When a five-month-old startup Zepto has managed to raise $160 million and within 2 months of the investment increases its valuation to $570 million, automatically the talk of the town has become “online grocery delivery under 10 minutes”.
Big players like Zomato, Swiggy, and BigBasket all jumped into the line. Swiggy announced to invest $700 million to reduce the grocery delivery time from 15-20 minutes to under 15 minutes. Grofers rebranded itself to “Blinkit” to tell the customers that they are delivering under 10 minutes. And their efforts are paying off. Swiggy’s express delivery wing Instamart is doing over 1 million orders per week. Blinkit also managed to grow its number of orders with a good retention rate. They are launching 10 minutes grocery delivery in 10 cities. Zepto claims to achieve 200% monthly growth with a 78% retention rate. In less than a year, the entire e-commerce ecosystem in India has witnessed this disruption from a premium service of same-day delivery to under 10 minutes delivery.
In the light of this express delivery, I wanted to research the 30 minutes delivery phenomena that Dominos began almost 18 years back.
Why did dominos start Pizza in under 30 minutes?
Domino’s Pizza comes with a 30-minute guarantee. If the time taken to deliver the pizza is more than 30 minutes, the pie comes free if it costs under Rs 300. Before Domino’s, the concept of food delivery was not mainstream – Domino’s created the market for food delivery in India. The impact was so deep that when the food delivery ecosystem started, the standard was 30 minutes.
The Indian consumer is extremely demanding and price-conscious so it was a risky move if not executed well, even for Dominoes. The 30 min or free guarantee did 2 things:
- It incentivized Indians to try out Pizza as they were virtually assured of extremely quick delivery.
- In the rare cases that the delivery got delayed, consumers were more forgiving as they got the pizza for free.
The guarantee worked wonders. The success rate was about 99.6%. Though Dominos offer a dine-in facility at their outlets, their business was built off the delivery business. The dine-in business side started showing traction only after the brand-building done by the delivery business.
How have they achieved this with a 99.6% success rate?
- The process was designed in such a way that a pizza can be delivered in 23 minutes, where 8 minutes is the delivery time. They have 7 minutes for any unforeseen situations.
- Their outlet location is chosen very strategically, within 10 minutes distance from the largest customer base and busy areas.
- They use local riders who know the routes and shortcuts and traffic very well.
- Seemless supply of necessary items.
- The menu has a limited number of SKUs to ensure that the variability and time involved in making the pizza are reduced. A new product is introduced only after considering this strategy.
Inspiration for the New Generation
The online grocery delivery idea might be inspired from Getir, from Turkey. In 2021, after five and a half years of pioneering the business in Turkey, it started in six European countries, bought a rival, and, today it is in three major American cities, New York, Boston, and Chicago. In just six months, Getir raised over $1 billion to fuel this outburst.
How big players and startups are approaching the 10 minutes delivery?
This hyperlocal delivery is happening through a network of dark stores and micro warehouses in the nearby locality. These storing facilities are strategically located keeping the busiest and high-demand areas in mind and to support the spoke-hub distribution model. With the help of location intelligence and geospatial data, maps, and road patterns, the technology helps the delivery partners locate the items ordered and package them as quickly as possible. Zepto claims that it manages to package the items in 60 seconds.
Another way of keeping the customer engaged is to predict an accurate ETA. Apps today predict beyond delivery partners’ travel time. They need to consider road conditions, local weather, traffic, and real-time stress observed in the system. The ETA shown in the App is not only a time but the brand promise that they are dying to keep.
They also use technology to better locate the delivery location. A pinpointed location helps the delivery partner to deliver the food seamlessly. A traditional map from Google provides 2D information which most of the time is not very useful. When you order from a multistory building, an office, or an apartment there is a commonplace where the delivery partners drop the items, because the apps have tokenized the location.
What more we can learn from Dominos?
One thing I can point out is how Dominos uses local riders for delivery. With new technologies, it is easier to locate the delivery location. But someone local can definitely find the location even quicker because they don’t need to follow any recommended route. This might come in handy in two cases. During rush hours, a local rider can pick up multiple orders and deliver at one go, quickly. To add to the list, in critical situations when the technology is not available, local riders can use their knowledge and judgment and deliver on time.
We all remember our Galli-grocery uncles who used to deliver regular groceries to our doorstep. The current trend is going to disrupt the system. The growth is surprising for a price-sensitive market like India where organizations are charging 10-15 rupees for each delivery. Blinkit (formerly Grofers) was experimenting with 2 hours delivery in Gurugram in 2021 which showed that the conversion rate for express delivery was almost double as compared to the regular delivery, which means the shorter delivery time is very impactful from a customer’s decision-making point of view. Like in the initial stages of online food delivery, a very small percentage of Indians are using it now. But I am sure, in no time ordering groceries online is going to be a status quo the business is going to penetrate regular Indian households.
Do you like my analysis? Keep reading.