November 29, 2023
Dr. Irfan Khan, Founder & CEO, eBikeGo-

Quick Delivery commerce – the new big thing in the Indian EV sector

The Indian quick commerce industry is expected to witness approximately a 15X growth by 2025, reaching a market size of close to $5.5 billion. These numbers are enough to put India ahead of other leading markets including China in terms of quick commerce adoption. Quick commerce platforms which facilitate 10-20-minute deliveries are growing 20-25% faster in volumes than the ones which make deliveries in four-hour or longer. E-commerce showed strong acceleration with growth being largely fuelled by new emerging formats like quick commerce.

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There are many reasons why customers love quick delivery commerce and why the segment is bound to soar upwards such as the convenience and speed of quick commerce are the key reasons. The total addressable market (TAM) for quick delivery commerce in India constitutes about $45 billion. Among these, metropolitan cities and tier 1 cities drive this market on the back of middle-class households. Over the last few years, quick delivery commerce has seen a significant trend in metropolitan cities of the country such as Bengaluru, Chennai, and New Delhi. The country has indeed laid the foundation for a well-positioned market for quick delivery commerce and its adoption. A large pie is at stake which is about $45 billion TAM indicates very large growth potential. The growing traffic on online websites and an increasing preference for online shopping over physical shopping experience are enabling this industry to grow rapidly.

Over the past few years, the global automobile industry, especially the EV industry is witnessing a rapid trend, and India has joined this turn of the tide. Many EV laws, many EV manufacturing startups, EV ownership models in the market, EV policies and regulations by central and state governments, growth in technology, and the ever-rising fuel prices are some factors pushing the country to adopt Electric vehicles in the country. With government initiatives favouring electric mobility, there are ample opportunities in the Quick delivery commerce and B2B market, and even the consumers are showing interest in EVs. According to the trends, the Indian EV sector will touch approximately $150 billion by 2030, growing at a CAGR of 90 percent for the next decade. Even with the booming interest in electric mobility from all corners, it will be the B2B segment driving India’s EV revolution for the next 3-5 years.

The Covid-19 pandemic has changed consumer behaviour and helped to catalysed e-commerce, shifting people to shop online. It has helped the Quick delivery commerce market to expand its fleet to ensure supply to the increasing demand of the products. At this time, Electric vehicles play an important role and bring cost savings to delivering those products. Apart from being an eco-friendly and efficient solution for last-mile delivery, EVs have several advantages to the Quick delivery services as compared to ICE vehicles. Such as it helps in saving the cost of energy/fuel. The cost of maintaining or even taking the EV on rent is much lesser than an ICE vehicle. Our government is also pushing to promote the adoption of EVs. Electric vehicles have the potential to emerge as vital options for last-mile delivery and lightweight goods for shorter distances.

The shift of the Quick delivery commerce towards electric mobility is a significant sustainability initiative, especially for e-commerce companies and a pioneering step for India’s electric mobility goals. Some Quick delivery commerce companies have already recognized EVs as a cost improvement measure, in addition to improving customer satisfaction and meeting regulatory compliance. EV adoption for quick delivery commerce will guide and inspire widespread adoption of electrified e-commerce in India. The role of e-commerce delivery stakeholders in solving some of the main challenges related to EV fleet adoption in India.

Quick delivery commerce companies need to signal demand and collaborate with vehicle manufacturers to develop the right-sized delivery vehicles. Apart from these, many OEMs need to innovate to fill product variability and reliability gaps. EV manufacturers also need to scale their production capacity to cater to the pan-India requirements of quick delivery commerce companies together with OEMs and help to address the barriers related to access to capital and financing of these electric scooters. Quick delivery commerce firms must leverage specialist vendors or charging point operators (CPOs) who provide solutions to overcome the challenges of availability, ownership, and optimization of EV charging infrastructure. Many companies need to invest in creating drivers’ awareness, capacity building, developing the workforce and providing an accessible charging network. The government and the industry need to collaborate to build conducive policies for development at each stage of the EV value chain.

Quick-commerce penetration within the online consumables market is about 7 percent and is expected to grow to 12-13 percent by 2025. Quick commerce services have proliferated India’s e-commerce ecosystem with promises of instant and rapid delivery of groceries and other items for daily use. Many quick delivery companies set up dark stores or partner with local grocery stores in the city to service orders in under 15-20 minutes. It will also save 42 million metric tons of CO2e, the annual emissions of 11 coal power plants. Many startup companies have already rolled out more than 80,000 EVs and nearly 10,000 charge points for employees and customers. Sustainable logistics and delivery of products is the next big thing in the world of quick delivery commerce and companies across various sectors are already adopting greener practices. Adoption of EVs for delivery services will increase the use of eco-friendly packaging materials and vehicles with low carbon emissions. To promote green logistics, route planning and optimization play an important role. It helps to ensure lesser miles while also helping to increase customer satisfaction and cost-efficiency.

It is crucial to address the concerns that can dilute the business opportunities in the EV sector. During the Covid-19 pandemic, most fleet owners have suffered immensely and even today they are facing huge challenges in getting vehicle finance. Even now, fleet owners are facing anxiety due to batteries and uncertainty of residual value about the safety of the drivers which have been under the radar recently because of the recent incidents of EV fires in different cities. Now it is very difficult for the companies to make finance available for fleet funding, OEM and insurance companies to offer residual value guarantees. The government should implement standards for battery and BMS to boost the confidence of the quick delivery commerce sector which can lead to the transition of the Indian automotive industry to EVs.

Large-scale EV adoption for quick delivery services requires financial incentives and innovative business models to deal with the challenges faced by EVs such as higher initial capital cost and lack of a robust charging network. Today, EVs captured about 1-2 percent of the Indian market, they can also be a game-changer for the automobile industry. The sales of electric cars grew by 234 percent in the first half of FY 2021-22, and electric two-wheelers witnessed a growth of 504 percent in 2021 will give confidence to the government, policymakers and customers of the potential of EVs in the Quick delivery commerce.

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