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"What started off as a pure FMCG consumer staples kind of a segment until about two to three years ago, today caters to multiple categories. We have seen how quick commerce has disrupted the BPC category," says Karan Taurani , Senior VP, Elara Securities . Tell us now with Blinkit's 10-minute ambulance service and now BB Now, as we know it, they are venturing into delivering prescription drugs.
How do you assess the future of quick commerce in healthcare because the important bit is it could be game changing, it could be something that where they are spreading themselves too thin and this could be at an early stage of evolution. How do you see it? Karan Taurani: So, if you look at the quick commerce business segment, it does have a very big demand for verticals which are impulse nature in terms of consumer buying. So, medicine that way is more of a planned purchase category.
Nonetheless, this is one more category which is very important because it is a very high frequency driver. Consumers would require medicines maybe on a weekly basis or a fortnightly basis. So, the entire proposition about quick commerce is to kind of appeal to verticals, which are very impulse in terms of purchase behaviour and also drive frequency therein.
So, they have been trying multiple things. This is also something which is probably experimental for now. We will have to see the impact in terms of how things pan out from here on.
But definitely, this is good news. What started off as a pure FMCG consumer staples kind of a segment until about two to three years ago, today caters to multiple categories. We have seen how quick commerce has disrupted the BPC category.
Even companies like Nykaa are feeling the pinch of quick commerce, they are trying to reduce the lead times, they are trying to invest a lot in terms of supply chains. Quick commerce has also disrupted the FMCD category, which is the fast-moving consumer durable category, which is mobile accessories and everything put together. Stock Trading Masterclass on Value Investing and Company Valuation View Program Stock Trading Market 104: Options Trading: Kickstart Your F&O Adventure By - Saketh R, Founder- QuickAlpha, Full Time Options Trader View Program Stock Trading Technical Analysis for Everyone - Technical Analysis Course By - Abhijit Paul, Technical Research Head, Fund Manager- ICICI Securities View Program Stock Trading Stock Markets Made Easy By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Renko Chart Patterns Made Easy By - Kaushik Akiwatkar, Derivative Trader and Investor View Program Stock Trading Market 101: An Insight into Trendlines and Momentum By - Rohit Srivastava, Founder- Indiacharts.
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Impulsive in nature is fine. These quick deliveries, they sound great. In theory, they do.
But when it comes to prescription drugs, critical healthcare services, there would be major regulatory and safety hurdles, do not you think that these companies will need to address? Karan Taurani: There would be hurdles, but it is not that they are doing something new. In terms of regulations, where they stand today, they are largely similar to what e-commerce companies are doing. In fact, they are giving a very big threat to the e-commerce market as well.
So, quick commerce is today about 4% of the entire India e-commerce market. And as I told you, there are certain verticals like the beauty personal care vertical, verticals like the FMCG staples wherein they have taken share from the e-commerce market. So, medicines is also one such segment.
Obviously, the regulations will be taken care eventually. Quick commerce companies that way have been quite dynamic in terms of adopting to new verticals. And as far as safety is concerned, I think there is no issue as such because the way they deliver the product, the technology, the experience is quite seamless.
You rarely see product defects, you rarely see kind of returns being there in the quick commerce proposition. So, medicines is also one product category of vertical, wherein the customers would want to have it on a frequent basis and on an impulse basis. Nonetheless, the online medicine market that way is very-very small.
It is only about $2.5-3 billion which is just about 1.5-2% of India's e-commerce market.
But clearly quick commerce wanting to try out each market and then experiment more in terms of innovation, in terms of investment and try to get the customer experience and then maybe enhance their product catalogue. So, they are on experimentation mode. I am not saying that this pharmacy vertical will completely take off from quick commerce, but definitely it is much needed (10:52) because they have to keep expanding to verticals, keep innovating if quick commerce market is supposed to grow by two to three times as compared to India's e-commerce market.
In that case, the first movers, at least in this part of the evolution or perhaps the diversification or growth, whatever you may call it, are these companies, Blinkit and Big Basket, they are pioneering. How do you think their entry is going to impact traditional players in the healthcare, in the pharma industries, your local medical stores? For them, this is a threat, is not it or do you think that this could perhaps spark collaboration? Karan Taurani: I do not see collaboration as such because quick commerce is a very different kind of a proposition. They operate via the dark store model.
They own the inventory as well. They do not operate in terms of getting their product from kirana store and then delivering to the household. Quick commerce has disrupted the FMCG space, has disrupted the consumer staple space.
Kiranas have felt the pinch of it. Again, because quick commerce is more of a top-up purchase. So, for a large chunk of the purchases in terms of household, you would visit a modern trade outlet where you get a bulk of purchases.
But for impulse buying behaviour, you would actually go to the kiranas. But what quick commerce brings you as a proposition is that the same product you are getting at a discount at your doorstep as compared to going to the kiranas and purchasing it yourself at the full MRP price. So, quick commerce is not a purely discounting game, of course.
Of course, there are discounts which are there, but it is more of a value proposition game wherein you are able to get the product within 10 minutes. And nonetheless getting pharmacy also via quick commerce can kind of boost this entire online pharmacy market because clearly what is happening right now in terms of online pharmacy is that you end up getting the medicines maybe after a slotted basis, so 12 hours, 24 hours, you have got slots which are there. So, if at all customers want these medicines on an impulsive basis, if at all customers want this on a very high frequency basis, they would kind of adopt to quick commerce platforms.
So, this will have a negative impact not only on the traditional pharmacy stores, but also on the other e-commerce players which are selling medicines today. (You can now subscribe to our ETMarkets WhatsApp channel ).
