FirstClub Is Betting On Quality Over Convenience; Can It Take On Quick Commerce Giants?

Want it better, want it faster! That’s the psyche of today’s consumers. And, this is what spawned the concept of affordable luxury. FirstClub entered this niche to spice up Indian gourmet with a smarter solution.

The thought of delivering premium groceries at affordable rates prompted Ayyappan Rajagopal to set up FirstClub last year. The trigger was simple – good-quality groceries, fresh produce, and premium packaged foods shouldn’t be a luxury restricted to the top 30 Mn households. Instead, it had to be democratised to a much wider consumer base.

While the former Cleartrip CEO found an increasing demand for better quality products delivered in time, he also realised that the available options were either too costly or too scarce.

FirstClub entered India’s $8.82 Bn online grocery market to hitch a ride on the 44.9% momentum of the industry with a single, persistent question: how can high-quality products across multiple categories be made available in one place, without making them prohibitively expensive? 

“Whenever I travelled abroad, I noticed that even simple products like fruits, veggies, dry fruits and breads were made with very good ingredients, without any artificial stuff. That concept didn’t exist in India, and my quest was to solve that,” he said.

Rajagopal chose a smarter middle path by offering everyday essentials and lifestyle products that were high in quality, yet priced fairly. FirstClub used the surge in India’s quick commerce market to become a $30 Bn to $40 Bn opportunity in the next three to five years as a lever.

A 60% repeat rate indicates the strong consumer loyalty the startup has garnered in less than a year, it claimed. 

It’s Not About Convenience Alone

Rajagopal wanted to feel the pulse of the Indian consumer before taking the first step towards setting up FirstClub.

A team spoke to nearly 780 people across multiple cities, not just in metros but also in non-metro markets, and the founder personally travelled to meet consumers face-to-face, observing how shopping habits shifted over the past decade.

The survey tracked the changes that were driving India to be an INR 426.4 Lakh Cr consumption economy by 2031, led by over 100 Cr smartphone-clad Indians and a burgeoning middle class. Indians today think differently about food – they are much more adventurous and ready to spend, whether it’s for cooking at home or for dining out.

What intrigued Rajagopal more was the scattered system of shopping. The consumer had to shift from one place to another for various ingredients. “There was no one-stop solution where everything could be found under one roof,” he said.

Quick commerce gave consumers the convenience of speed, but quality continued to be a problem. Many respondents told FirstClub that they preferred to buy fruits and vegetables the old way, as the freshness was often a miss in app-based purchases.

The market needed something different to plug the gaps.

A Drift From Dark Store To Clubhouse

FirstClub launched its first ‘clubhouse’ in Bellandur in June. It set up the next one in Whitefield in August, and in HSR Layout last week, while the next stop would be Koramangala.

The company refuses to call the storage facilities ‘dark stores’ as they are called in the quick commerce parlance. As a proof of the transparent system it fosters, the company plans to invite customers inside the stores to see the quality of products it stocks.

FirstClub operates in a market dominated by players like Blinkit, Zepto and Instamart. How does it feel to compete with giants like Swiggy’s Instamart with a market capital of INR 1 Lakh Cr, Eternal-run Blinkit with a market worth nearly INR 3 Lakh Cr, and an INR 700 Cr Zepto?

It’s a tough task to take on such seasoned and solvent rivals. FirstClub needed a clear differentiation moat to create a position in a market dominated by the trio.

FirstClub’s approach to product selection is very different from the quick commerce Big Three. Every single batch of every product is tested before it reaches the shelves. If the quality doesn’t measure up, it doesn’t get listed. “Take ghee as an example. Instead of offering 40 or 50 brands, we have only four or five that are truly top-quality products.”

Exclusivity is another focus, according to the founder. Many of the brands sold by FirstClub are not available anywhere else. On most quick commerce apps, the product range is identical, which means shoppers can switch platforms without hesitation. But, by offering unique selections, FirstClub plans to build loyalty and make customers return to find something that they can’t get elsewhere.

“We don’t just do a quality check at the warehouse. We also do it at the store level, and then once more before dispatching to the consumer. All this put together ensures quality. Plus, we maintain very low inventory at the store, which ensures freshness of the products we sell,” he said.

Curation is another aspect where FirstClub is working to make a difference. For example, instead of listing 10 versions of the same whole-wheat or multigrain bread, the platform looks at global benchmarks and builds variety through differentiation. As a result, its selection spans everything from classic sourdough and chocolate sourdough to Japanese milk bread shokupan — making it one of the widest bread ranges in the market.

The process doesn’t stop at variety. Once a category is identified, the team researches the best brands, sources samples, and runs detailed lab tests to check ingredients, quality, and any possible contaminants. After that, the products go through blind taste tests with an independent consumer panel. Only the top two or three in each category are finally listed.

Solving The Unit Economics Math

The FirstClub clubhouses are smaller, efficiently stocked, and strategically located to ensure quick delivery while maintaining product freshness.

By working directly with brands and manufacturers, FirstClub has eliminated the intermediary layers to offer premium-quality products at competitive prices, the founder claimed. “Only last-mile riders are supplied by Shadowfax but, rest of the supply chain, covering the warehouse, first-mile and middle-mile is done by us, besides managing the last-mile,” Rajagopal explained.

FirstClub recently raised $23 Mn (around INR 203 Cr) in a Series A round, co-led by existing backers Accel and RTP Global, at a valuation of $120 Mn (INR 1,050 Cr). The startup plans to spend it on expansion.

The startup banked on its unit economics to thrash out an elaborate expansion plan. Its unit economics is driven by a premium basket strategy. The founder argued that its stores are positioned to break even sooner than the time its rival quick commerce players took. The levers of its unit economics are order value and gross margin. Both, he claimed, are structurally higher compared to the market. Higher order values ensure better revenue per transaction, while stronger margins provide more room for profitability. Taken together, these factors will shorten the path to break-even at the store level, he added.

According to Rajagopal, the average order value is nearly double that of the leading quick commerce players, with customers typically buying 10 or more items in a single order. “This is evident in the over-60% repeat rate we recorded.”

FirstClub has so far followed a community-centric, education-first approach for customer acquisition. Instead of relying on expensive digital campaigns, it initially focussed on offline activations in apartment complexes and neighbourhoods, educating consumers about clean-label, high-quality products.

Can Freshness Last A Wider Reach?

FirstClub aims to grow its clubhouse count to 35 in Bengaluru over the next six months, ensuring that by the festive season, it can serve the entire city with its curated clubhouse model.

As it plans to scale beyond its current micro-markets in Bengaluru, the startup plans to replicate the operational blueprint of its first four stores, while maintaining the quality standards.

It also plans to diversify its offerings. Within the next few months, FirstClub will venture into cafés with freshly prepared food, a gifting vertical for festive and corporate purposes, and home products ranging from décor to kitchen essentials.

On the technology front, FirstClub is investing heavily in building GenAI-driven systems and strengthening its in-house capabilities. To support its expansion overdrive, the company is looking out for talent across functions and into brand building and marketing efforts.

But, scaling a quality-first quick commerce model comes with its own set of challenges. Operationally maintaining freshness while increasing the delivery radius requires precise demand and inventory planning. Additionally, customer acquisition in new micro-markets calls for both education and trust-building, which can slow down early adoption, despite strong brand promise.

While FirstClub wants to build its business on a premium-focussed and curation-led approach that differentiates it from typical quick commerce players, profitability will hinge on balancing high-quality offerings with efficient last-mile logistics. The biggest test will be sustaining margins as order volume grows and the number of stock points increase.

[Edited by Kumar Chatterjee]