branch of e-commerce that emphasises extremely rapid product delivery. In contrast to conventional e-commerce, which can take several days to deliver items, quick commerce strives to complete orders in just minutes to a few hours. Will go through the existing Q-commerce businesses in India first as it can not be compared with DMart simultaneously.

The quick commerce segment is growing at breakneck speed, driven by convenience and ultra-fast delivery. According to a Morgan Stanley report, this market could balloon to $25 billion–$55 billion by 2030. High-frequency users—about a third of the customer base—are expected to drive nearly 75–80% of the total market value.

This sector is even projected to surpass food delivery in gross order value by 2026, making it a critical battleground for e-commerce players.

Existing quick commerce players

The Q-commerce competition in a market already dominated by established players:

Blinkit’s (Owned by Zomato) sales have skyrocketed, doubling in the September quarter compared to the previous year. It is now nearly half the size of Zomato’s original food delivery business but growing six times faster.

Zepto recently raised $350 million, boosting its valuation to $5 billion and cash reserves to over $1 billion. This new funding strengthens its position in the quick commerce war.

Flipkart, Amazon’s biggest rival in India, launched its Minutes quick commerce service earlier this year and is rapidly scaling operations across major cities.

BigBasket transitioning into the quick commerce model, BigBasket reported gross sales exceeding ₹900 crore in October 2024.

The Tata Group has also ventured into this space with Neu Flash, leveraging its super app Tata Neu.

Is quick commerce players threatening India's retail giant DMart?

The shares of DMart have plunged by more than 30% since the September peak took a further hit by Q2 FY25 results. The retail major's net profit for the Q2FY25 rose by 5.8% YoY, reaching ₹659.6 crore, compared to ₹623.6 crore in the same period last year. Avenue Supermarts revenue rose by 14.4% YoY to ₹14,444.5 crore, up from ₹12,624.4 crore YoY. The biggest miss for Avenue Supermarts was revenue growth, which was the slowest in four years. The like-for-like growth was the slowest in three years.

Management noted that stores and operations in metro cities, including the online offering DMart Ready, were impacted by online grocery format players, including quick commerce players.

Note: Like-for-like growth compares the sales of similar stores over a specific period(24 months), removing the impact of new openings, closures, or major changes. It shows true growth by focusing only on existing operations.

What’s not working for DMart?

DMart’s inventory turnover ratio dropped from 14.8 in FY23 to 6.6 in H1 FY25, showing it is holding inventory longer. This change reflects a mismatch between stock levels and consumer demand. With Quick Commerce growing, shoppers prefer smaller, frequent purchases, making it harder for DMart to manage inventory efficiently. Holding costs rose by 20% to ₹1,219 crore in H1 FY25, impacting DMart’s ability to keep prices low under its EDLP strategy.

DMart’s like-for-like (LFL) sales growth fell from 9.1% in Q1 FY25 to 5.5% in Q2 FY25, especially in metro areas. These markets, contributing 47% of revenue, saw LFL growth drop in Q2 FY25 due to Quick Commerce’s popularity. Consumers in metros favour rapid deliveries, highlighting DMart’s struggle to adapt to changing buying patterns.

DMart’s bulk-buying model doesn’t align with the shift toward frequent, smaller purchases. Overstocked inventory grew 23% to ₹3,450 crore in H1 FY25, tying up capital and risking obsolescence.

DMart’s competitive edge, built on cost efficiency and bulk buying, is under threat from quick commerce, which uses real-time insights for inventory management, challenging DMart’s traditional strengths.

DMart, with its cost-efficient bulk-buying model, has long been a leader in Indian retail, but the rise of quick commerce is reshaping consumer behaviour, especially in metro cities. Shoppers now favour smaller, frequent purchases with instant deliveries, posing challenges to DMart's traditional operations.

The slowing revenue growth, falling like-for-like sales, and rising inventory costs highlight DMart's struggle to adapt. Quick commerce players leverage technology and real-time data for inventory efficiency, which contrasts with DMart’s slower, bulk-focused model.