What Tata, Reliance and Swiggy see in 6am deliveries

The early morning milk and grocery delivery segment fizzled out and consolidated even before it could scale up. But with Tata Group, Reliance and Swiggy now dominating a category that had a growth spurt during the pandemic, Amazon India and Flipkart may have missed milking an opportunity

author-image

By 

Aditi Shrivastava

June 30, 2021

9 Min Read

Not too long ago, there were about 20 startups trying to replace the neighborhood vendor delivering milk packets to your door every morning. Now, it’s a three-horse race.

Two of the contenders are India’s largest business conglomerates, Tata Group and Reliance Industries. As they build their own digital empires, they see in morning deliveries a powerful distribution channel leveraging their supply chain capabilities built over decades.

The third is Swiggy, which entered the morning milk and grocery delivery sector through its acquisition of Supr Daily three years ago. Reliance is in its last leg to purchase Milkbasket this year after months of deliberations, and Tata last month bought BigBasket, which operates BBDaily.

Most of the other startups in this space, such as DailyNinja, Doodhwala, RainCan and Morningcart, have either folded or been acquired. A few remaining ones, such as Country Delight, are smaller in operations.

The business of digitizing morning milk deliveries holds great promise for online grocery deliveries, a sector that has been experimenting, not always successfully, with multiple models. The 6 am deliveries model offers a ready platform for repeat business, one that can be expanded to get customers to add other products to their daily baskets along with milk.

“Grocery is a classic category for subscription-based purchase models because of repeat orders and product brand stickiness,” said Rahul Malhotra, Senior Analyst at Bernstein, in a report. Malhotra highlighted how the model enables retailers to better forecast demand and delivery schedules. 

Investors including Sequoia Capital, Matrix Partners, Omnivore and Kalaari have poured in about $100 million into the morning deliveries category. But none of the startups has managed to scale up operations independently.

s

Some experts say the margin structure never allowed for it, while others blame an obsession with hyper growth. “The underlying assumption in backing this sector was that over time you would get a large basket size (over Rs 500) but I don’t think anybody has been successful,” said an investor in the sector. 

“It’s a capital-intensive and longterm commitment game,” said another investor. “Not many have the appetite or the capability to build it barring, say, five big companies in the country.”

With Tata Group and Reliance now in the business, the category gets a huge leg-up in backend sourcing and fulfilment capabilities. Their timing may be just right, with the pandemic lockdowns driving greater adoption, especially among apartment-dwellers.

Why

Subscribe

Pricing

As a premium subscriber, you will get access to 3+ premium articles a week
Limited time offer
Launch price
INR
2,399
/ Year
INR 3,999
Save 40% with our launch offer.
Please apply the code at checkout.

copyCopy Code

Upgrade Now

Why

Subscribe

As a premium subscriber, you will get access to 3+ premium articles a week

Smart Information, Better Decisions

We report on the latest and most important developments in India’s biggest tech companies and also disruptive startups so you can make better decisions.

Seasoned Team

Tracking the highs and lows of India’s biggest internet companies over the past decade has given us access to the right decision-makers to interpret the latest state of play.

Inside View with Org Charts

Know the key decision-makers with Org Charts. We thrive on decoding boardroom conversations so we can bring you a 360° view of what's happening at India's high-growth companies.

Filtering the Noise

New economy companies cannot always be evaluated using traditional methods. We analyze the relevant metrics, ask the tough questions to get you the right picture
share-button
like-button
share-button

For subscribers only

Premium Reads

>>

View More >>

Deeply reported and objective news on the country´s fastest-growing companies and the people behind them.