How Indian EV Startups Are Electrifying Quick Commerce Startups

The Indian quick commerce industry is expected to witness approximately a 15X growth by 2025, reaching a market size of close to $5.5 Bn. These numbers are enough to put India ahead of other leading markets, including China, in terms of quick commerce adoption. 

Quick commerce platforms that allow for 10 to 20-minute deliveries are growing 20% to 25% faster than those that allow for four-hour or longer deliveries. Customers love quick delivery commerce for many reasons, the most important of which are the convenience and speed of quick commerce.

In India, the total addressable market (TAM) for quick delivery commerce is approximately $45 Bn. This market is driven by middle-class households in metropolitan cities and tier 1 cities. Over the last few years, quick delivery commerce has seen a significant trend in metropolitan cities of the country, such as Bengaluru, Chennai, and New Delhi. 

The country has indeed laid the foundation for a well-positioned market for quick delivery commerce and its adoption. This industry is growing rapidly due to increased traffic on online websites and a growing preference for online shopping over physical shopping experiences.

India’s Shift To Electric Mobility

The global automobile industry, particularly the EV industry, has seen rapid growth in recent years, and India has jumped right on board. There are several factors that are driving the country to adopt electric vehicles. This includes an increase in the number of EV manufacturing startups, market-ready EV ownership models, federal and state EV policies and regulations, technological advancements, and steadily rising fuel prices. 

Government initiatives that support electric mobility have created numerous opportunities in the quick delivery commerce and B2B market, and even consumers are showing interest in EVs. The Indian electric vehicle market is expected to reach $150 Bn by 2030 and grow at a CAGR of 90% over the next ten years. Despite widespread public interest in electric mobility, the B2B segment will be the one to drive India’s EV revolution in the next 3 to 5 years.

Electrifying Quick Commerce

Covid-19 has influenced consumer behaviour and catalysed ecommerce, encouraging people to shop online. It has helped the quick delivery commerce market expand its fleet to meet the increasing demand for the products. At the moment, electric vehicles play an important role in delivering those products and saving money. 

Aside from being an environmentally friendly and efficient solution for last-mile delivery, EVs have several advantages over ICE vehicles for quick delivery services. For instance, it helps in saving fuel costs. The cost of maintaining or even renting an EV is much lower than that of an ICE vehicle. Electric vehicles have the potential to become vital options for last-mile delivery and lightweight goods over shorter distances.

The transition of quick delivery commerce to electric mobility is a significant sustainability initiative, particularly for ecommerce companies, and a watershed moment for India’s electric mobility goals.  Some companies have already recognised EVs as a cost improvement measure, in addition to improving customer satisfaction and meeting regulatory compliance. EV adoption for quick delivery commerce will guide and inspire widespread adoption of electrified ecommerce in India. 

Role Of Ecommerce Delivery Stakeholders

To develop the right-sized delivery vehicles, quick delivery commerce companies must signal demand and collaborate with vehicle manufacturers. Aside from these, OEMs must innovate to close gaps in product variability and reliability. Together with OEMs, EV manufacturers must scale their production capacity to meet the pan-India needs of quick delivery commerce companies, as well as address the barriers to capital and financing for these electric scooters. 

Quick delivery commerce firms must rely on specialist vendors or charging point operators (CPOs) to overcome the challenges of EV charging infrastructure availability, ownership, and optimization. Businesses must invest in increasing driver awareness, capacity building, workforce development, and providing an accessible charging network. The government and the industry need to collaborate to build conducive policies for development at each stage of the EV value chain.

Quick commerce penetration within the online consumables market is about 7% and is expected to grow to 12% to 13% by 2025. Quick commerce services have proliferated India’s ecommerce ecosystem with promises of instant and rapid delivery of groceries and other items for daily use. To service orders in under 15 to 20 minutes, many quick delivery companies set up dark stores or partner with local grocery stores in the city. 

Green Logistics

By 2030, more than 2.5 Mn zero-emission vehicles will be on the road thanks to corporate and leasing fleet commitments, saving 42 Mn metric tonnes of CO2—the equivalent of 11 coal power plants’ annual emissions. Sustainable logistics and delivery of products is the next big thing in the world of quick delivery commerce and companies across various sectors are already adopting greener practices. 

Adoption of EVs for delivery services will increase the use of eco-friendly packaging materials and vehicles with low carbon emissions. To promote green logistics, route planning and optimisation play an important role. It contributes to fewer miles driven while also increasing customer satisfaction and cost-efficiency.

Challenges Ahead

It is crucial to address the concerns that may limit the EV sector’s business opportunities. Most fleet owners suffered during the pandemic, and they continue to face significant challenges in obtaining vehicle financing.  Due to the recent EV fire incidents in various cities, fleet owners are still experiencing anxiety over batteries and the residual value of their drivers’ safety. 

It has become increasingly difficult for businesses to provide financing for fleet funding, and for OEMs and insurance companies to provide residual value guarantees. To boost the confidence of the quick delivery commerce sector, the government should implement battery and BMS standards, which could lead to the transition of the Indian automobile industry to EVs.

Large-scale EV adoption for quick delivery services requires financial incentives and innovative business models. This will assist the industry in addressing some of the issues, such as higher initial capital costs and a lack of a robust charging network. 

EVs currently account for about 1% to 2% of the Indian market. However, they have the potential to be a game changer for the automobile industry. The first half of FY 2021–22 saw a 234% increase in electric car sales, while 2021 saw a 132% increase in sales of electric two-wheelers. This has given the government, policymakers, and customers confidence in the potential of electric vehicles in the quick delivery commerce segment.