Zomato-owned Blinkit, the quick commerce platform, recently faced heat and backlash on social media when the Commission of Food Safety in Telangana raided its warehouse and found the premises ‘very disorganised and unhygienic’. The Commission reported a lack of basic hygiene protocols, an absence of Food Safety Training and Certification (FoSTaC) and medical fitness certificates of food handlers and found infested and expired food items.
Just a week later, a disturbing incident took place in Mumbai where a customer discovered a human thumb in their Zepto ice cream order, further adding to greater public scrutiny against q-commerce platforms. In another incident in February, a Zepto customer had flagged that he found worms in oranges he ordered from the platform. And more recently, a consumer claimed she found a dead mouse in a bottle of Hershey’s syrup that she ordered off Zepto.
These incidents come at a time when quick commerce in the country has managed to create a big share in a post-pandemic world and is currently valued at around $2.8 billion. Blinkit currently commands a substantial 45 percent market share, followed by Instamart at 27 percent and Zepto at 21 percent.
To become the 10-minute Amazon, Blinkit, over the years, has expanded into multiple categories including electronics, home décor and cosmetics, increasing the cart value. It delivers more than 4 lakh orders daily. Zepto, which does 5.5 lakh orders is set to raise $650 million at $3.5-billion valuation.
For its part, Blinkit is set to receive an infusion of Rs 300 crore in fresh capital from its parent Zomato, taking the total investment in Blinkit to Rs 2,300 crore since its acquisition in August 2022. It is also inching towards profitability and recently turned adjusted EBITDA positive in March.
Meanwhile, the dark stores or mini-warehouses have emerged as the backbones of the fastest deliveries for q-commerce players. With over 526 dark stores across India, Blinkit plans to double the number to 1,000 in the next one year. On the other hand, Zepto, at present, already has a network of over 340 dark stores across seven cities in India.
But in this fast race to Q-commerce supremacy are India’s q-comm brands losing consumer trust just as fast as their delivery time? A Zepto-minute is all it takes to lose a customer for failing to deliver on the most basic brand promises.
As the competition in the q-commerce industry intensifies and platforms remain focused on high valuation, what does the lack of basic quality and hygiene at their dark stores reflect?
According to the regulatory frameworks by FSSAI, which also added regulations for the e-commerce industry in 2020, the basic checks required at these dark stores are related to the separation of food and non-food products, maintaining hygienic practices in transportation, handling and storage, maintaining products in their recommended storage conditions, ensuring products have adequate self-life at the time of sale, having trained manpower for food handling etc.
These are all well-defined in FSSAI rules, but seem to be ignored by Indian q-comm companies.
What is going wrong: Disregard or de-prioritisation?
It is true that in the phase of rapid expansion, the entire industry is focusing on building capacities on-ground, and trying to do at low cash burn; It is almost like building a ship while you are already sailing in the rough seas, notes Santosh Sreedhar, Partner (Consumer & Retail), Avalon Consulting.
Although he doesn’t think this is a deliberate disregard of regulations on Blinkit’s part, but a de-prioritisation to make sure they are able to garner shares in a highly competitive market.
“I would not be surprised if inspections in other quick-commerce locations also show similar results. But such practices are pardonable when you are a small player. As you become bigger, it is in the company’s interest to make sure the right practices are well-defined and executed at every stage of the value chain so that you are able growth your business without risk to brand equity owing to such incidents,” he highlights.
Volume and velocity versus brand value
The competition in the q-commerce space is fierce. The platforms try to stay ahead by tapping into the latest tech innovations and predictive analysis. But they shouldn’t forget about their customer-centric approach, notes Rohit Varma, Founder, narrative – a branding and communications agency. The approach holds every player accountable for detailed and clear product information, and the quality and hygienic handling of items. The mindset is key. The rest can be taken care of by ticking off rules and prerequisites laid down by the FSSAI.
“Frequent inspections of facilities can help. It’s good that the Commissioner of Food Safety, Telangana shared details of the inspection on X. Consumers will be extra careful while accepting deliveries,” he says.
Mohit Hira, Co-founder, Myriad Communications, believes that q-commerce doesn’t mean making a quick buck at the expense of long-term brand building.
“The Blinkit incident goes far beyond what the state of the warehouses is. The fact that their riders don’t even wear helmets proves this (that the company is too focussed on the valuation only). This behaviour is aided and abetted by Blinkit’s uncaring customers and their investors who must be aware but seem to be turning a blind eye. And frankly, there is a mistaken belief about the way brands are built. While it is true that we operate in a selfish world, it’s also equally true that a brand can be adversely impacted by external sensitivities,” he says.
The need for speed
However, the core promise of quick-commerce is rapid delivery, often within 15 minutes, which is why consumers are drawn to these services. While self-regulation is important, similar to how airlines are forgiven for cramped seats if they are punctual, consumers prioritise the speed of delivery, experts said.
As long as this promise is maintained, q-commerce providers will retain their customer base. Impromptu inspections can help ensure compliance with quality and hygiene standards, but the industry can also benefit from some level of self-governance without heavy-handed government intervention, suggests Yesudas S Pillai, Founder and CEO, Y&A Transformation and Channel Factory.
According to Pillai, the incident is unlikely to pose significant challenges for Blinkit. Recent investments, such as Zepto attracting investors and Zomato injecting another Rs. 300 crore into Blinkit, indicate that the quick-commerce industry is robust. As long as these platforms maintain their promise of quick delivery, they will continue to thrive despite occasional setbacks, he adds.
Such safety concerns, although alarming, aren’t entirely shocking because of the repetitions. But while people are likely to show mistrust in q-commerce platforms, Varma doesn’t think there will be a slump in consumption. They will be more vigilant about what they purchase and the condition in which it is delivered to them.
Hampering the brand trust
While the q-commerce consumption remains strong, experts agree that such an incident and negligence could dent consumer trust and brand value (for both Blinkit and Zepto) if not addressed promptly and transparently.
“Although the focus on valuation is significant, neglecting operational standards can be detrimental. It’s essential for all companies to balance growth with responsible practices,” says Himmath Jain, Co-founder and Director, AS-IT-IS Nutrition.
He advised customers to look for transparency in sourcing and handling practices, check for certifications, and consider reviews. Being informed helps ensure they choose brands committed to quality and hygiene.
The silver lining is that the recent incidents, experts say, are good for the industry as they will lead to increased awareness and attention to adhering to food safety rules by not just the q-commerce industry but also the online grocery players.
What next? Self-certification of locations, better store visibility for users?
One challenge with dark stores is, unlike in a store purchase, it is very difficult for consumers to understand if the right practices have been followed by the quick-commerce player as they only see the product when they get it delivered.
Sreedhar expects q-commerce players to come up with innovative solutions such as setting up self-certification of locations, consumer visibility of the store, or the packing process etc. They can also invite consumers / consumer bodies to visit the store for inspection which can provide a community-level endorsement of the maintenance of quality, he suggests.
Supriya Chouthoy, Professor of Practice, Marketing, BITS Law School, highlights that fundamental shift are necessary, and incidents like this one can serve as a wake-up call, prompting stricter safety measures that will ultimately foster sustainable growth and ethical practices within the q-commerce space.
“The convenience of q-commerce came at a cost as stakeholders temporarily overlooked hygiene and safety considerations. We are now experiencing the consequences of prioritising “instant gratification in 10 minutes,” Chouthoy remarks.
Disruptive businesses like Blinkit and Zepto often face a delicate balancing act between profitability, rapid growth for better valuations, and prioritising customer value. However, prioritising customer value is paramount, she notes. They must also ensure operational excellence, and new AI solutions could be a valuable tool in rethinking their approach. Ignoring these factors could jeopardise their long-term value and reputation.