In 2024, the spotlight was on quick commerce. The wind was behind its sails as the sector saw rapid growth propelled by widespread consumer adoption in metros and capital flooding to support innovation as investors found a new gold rush.

Initially marketed to fulfil last-minute grocery needs, quick commerce’s use case expanded this year beyond daily essentials and groceries to even clothing, footwear and electronics, stepping on the toes of ecommerce players like Amazon and Flipkart. This prompted the giants to introduce their own quick delivery offerings to protect their turfs.

This reflects changing consumer patterns as the demand blew up for instant grocery delivery as an alternative to physically visiting a kirana store or a supermarket. By offering a bigger assortment of products like toys, fashion basics, beauty items etc, players like Zomato-owned Blinkit, Swiggy Instamart, and Zepto—which established themselves as formidable players in the sector—also gave consumers the option to do last-minute shopping.

The exponential growth in the sector has attracted newer ventures, and at the same time, brought in scrutiny and competition checks. 

The holy trinity 

Zepto, Blinkit, and Swiggy Instamart are dictating the terms of growth in the sector.

Sriharsha Majety-led Swiggy went public this year with a Rs 11,327-crore initial public offering (IPO) and has since made a gain of 49% (as of December 19, 2024) over its issue price. The foodtech giant looks to turn its quick commerce business profitable by September 2026. 

Meanwhile, quick commerce’s golden child, Blinkit, managed to achieve EBITDA breakeven less than six months into the year. The only profitable player on the scene, it is now expanding beyond metro cities and making inroads with new categories. Its parent Zomato earlier raised $1 billion, or Rs 8,500 crore, through qualified institutional placement for Blinkit’s store expansion.

Zepto, which is eyeing an IPO in 2025, plans to double down on food delivery with a renewed focus on expanding Zepto Cafe, adding more categories, and tapping on monetisation to improve unit economics. The unicorn is flushed with cash after raising $1.35 billion this year. 

Profitability and growth 

In March, Zepto started charging a platform fee of Rs 2 per order on top of a variable handling fee. The firm also levies restaurant charges on Zepto Cafe orders on top of taxes and occasional overhead fees like late-night charges, surge costs, and rain charges. Both Swiggy and Zomato hiked their platform fee to Rs 10 over the year from Rs 5 at the beginning of the year, citing a surge in orders during the festive season. 

This is not unusual as the expensive nature of hyperlocal delivery operations drives quick commerce platforms to rely on delivery charges, along with supplemental revenue coming from advertising and additional channels.

“Brands are now spending more on making sure that their products are displayed to customers on quick commerce apps because they are more competitive than kirana shops … Brands are spending just like they were spending on Amazon and Flipkart,” notes Satish Meena, Founder at Datum Intelligence. 

A big part of the advertising revenue comes from D2C brands that find an overlap with the target group and see higher conversions on quick commerce platforms than any other channels. 

“What’s particularly noteworthy is that it’s the Tier I customers that are driving this shift toward quick commerce—the same cohort that also gravitates toward D2C brands,” explains Keshav Biyani, Co-founder, The Good Bug, elaborating that the company has already reallocated ad spending towards newer quick commerce players. 

Swiggy too expects growth in advertising as a key driver for improving take rates for Instamart, with its contribution margin projected to expand to 9%.

However, upcoming players like ex-Flipkart executive Ayyappan R’s startup FirstClub, an omnichannel and quick commerce retailer, want to prioritise customer trust and transparency over advertising. The firm will operate on a subscription model to bring in additional revenues. 

For Zepto, some of these additional revenues come from Zepto Pass launched earlier this year.  However, Zomato CFO Akshant Goyal, during the company’s September quarter earnings call, had said that the company doesn’t plan to introduce a loyalty programme for Blinkit yet. 

The next areas of monetisation being developed are sampling services and private labels, however, there is a need to cultivate the infrastructure. 

10-min food delivery x quick commerce  

Platforms are expanding SKUs in a bid to improve order frequency and bring up average order value.

Zepto, among the first to introduce the 10-minute delivery concept, aced the category as it ultimately launched its standalone app for food delivery with Zepto Cafe. The service already clocks close to 30,000 orders a day and is estimating an Annual Run Rate (ARR) GMV of Rs 160 crore. 

Now, the company is focusing on expanding the segment. If it grows significantly, it could move beyond just 10-minute quick food deliveries, potentially onboarding restaurants and competing directly with full-scale food delivery models, noted Meena. 

Swiggy’s Bolt—its take on the 10-min food delivery service—already accounts for 5% of the company’s total orders and the share is likely to grow as Swiggy scales it beyond top cities. Zomato has also started pilots for Bistro by Blinkit, along with players like magicpin and Ola Consumer entering the fray. Tata Digital’s BigBasket is also in the process of launching food as a category, while new startups like Zing and Swish have started delivering in select pincodes of Delhi-NCR and Bengaluru, respectively. 

Higher average order values help offset the high cost of logistics and warehousing, prompting players like Zepto to launch SuperSaver, which takes in a minimum order value of Rs 1,000 to attract price-conscious consumers and place itself as a grocery stock-up service rather than just a top-up service. 

Stretching the limits of quick commerce

Categories like gourmet foods, premium beverages, and small electronics are expected to see growth as platforms refine their delivery capabilities, explains Ninad Karpe, Founder and Partner of 100X.VC. 

Both Blinkit and Swiggy have initiated pilots for a large order fleet, with the latter setting up separate infrastructure for extended delivery timelines for some Instamart categories. Swiggy plans to increase the average size of its stores by 30-35%, and at the same time, is rolling out megapods—stores which can house over 50,000 SKUs—to improve the size and selection of its categories.

“It will be difficult for challengers (newcomers) to disrupt the existing market, given the customer isn’t price conscious and hence doesn’t look out for multiple options (unless the current platform under delivers),” notes Kushal Bhatnagar, Associate Partner at Redseer Strategy Consultants. 

FOMO brings new entrants

According to the Datum Report, the Indian grocery market is expected to add about $250 billion in sales by 2028, driving everyone in the hunt for a share of the slice. 

Vertical marketplaces like Myntra and Nykaa have also launched 30-minute delivery for select assortment under their M-Now and NykaaNow initiatives, respectively. Tata Digital’s ecommerce app, Tata Neu, has also launched its quick commerce arm under the name Neu Flash to offer apparel, beauty and personal care, and electronics, along with daily essentials. 

Walmart-backed Flipkart launched Flipkart Minutes in Bengaluru this year, with plans to scale to other cities. Amazon, through Tez, expects to enter the race as soon as the end of this year. 

Ecommerce players like Amazon’s edge in quick commerce lie in strong sourcing integration with brands, since a larger chunk of its business comes through slotted commerce, and expertise in non-grocery categories, remarks Bhatnagar. 

“This will be a multiplayer market. Everybody is approaching it from different perspectives; somebody will fight on price, somebody will fight on assortment, somebody will fight on speed etc,” believes Vipul Parekh, Co-founder of BigBasket. 

Channel shift and regulatory scrutiny 

However, with so many players entering the retail market, companies are looking at a channel shift rather than a market creation opportunity. 

The economics of the quick commerce platforms make matters worse for kirana stores and offline supermarkets as these platforms are able to offer better pricing since there are few intermediaries. On the producer side, major FMCG giants like HUL, Tata Consumer, Dabur and Parle Products have flagged better-than-average growth in their quick commerce channels mix, with higher contributions expected in the near future. 

While unorganised retail holds a whopping 93% share in the Indian grocery market and quick commerce holds less than 1% as of CY2023, according to a Datum Intell Report, analysts expect the quick commerce contribution to grow as much as 3% by 2028, with the sector turning into a $40 billion market by the end of this decade.

“Quick commerce has largely taken share from the slotted ecommerce players in the top cities (and not so much from the offline stores), as QC has targeted the evolved big-city customers who were already purchasing their groceries online from different modes,” believes Bhatnagar. 

This rocket growth is bound to attract regulatory scrutiny, with major quick commerce players gearing up to change or already executing changes in their captable structure to include higher representation from domestic investors to comply with FDI regulation on holding inventory.

Hello,

Medical science is at a turning point, according to a recent article in Nature, as over 100 clinical trials of stem-cell therapies for several diseases, including cancer, Parkinson’s disease, and diabetes, are underway.

In fact, treatment for some of these conditions could be a part of general medicine in as little as five to ten years. 

Considering that it has been only 26 years since pluripotent stem cells–which can become any kind of cells in the body and can, theoretically repair damaged tissue–were cultured in a lab, the progress has been remarkable. 

Did you that John B. Gurdon and Shinya Yamanaka won Nobel Prize in Physiology or Medicine in 2012  for their groundbreaking work in stem cell research?

Speaking of scientific advancements, AI bots–even while they are hallucinating or in simpler words, making things up–are helping scientists get ideas and possibly, make new discoveries. 

Oh and apparently, AI chatbots not only hallucinate but also procrastinate. In a rather hilarious saga published on Semafor, filmmaker Nenad Cicin-Sain talks about his experience in recruiting ChatGPT’s help in writing a screenplay. His attempts reportedly ended in frustration as the bot kept extending the deadlines!

It appears like bots are indeed turning into real writers!

Lastly, on a sombre note, it has been two decades since the Indian Ocean tsunami–one of the deadliest natural disasters in modern history. The event reshaped disaster management around the world. 

Gone but not forgotten.

In today’s newsletter, we will talk about 

• Quick commerce: The fast and the furious
• Creating reliable AI agents
• Building a home gym

Here’s your trivia for today: What state in the US serves as the primary setting for many of Stephen King’s novels?

Ecommerce

Quick commerce: The fast and the furious

In 2024, the spotlight was on quick commerce. The wind was behind its sails as the sector saw rapid growth propelled by widespread consumer adoption in metros and capital flooding to support innovation as investors found a new gold rush.

The exponential growth in the sector has attracted newer ventures, and at the same time, brought in scrutiny and competition checks. 

Key takeaways:

• Zepto, Blinkit, and Swiggy Instamart are dictating the terms of growth in the sector. 
• Zepto, which is eyeing an IPO in 2025, plans to double down on food delivery with a renewed focus on expanding Zepto Cafe, adding more categories, and tapping on monetisation to improve unit economics. 
• Categories like gourmet foods, premium beverages, and small electronics are expected to see growth as platforms refine their delivery capabilities, explains Ninad Karpe, Founder and Partner of 100X.VC. 

Startup

Creating reliable AI agents

Composio, which was featured in Yourstory’s Tech30 2024 list, builds tools for developers. Its platform speeds up the process of building and connecting AI agents to external services, reducing development time from months to just days.

Faster, better:

• The San Francisco, California-based startup provides tools that enable developers to quickly create reliable AI agents that interact with external software, like CRM systems (e.g., Salesforce, HubSpot) and services like Gmail. 
• Its platform has gained traction on GitHub, with over 12,000 developers building on its framework, including engineers from Fortune 500 companies like Meta Platforms, Salesforce and Cisco.  
• Like many other AI applications, Composio operates on a hosted platform with a usage-based pricing model. Developers and large enterprises can sign up, create an account, and access Composio’s services using an API (Application Programming Interface) key. 

Startup

Building a home gym

Hyderabad-based fitness and wellness startup Portl leverages AI to help users stay on track of their fitness goals. Earlier this month, the company launched Portl UltraGym—which it says, is an all-in-one portable training system designed to make strength training more accessible at home.

Get fit:

• The machine, priced at Rs 59,990, uses digital weights technology and provides the same effect as a professional grade gear, in a compact design of 2.4 square feet, according to Portl.
• UltraGym can also be integrated and used with Portl Studio, the company’s flagship smart mirror. The company sees its product entering the gyms and hotels as part of their premium service.
• From sourcing components and creating early prototypes to finalising hardware design and refining UI/UX and software platforms for seamless integration, Portl encountered various obstacles. 

News & updates

• Falling sales:  Toyota Motor’s global production decreased for a 10th straight month in November, the Japanese carmaker said on Wednesday, although its worldwide sales grew for the second consecutive month on solid demand in the United States and China.
• AI exclusion: Blind and partially sighted people are being excluded from the benefits of artificial intelligence tools and facing “a new level of discrimination”, the new president of the Royal Society for Blind Children has claimed as he called for better design of everything from video games to AI agents.

Which state in the US serves as the primary setting for many of Stephen King’s novels?

Answer: Maine. 

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Software developers’ time is valued highly as their role is crucial to the company’s operations. 

Composio, which was featured in Yourstory’s Tech30 2024 list, builds tools for developers. Its platform speeds up the process of building and connecting agents to external services, reducing development time from months to just days.

The San Francisco, California-based startup provides tools that enable developers to quickly create reliable AI agents that interact with external software, like CRM systems (e.g., Salesforce, HubSpot) and services like Gmail. 

These AI agents are essentially automated systems that perform tasks on behalf of the user within those software platforms. For example, an agent could be designed to automatically manage emails, update records in a CRM, or perform data entry without human intervention. 

Normally, when developers build such agents, it can take months to fine-tune them to work accurately and reliably. 

Composio simplifies agentic integration—ensuring how multiple AI agents communicate and function together—by offering a platform where developers can connect their agents to these systems in a much faster and more reliable way. Its platform has gained traction on GitHub, with over 12,000 developers building on its framework, including engineers from Fortune 500 companies like Meta Platforms, Salesforce and Cisco.  

“AI agents are inherently unreliable and prone to hallucinations, making it one of the biggest challenges in building them. When agent integrations go live in production, they often operate with significant inaccuracies, requiring developers to spend months optimizing reliability,” Soham Ganatra, Co-founder at Composio tells YourStory.

The startup was launched in June 2023 by IIT – Bombay alumni, Karan Vaidya and Soham Ganatra. 

One-size-fits-all solution

Most AI agents or LLMs rely on the ability of an AI model (like an LLM) to interact with external functions or tools to perform specific tasks, this is essentially called tool calling.

However, the reliability of function calling is often too low on account of hallucinations and inaccuracies–a key reason why many LLM applications are not yet widely deployed in production.

For instance, when you go live with an agent that interacts with Gmail, the reliability would be somewhere close to 40% to 50%. According to Ganatra,  reliability with Composio would start above 90% therefore allowing developers to go into production quickly. 

Composio’s solution works on a foundational level and applies itself to agentic integration across industries, improving AI integrations regardless of the specific use cases. 

Pricing and clients 

Like many other AI applications, Composio operates on a hosted platform with a usage-based pricing model. Developers and large enterprises can sign up, create an account, and access Composio’s services using an API (Application Programming Interface) key. 

They gain access to Composio’s services through an API (Application Programming Interface) key, and pay charges every time the API is called. 

This pay-per-use approach enables flexibility for different scales of operation and further promotes adoption. Its average contract value is close to currently $20,000 or Rs 16 lakh.  

Its clients and partners include enterprises like Databricks, Datastax or startups like 11x, 

It is used by developers, who inherently represent enterprises, and monetisation on that front has also started just less than a month ago.

“AI agents space in general is too nascent and therefore currently the target is not monetising, but the target is actually getting usage up, ” explains Ganatra. 

About 80-90% of projects involving agents and LLMs are currently in the MVP (Minimum Viable Product) or POC (Proof of Concept) phase. Monetisation becomes more viable when these projects move to full-scale production, which is expected to become more mainstream around February or March 2025, adds Ganatra. 

Composio is vying for a small slice of the enterprise AI market which is expected to reach $311.64 billion by 2029, growing at a CAGR of 52.17% according to Mordor Intelligence. 

As AI adoption accelerates, seamless integration and uninterrupted workflows are critical for enterprises to stay competitive. By cutting down development cycles, businesses can accelerate time-to-market, lower costs, and focus on innovation, enabling them to fully leverage AI’s potential while keeping up with rapidly evolving industry demands.