9 Predictions For India’s Consumer Services Economy In 2024

9 Predictions For India’s Consumer Services Economy In 2024

SUMMARY

Consumer services in general are expected to turn costlier in 2024 as platforms chase profitability and focus on maximising per-order revenue

Quick commerce platforms are likely to expand to ecommerce categories in search of revenue boost from their existing user base

While EVs are likely to see a bigger push in mobility, the success of ONDC-backed Namma Yatri likely to see new platforms sprout up in smaller cities

India’s internet economy has gone through a major growth spurt in the past few years and as with age, most sectors are rapidly maturing. In the case of consumer services, the maturity manifested itself through a sharper focus on revenue and profitability in 2023. Three-year-old startup Zepto turned into something of a poster child with strong revenue growth and securing a big round that saw it turn into a unicorn. On the other hand, Swiggy and Zomato have looked to celebrate milestones that are closer to fundamentals aka unit economics and profits. Ankit Nagori, cofounder and CEO of Zomato-backed Curefoods, believes that as metros and Tier 1 cities has almost reached a point of saturation, many platforms are now looking to expand to smaller market segments. As a result, they cannot afford to rely on high discounts to existing active users. “The interest of small businesses has been clearly outlined to be a priority by the union commerce ministry. Hence we can expect the ecommerce policy to favour the kirana store owners across the country and could also negatively impact the quick commerce players which have been heavily banking on discounts till now,” one of the sources privy to development said.But Zomato’s experience in the past year will give Swiggy much optimism. The question is will retail investors turn their attention to a new stock or continue to bet on Zomato which has a longer track record as a public company. Zomato is likely to see some sell-offs as investors hedge their bets between the two stocks, provided, however, that Swiggy lists in 2024.The fact is that the Indian government has looked to redress these gig worker concerns, but the implementation of the law has been very slow. 

In some cases that meant entering product territory (a la Urban Company), and in others it meant relying on platform fees as seen in the quick commerce and food delivery space. But the push for revenue and improving unit economics has meant compromising on the unbridled user base growth. Instead, the attention is on maximising the revenue gained from the most active users. 

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