Quick commerce emerges as Amazon’s fastest-growing India business – Business News

The service is now available in over 60 cities and towns, four times its footprint of less than 10 weeks ago, with the expansion pushed into Tier 2 and Tier 3 markets. Amazon said it is on track to reach 100 cities by Diwali. Orders are fulfilled through a network of more than 750 micro-fulfilment and urban fulfilment centres. The company did not disclose how many of these are dedicated dark stores, or give an absolute sales figure for the three-month period. “In a short period of time, Amazon Now has crossed $1 billion in annualised gross sales in India, making it the fastest-growing e-commerce business unit in Amazon India’s history,” said Samir Kumar, country manager, Amazon India. The announcement comes as a recent UBS report suggested that Flipkart has gained an early edge over Amazon in quick commerce.

Flipkart Minutes was scaling faster and putting more orders through each store, with more than 1,000 dark stores across 120-130 cities and 40-45% of Flipkart’s customers in those cities also visiting Minutes, the brokerage estimated. Amazon Now had 500-600 dark stores across 11 cities at the time, according to the same checks, and had activated fewer than one in 10 of the 60-70 million customers who regularly use Amazon’s main app, with new customers making up less than 6% of its quick-commerce base.

Amazon Now’s expansion had slowed over the previous two to three months, UBS said, on operational problems involving storage, transfers from hubs to stores, expiry, and mismatches between system inventory and stock physically available on shelves. The brokerage expected the pause to be temporary once those issues were resolved, with the network adding 200-300 stores over the following two to three months and reaching about 1,000 by the end of the calendar year. Flipkart Minutes, on UBS estimates, could add another 1,000 stores to reach about 2,000 by the middle of next year.

Store productivity remains the harder test for both entrants. Amazon Now averaged 700-850 orders per store per day, down from about 1,000 when its network was 200 stores, against the 1,700-1,800 orders a day a store needs to turn profitable, UBS estimated. For comparison, Blinkit and Swiggy’s Instamart averaged about 1,600 and 1,089 orders per store per day in the June quarter respectively, while Zepto averaged 2,071 in the March quarter, according to company disclosures.

The report also suggested that Flipkart Minutes is pulling ahead on average order value. Excluding mobile phones, a Minutes order averaged Rs 500-530 in the June quarter, against Rs 518 at Blinkit and Rs 508 at Instamart, as disclosed by the companies. Include phones, where Flipkart is strong, and Minutes’ average order is larger than Blinkit’s, the brokerage added. Amazon Now averaged Rs 400-450, up from Rs 260-300 in April, before discounts. However, the gap would widen further once discounts are accounted for, the report added.

Tuesday’s announcement lands at the start of the festive quarter, with Big Billion Days and the Great Indian Festival approaching. Amazon had said in June that it planned to build India’s largest delivery-in-minutes network by taking Amazon Now to over 300 cities.