Q-comm avid gamers so as to add pre-made meals to cart for higher margins – Trade Information

As competition in quick commerce heats up, players are looking to increase their average order value (AOV) for higher margins. As a result, a few quick commerce players have started offering quick deliveries of pre-made food items such as tea, coffee, samosas, tarts and croissants in certain pockets, through their cafe division. Customers can add these items to their cart, alongside their groceries and get them delivered instantly.

For instance, Zepto rolled out Zepto Cafe in pilot mode in Mumbai in April last year and is currently also operational in certain areas of Bengaluru. Swiggy’s Instamart arm also pilot-launched Instacafe in Bengaluru. These are typically food items that are usually available at supermarkets across many countries and cost anywhere between ₹30 to ₹300.

Aadit Palicha, co-founder and CEO of Zepto, had last year explained that the model is similar to customers picking up a coffee or some ready-to-eat snacks at 7-Eleven store in the US. The only difference is it will be delivered home instantly.

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So far, consumers seem to be welcoming these offerings, the reason being unlike food delivery apps such as Zomato, and Swiggy, consumers can add both groceries and food items to the same cart and get them delivered in one go.

The idea behind adding this vertical is to entice customers to add more items to their orders, thus driving up the total transaction value. Globally, many players such as GoPuff in the US, Deliveroo in the UK, and Rappi in Latin America have incorporated snacks into their offerings to boost revenue per customer.

“It’s a high-frequency purchase category that could increase platform-level user engagement, but also intends to take wallet share from food delivery aggregators like Zomato, Swiggy as well as offline convenience stores & coffee shops” Madhav Kasturia, founder and CEO of Zippee, a startup enabling rapid delivery for e-commerce brands through dark stores across India, said.  

Experts say that adding a snack delivery vertical will likely increase the GOV (gross order value) for quick commerce platforms, albeit not to the same extent as selling high-ticket items like a PS5 or the latest iPhone.

While high-margin and bigger-ticket items such as electronics are crucial to increasing platform-level AOVs (average order value) and subsequently profitability, focusing on snacks may not necessarily be a trade-off.

While snack items may not have the same high margins as premium electronics or luxury goods, they offer better margins than everyday grocery items. High-ticket items might contribute 60% of the overall profits, snacks, and other medium-margin items could account for 25-30%, with the remaining 10-15% coming from everyday grocery deliveries. “However, the volume of orders will likely be the reverse—60% of the orders may come from grocery items, 25-30% from snacks, and around 10% from high-ticket items,” Anirudh A Damani, managing partner, Artha Venture Fund told Fe.