Flipkart, Reliance Retail Go the Kirana Store Route to Win the Quick Commerce Race

The quick commerce segment is getting crowded with key players such as Reliance Retail and Flipkart also joining the race. To add to it, other e-commerce players catering to the beauty segment, such as Myntra and Nykaa, are also joining the race. 

With the surge of the quick commerce market in India, the demand for dark stores is also increasing. A dark store is more like a warehouse facility that is used as a fulfillment center by quick commerce platforms to reduce the delivery time. 

However, what becomes interesting is that some players, such as Reliance Retail and Flipkart, are reportedly collaborating with kirana stores for quick commerce delivery. This is in sharp contrast to the all-favorite dark stores that have become a synonymous word for major quick commerce players such as Blinkit, Instamart and Zepto. 

Never Ending Love for Dark Stores 

The love for dark stores definitely has no end for quick commerce platforms. A report by financial services firm Chryseum highlights that sales by quick commerce platforms have reportedly surged by more than 280 per cent. There has been a sharp increase of gross margin value from $0.5 billion in FY22 to $3.3 billion in FY24, adds the report. 

As the quick commerce market expands, the demand for dark stores is also rising, with an estimated requirement of 24 million square feet of space in India by 2023, as per a Moneycontrol report based on data derived from JLL and Miebach Consulting.

Just to give an example, Blinkit is looking forward to having 2,000 dark stores by 2026. Zepto is planning to increase its dark store number to 700 from 350 in March 2025. Meanwhile, the draft IPO papers of Swiggy reflect that the company will extensively invest in dark stores. For its material subsidy Scootsy, Rs 559.10 crore will be allotted for expansion of dark stores in different locations and Rs 423.30 crore for license payments. As of June 30, the company has 538 dark stores. 

The increase in demand is also causing a surge by companies to grab land for dark stores. Reports indicate that it is getting hard for companies to find land in Tier I cities. A report by BofA Securities dated August 30 reportedly highlights, “All platforms are in a land-grab mode as they look to almost double their dark store count in the coming years.” 

As companies try to grab one more piece of land, it is interesting to note how some are opting for a model sans dark stores.

Read: Foodtech Jumps on the Quick Commerce Train to Meet Instant Meals' Demand

Reliance Retail Quick Commerce Model 

Pretty new to the race, Reliance Retail has decided to not focus on dark stores. An Economic Times report indicates that the company will focus on selling products via their retail stores. Nationwide, the company has a network of around 3,000 retail stores. Further, media reports indicate that kirana stores that are part of JioMart’s merchant partner programme will also help in the fulfillment of the orders. 

Another company that has been focusing on alternatives to dark stores is Flipkart. The company’s quick commerce service 'Minutes' recently went live in Bengaluru in August. Instead of relying on dark stores, Flipkart decided to partner with kirana stores, as per a Moneycontrol report.

An industry executive said as per the report, “Flipkart feels there is no merit in going all out and setting up new dark stores for its quick commerce play. There are a lot of costs and regulatory approvals involved, which make no sense right now.” 

The company indicated that these kirana stores will double up as dark stores for the company. The collaboration between kirana stores and the quick commerce sector is something that union minister Piyush Goyal is rooting for. The minister recently said that in order to sustain themselves and avoid losses, quick commerce companies must join hands with kirana stores.

The statement was given by the minister amid increasing concern by the government that quick commerce platforms are eating the share of kirana stores. The All India Consumer Products Distributors Federation (AICPDF) also recently alleged that quick commerce companies are practicing anti-competitive behavior and asked the government to carry out an out an investigation on the same. 

Now, the question that lies is, What are the challenges of collaborating with Kirana stores, and is this a model that will be followed as a new alternative? 

“The biggest challenge of relying on kiranas and retail stores instead of dark stores is consistency in service. Kiranas have different inventory levels, management styles, and geographical constraints. Ensuring uniform product availability, pricing, and delivery speed across multiple Kirana partners can be tricky,” says Siva Balakrishnan, CEO & Founder of Vserve. 

Experts further highlight that logistics become complex as quick commerce thrives on rapid delivery. Without the controlled environment of dark stores, managing the fulfillment chain can lead to delays or inaccuracies, especially during peak times or festive seasons, add experts. 

Further, dark stores are optimised for picking and packing goods specifically for online orders, which allow for streamlined operation. “Reliance's focus on traditional retail might lead to inefficiencies in fulfilling online orders, as they will constantly need to manage inventory across multiple kirana and retail locations instead of a centralized dark store model,” says Somdutta Singh, founder and CEO, Assiduus. 

With faster delivery being the norm for these platforms, some analysts indicate that it is unlikely that this new model will be adopted widely. “As consumer behavior shifts towards valuing convenience and speed, traditional models like those based solely on kirana or retail stores may struggle,” says Singh. 

However, others feel that these alternative models might be sustainable in India, where kirana stores already play a prominent role. “As more companies look for sustainable, scalable solutions, the hybrid model of partnering with kiranas might catch on,” says Balakrishnan. However, Balakrishnan adds that it will depend on factors such as how well companies can integrate technology, ensure inventory consistency, and manage customer expectations in terms of delivery speed and product availability. As the quick commerce race increases, it will be interesting to see if this model will gain more traction amongst companies.