We have indicated earlier that hyper-local delivery companies are witnessing better unit economics amidst lockdown as also clarified in case of Zomato and Grofers. Most of these players are expecting a sizeable part of this improved unit economics to stay put even after lockdown lifts and is the likely reason for Grofers to pre-pone its plan for IPO. The key metrics to monitor however, would be the trend in delivery costs (and charges) and average take rates in our view.
Flipkart has launched instant hyper local delivery services in Bengaluru to deliver grocery, dairy products and vegetables, mobiles, electronics and home accessories. Bengaluru is generally considered a traffic-heavy city and a quick-delivery pilot here would build a clear picture for Flipkart whether the model can be replicated elsewhere. In our view, the road infrastructure support in Indian cities is not favorable for such models and many companies have in the past tried but failed to create a sustainable business model. Other competitors working on this model include Swiggy Stores, Dunzo (Google-backed) and BigBasket's "Express Delivery" service.
