Are we seeing the unbundling of quick commerce? | Two by Two | The Ken

0:01 Hi, this is Rohin. You're listening to the free version of the 2x2 podcast. While this is a full and unedited episode, it was originally released 4 weeks ago to our premium subscribers. If you would like to listen to future episodes the very first day they're released, then please consider upgrading to our premium version. You can do that either by subscribing to the Ken's premium plan which unlocks all our premium podcast via our subscriber apps or you can just subscribe to the Ken's premium channel on Apple podcast for a really affordable monthly subscription price that will unlock all our premium podcast. Our premium podcast include 2x two of course but also first principles the nutgraph and make India competitive

0:47 again. Check the show notes for links to all of these. Now back to the episode and thank you for listening. Well, a Zepto Blinket, Instamart, Flipkart, Minutes and BB now goes live with a new dark store, right? They're entering the new market is um with the easiest and fastest categories which is fruits, vegetables, um confectionary, bread, eggs, morning category, all of those categories. Right. Correct. And then they'll get to a bit of beauty, personal care. By the time they reach fashion, they only have 300 ft left for fashion. And when you start fitting SKUs and and sizes and

1:33 colors in those 300 feet, then fashion becomes a day zero failure. Because when you and I go and we're surfing through say a fashion marketplace such as a Slick or a Myntra Mna or an AIOQ or a bunch of others, right? You need those money styles to sort of surf through to arrive at at least adding two or three in the cart and eventually going to the cart and maybe removing one or two and eventually buying one. So, it's not that easy for these horizontal quickcom players to bring in a category as large as fashion. [Music]

2:52 today's episode of 2x2. And today's episode of 2x2 is a lot of fun because in today's episode, we're going to discuss about the future models of 10-minute deliveries and how we expect it to evolve and grow. And to do that, I have two wonderful guests with me. Uh my first guest is Madav Kasurya who is the CEO and founder of Zippy and which I understand is in the business of helping e-commerce brands connect their online stores to plugandplay quick commerce delivery. And of course for all our listeners like many of you I've been following Madav on LinkedIn where some of his fairly opinionated but quite sharp takes have been doing the round. So welcome to 2x2 Madav. Thank you. Thanks for having me. Mother, before we begin, can you just tell us and our listeners a little bit about what Zippy

3:38 does? So, Zippy is essentially enabling speed for um brands, e-commerce businesses, and marketplaces across cities across about 13 cities. We're enabling about 175 such businesses very category agnostic but with a key focus on food, beverage, beauty, personal care, uh baby care, pet care, a little bit of wellness, sexual wellness, pharma, fashion, etc. Right? Pretty much all the mainstream categories. Model is very simple. Uh we enable speed using Zippy operated dark stores and Zippy operated last mile fleets. And we we we feel that it's super important for us to control both these pieces uh before the order reaches the customer in order to

4:24 maintain reliability across the network. Got it. So it's that's for us. So you basically do quick commerce but you in order to do quick commerce you do it for multiple brands and so you have dark stores and you have a delivery fleet. Absolutely. Okay. Interesting. I'm going to come back to you with a question. But before that, let me introduce mother is in the business of selling shovels during a gold rush. That's what I keep hearing every second week. And if you had a penny for every time you heard that, you would have a lot of you would be funding your next round. Absolutely. All right. My second guest is Sanjay. Sanjay Ram Krishna is the founder and general partner at Multiply Ventures. Now Sanjay has a long career as an operator in e-commerce. He's had

5:09 leadership roles in companies like Flipkart, Myntra plus stints at Google, G etc. And right now Multiply Ventures is an early investor in consumer tech and I understand Sanjay that you are also interested in companies that are also doing quick commerce right now. That is right. So we have invested in one which is Slick Club. uh we've starting off we've been kind of watching the quick commerce journey both from an horizontal and from a vertical and a point of view uh and it's fairly interesting so as a VC you have your thesis so you kind of jump in saying that there is potentially something uh end of this say if it if it's a decadel kind of a view uh now what e-commerce did 15 years back can quickcommerce do

5:56 something significantly different from a consumer adoption point of view 10 years from now, right? So, so, so that's that's how my first our first investment in Slick happened. Got it. I must say that we are recording on 27th May and today morning there was a press release that hit uh Rohin's inbox and my inbox that Slick Club has raised another $10 million as part of a funding round as well. So, clearly others are also looking well timed. This is the kind of PR you can't buy. But yes, well done. I think I have a question first before we even begin to all to both of you to Madav and to you Sanjay which is that today like if you asked us three years back and I know that and ask Rohan to jump in as well 3 years back you had asked us who is really going to buy stuff within 10 minutes that was really the overarching thing when they started

6:42 doing 10-minute delivery the big question that everybody said is who wants you know ata in 10 minutes who wants grocery in 10 minutes who wants diet cook in 10 minutes and it turns out all those people who said that were the ones who ended up buying all of those things in 10 minutes. Then the questions became even more existential and absurd which is who wants air conditioners in 10 minutes? Who wants refrigerator refrigerators in 10 minutes? Turns out for some reason people are doing that too. I don't understand why but they're doing it. So I think the question that I have for the two of you is that as a consumer and as all the consumers who are listening to this podcast today, if I want something from ATA to groceries to refrigerators to air conditioners to PS4s to print outs, I go to either a blanket or an Instamat or a Zeppto and I

7:30 get it within 10 minutes, 20 minutes, 30 minutes, 60 minutes. Why is that going to change 2 years from now, 3 years from now? Why will that not continue to happen? Clearly the two of you believe something and you don't think it's going to happen otherwise you both would be working at a Zeppto or an Instamart etc. Clearly there is something some other kind of a future that you are saying is going to happen. What is this future? So I can take a stab at it in terms of from a from a VC angle. The way we kind of see it is um what we have seen in the last 15 years or 20 years of e-commerce. You know when I joined Myntra when we were in Myntra together I'm just going to reflect back on that. That's true. Droia Sanjay and I were colleagues at Myntra in the very early days of Myntra. The joke I say is that I joined Myntra like 20 minutes

8:16 after they got VC funding and so yes go on. Yeah. So when we kind of pivoted from being a personalized merchandise kind of you know we used to sell those to a fashion e-commerce website series A uh I remember at that point in time the task given to me as head of marketing and to my team was how many shoes can we sell on a daily basis and the first men's target I still clearly remember was 10 shoes a day was a target given can we actually sell in the year 2010 10 shoes a day 300 shoes a month uh to this Indian audience which is absolutely used to uh buying fashion very very differently and if at that point in time both VCs and the founding team and the leadership if you have asked this question how big can Myntra be I think

9:01 give or take people thought of a 100 million $200 million kind of a business from the the the vantage that you had from this 10 shoes right so to a billion dollar plus of annualized GMV was not something that people thought is kind of possible so market forces I think works in ways that nor the founders nor the VCs can actually envisage and that's my big learning both as an operator and a VC you can kind of say that there are lots of tailwinds for a sector there are lots of things that will kind of pan out but beyond that you let market forces kind of decide so what we why I want to kind of go to that space was when I when I kind of come back here to quickcommerce I was in the same boat 3 years back why will I need something in 10 minutes so first and foremost I don't think quick commerce equal 10 minutes in my mind quickcommerce is possibly the

9:49 fastest possible delivery within that category and I think that over the next 2 to 3 years will kind of stabilize somewhere okay whether it's 10 minutes for grocery 60 minutes for fashion could be you know same day for you know consumer durables I don't know but it'll kind of currently everybody's in this rush of 10 15 minutes but I think that will kind of stabilize for at a category level but verticalization is a way to go uh what does that mean when you what do you mean by verticalization we when when you kind of start buying something as a consumer I think the you actually buy a brand a product or design in most of the categories. That's our thought process. You're not buying um you're not except for groceries which you kind of buy as a basket. Everywhere else as a consumer, you're thinking through a need state. That's how consumers buy. I need a shirt. I need there's an occasion. I need something in

10:34 fashion. I need a jewelry. I my my my x amount of, you know, my something in the BPC category is over. So, I'm replenishing that. Right? So, that's largely how consumers kind of think. you're not thinking basket heterogeneously typically when you kind of buy something. Uh so horizontal e-commerce did two things very very well. One is educating people in terms of everything that is possible in each category. So you learned as you kind of went to Amazon or the Flipkart. But now if I want to kind of buy something product design uh brand first it's extremely hard because you're spending 25 30 minutes just figuring out in this ocean in terms of how do I buy those right so I think need state you know what we say as vertical e-commerce is that there needs to be now I think

11:19 you've gone through absolutely nothing to lots of everything to I think you'll find a midpath in terms of what commerce or you know a curated kind of a marketplace does which is in fashion do you need so any SKUs and line items or can it be very highly curated in terms of what is trending what do you like what is trending in Bangalore so on and so forth so I think verticalization for us when you look at fashion that's the lens similar thing can happen in other categories but other than groceries everywhere else it's kind of bought very very differently you don't buy consumer durables is very very different purchase right it's a very clear need state when it comes to consumer durable so you when I say you know think of where you want to buy your refrigerator from. If you ask a consumer, he or she is going

12:05 to say five places and five destinations from where they will kind of buy this. It could be online, it could be offline, um and a multibrand kind of a retail outlet, right? Or a brand store. Okay. So we all consumers think like that and currently in the last you know decade and a half very very clearly there seems to be at least I struggle when I go to Mntra or a Flipkart my you know companies that have worked I struggle to find certain product categories because it's just way too much and I don't think tech is able to solve that. So we genuinely feel there is curation is the key and delivery the faster you deliver I think that consu consumer aha moment is just there for everything. So that's the way we kind of see verticalization. Got it. So I understand what you're saying. What you're really saying is that well I understand that there is

12:51 going to be this this horizontal kind of quick commerce places like a blinket instamart etc where you can get everything but you see ultimately quickcommerce becoming specialized where consumers get evolved enough to say like oh instead of I buy like in e-commerce I go and buy makeup from Myntra sorry from Nika or I go and buy say furniture from urban ladder but I may not even though furniture and all of these things are available in like a flipkart or Amazon there's going to be a consumer propensity city to go to specialized places and you see something similar playing out in quick commerce. I'll be really honest. I'm very skeptical but I'll come to the reasons why I'm skeptical. Madav suppose I asked you the same question which is there is a Zeppto, there is an Instammart, there is a blanket I am a consumer 3 years from now all of us will be buying from the

13:38 same place. Do you agree or do you think that's going to change? Some categories will need separate interfaces uh in terms of speedier consumption. A few of them that I can state at the back of my head right now are a fashion and I'll give you reasons behind each of these categories, right? B pharma, c gifting and d furniture and sleep, right? uh fashion just by virtue of the number of SKUs as we call it on this side of the world, right? SKQ stands for a stock keeping unit or an individual product that you can see on a website, unique article, unique article to be

14:24 fair, right? Uh so one blue t-shirt of Aridas in an Excel size is one SKU for context, right? So fashion runs in thousands and tens of thousands of SKUs, right? So for you to create a subcategory on a horizontal platform of fashion would not do justice to the category and to the consumption pattern. So it's very important for you to have a different interface for a category like fashion. Similarly, um pharma will need a separate interface not because uh of the number of SKUs but because of

15:10 compliance also in certain cases, right? The dark stores that need to be enabling speed for a lot of this speedy pharma will will be totally different from the dark stores that will churn out say grocery, fashion, food, all of these kind and offer something that's been super uh insightful for us at Zippy has been the gifting category. Gifting occasions are increasing by the day. Every day is a festival in India now, right? Every day is a day to gift in India. People actually go on a blanket and start searching for gift gifting hampers etc. and don't end up finding something that sort of serves the need. There are going to be platforms we see whether it's a

15:57 phones and petals or an IGP or a gift studio a bunch of them right converting and moving towards verticalized quickcom in the next few months. Definitely not a year. Hm. And you said there was a fourth category which is essentially furniture and sleep again different infra requirements and uh like fashion has a try and buy feature attached to it. fashion has a problem attached to it which is it's very high on returns. Right? Similarly, each of these categories have their own compliances protocol and problems associated with the category which makes it very important for them to have a a different interface and b a different backend infrastructure which may mean different uh sizes of dark stores and

16:45 different sorts of last mile. Pharma and fashion may work on two wheelers, right? But a furniture and sleep category will need a three and a four-wheeler supply chain attached to it. So hence I think we'll see a lot of these categories go into verticalized um quick commerce. But then there are some categories which I absolutely don't feel will get into verticalized quick commerce such as electronics right mobile phones chargers accessories phone covers all of these categories will absolutely not get into verticalized uh quickcom is what I feel as of today. Hm. What's the what's the thinking behind that mother? Why do you say like I mean not to be specific about electronics but when you look across all these categories and you feel that some will not go into the

17:33 10-minut verticalized space and some will what is it that differentiates those who might the ones that might from the ones that might not? I'll tell you a again no compliance required. B um SQU width is not that heavy in this category. C curation is very easy. It's very easy to define the parto of what sells in what quantity in what pin code at what time of the day, right? And D from a supply chain requirement, it doesn't need a separate back end. All it needs is maybe in certain dark stores a strong room if you're keeping some high value selection, right? But in cases of your chargers and accessories and speakers and headsets, you don't even need a strong team.

18:18 I just want to get Rohin in because I know Rohin has strong points of view about Amazon and its selection. So, I mean, for what it's worth, I think, you know, I'm increasingly impressed by I' I've done another 180 degrees and I'm increasingly impressed by Amazon's quiet focus and execution as compared to um I mean a bunch of other companies, right? But but I want to essentially go back and you know I mean before we dive too deep into the 10-minute model and like you know the supply chain behind it the store architecture infrastructure etc. I want to go back to what we started this conversation with which is essentially Sanjay said 3 years ago if you asked me I wouldn't have believed that right so

19:04 it's the consumer um behavior approach right and we know that in some sectors it's or some categories it's happened I mean uh greatest example being Instammart Blinket Zeppto etc which and let's let's largely admit that they're selling groceries FMTG goods etc and stuff like that right um I'm Now that's one point, right? Second point is it doesn't look to me that 10-minute commerce or 60-minute commerce or x minute commerce is essentially coming over and above the rest of commerce, right? Overall things have been slowing down in India and it looks to me like a zero sum game, right? That some of you know when people buy something from an instart or a flip card or sorry a flip

19:50 card minutes or a zeppto it's possibly something that they would have bought somewhere else, right? So that's that's the other part and so therefore when so these are my two ways of looking at it and then I get everything that's happened till now but even while we were speaking when we were talking about Slick Club I opened up the Slick Club website and I was like browsing through um you know the closing range the shoes selection um the accessories etc and stuff like that and I was trying to figure out what is the and and there are very interesting things and I want to kind of go deeper into it like for example Example in Bangalore slip club uh offers try or buy essentially somebody will bring it to you you try it on and you return it and now it sounds fantastic but all of us know it's it's potential

20:36 impact on like you know what happens to those items when they use tried back the cost of sending it the cost of getting etc. It couldn't be easy. It also offers a 7-day return period for items which are not tried and bought. Right? So, there's a significant cost incurred there as well. And the promise is 60 minutes. Now, I'm trying to figure out two things and I'd love to hear this from Sanjay, right? Who are these folks who want fashion in 60 minutes, right? And what is the cost of profitably addressing those people? because most of the brands that I saw I couldn't recognize but then again I'm too old I don't recognize most newer brands anyway so I don't know right um and I say this because today we just did a fantastic

21:23 story on the ken about flipkart and kalyan krishna morti and the numbers that flipkart's losses are still last year's fi24 losses were 4,200 crores right so the context is think guys who are doing at scale in most efficient ways are still not making profits in horizontal e-commerce So help me understand what's the thinking behind verticalized fashion e-commerce who is it targeting and how will it ever make money and get profitable understand okay please I sorry last point I do know the margins in apparel are higher right we've been hearing that ever since PGK joined the ken saying that hey myntra you know what if you want to pick a category to disrupt you better pick apparel cuz it offers the highest gross margins let me

22:09 say that Sanjay is the one who told me that when I joined So it's all suggest well he didn't lie. Okay. Go ahead. Okay. So there are two parts, right? So let me address the first part. Um fashion by nature, right? Uh is significantly different in terms of how we buy fashion, right? From a mind state, the lots of what kind when you kind of both offline and online. So let me just kind of touch upon online out here, right? So curation plays a part. The kind of brand choices you have know plays a part know so on and so forth. So fashion definitely I cannot buy fashion in the same place I'm buying organic potatoes and tomatoes right so my need state when I go to a zeppto or an instamart is very very different I'm buying groceries for my home packaged goods and vegetables vegetables largely

22:56 unbranded my only filter is whether it's organic or not and a price point at which I'm going to kind of consume so that's how typically people buy vegetables right so you that's a need state now when it comes to fashion very very different uh there are multiple sets of consumers and their way they kind of buy into fashion is very very different right largely when we looked at Slick and when we spoke to a whole bunch of consumers their first largest cohort has been Gen Z very very young so the the kind of mix that you will see uh in terms of brands if you are old I am maha old right so for me it is uh so so but I do kind of follow fashion as a as a sector deeply uh my daughter is a consumer that's how old I am but she kind of consumes from uh wait I cannot

23:41 let this challenge go unjal like you know defended right. How old are you Sanjay? I'm 52. Ah damn missed you by about two and a half years. All right let's continue. So um so the fact is for Gen Z uh I think among lots of things that's been written about this cohort of consumers there are few things that I've seen uh I think and I kind of agree with Madav. One is their last minute shopping, right? Uh and the need state for last minute is almost like uh you know too many in a week and many more in a month. So there are lots of occasions that my daughter goes to in terms of her engagement. It could be birthday parties. It could be just catching up

24:27 with her friends. Could be reunion. It could be somebody's birthday. It could be prom night. just the number of times that they have and every time they are like can I buy something that's affordable for that evening right and they do kind of go to slick and kind of see the brands that's kind of on offer and they kind of buy it number one so I think that need state has kind of just increased so the positioning of slick club is largely it's your last minute fashion app and I think across categories what we are seeing consumers need state right now with the evolution of quick commerce is the fact that number of people who are spontaneously buying into something has kind of increased. It could be that it's the same share of wallet which I it would have gone somewhere else but I'm

25:12 spending it here but it's not anymore thought through considered you know a week or 10 days in advance and I'm going to buy into something it is just that I feel like buying into something because I have a Friday evening to attend I'm buying it right so that's a set of consumers who are number one at at least in the year of you know slick so far and hence you will see that bit second that we have seen is gifting is a big big driver all right by nature Indians we gift toward the last moment even us that cuts across the age group from whether Gen Z or millennials when we say we need to go for somebody's you know XYZ there's an occasion we're like you know the family decides what do we get and is always last minute and right now I think quickcommerce enables a far more curated

25:58 very very nice set of things that you can carry for the location fashion in this case slip kind of you know does that very very well especially for genz's right I think that's number two Number three, I think 20 25% of current Slick users use the try and buy offer. Uh, right, which is you pay a small premium, right, for somebody to kind of I kind of pick up five items. I might try all of them. Three of them kind of fits me well. I return the other two. And you do that then and there. Then and there. Okay. Right. So the person is waiting for you. So then and there, you know, the product kind of goes back. Now in terms of the question of how well it kind of gets feature used to exist on horizontal uh or at least fashion platforms I don't know if it still does or not. I I I don't think it's particularly controversial. I think I don't think it's particularly controversial to say that myra did try

26:44 and buy. Uh I think it's fair to say does it still do it? Myntra currently I mean seeen I don't think there is a real time try and buy but when you kind of buy something because I can return I Yeah. Yeah. I get that. I get that. I'll tell you what it is. The reason I'm asking is why they turned it off. They turned it off because it got super expensive. The cost of reverse logistics was insane. There was another reason why. Another thing that they tried before that. The other thing that they tried before that was they did the multiple sizing. So if you're buying say medium, you could get a small and a large all three products at the same time. No, no. Yeah. Yeah. I I I've seen that. But my point is uh so you're saying myra removed try and buy because reverse logistics cost was high and this

27:30 is a person who's already gone there and designing the return path for that person and you're are we assuming that this goes away in the context of x minute commerce. Yeah, it's very different the logistics here and I think again mad pointed out to that right. So fashion if I'm if somebody is kind of building purely for fashion right in Slick's case it's purely fashion. The duck store is designed for fashion. It once a consumer says no, it goes back to the dark stores immediately, right? And gets restocked. You kind of clean it up, steam it, whatever. It gets restocked. It's fine and repackaged into uh sort of envelope and then rebin onto the racks and then empty goes live again and next customer places. What does this cost typically? I mean, if you were to

28:17 give like a range, I'll tell you. I I I'll get to economics. Uh so average cost of forward delivery of a fashion order in 60 minutes within a 7 to 8 kilometer radius is approximately 80 rupees at not so high efficiency. Um bringing it back is the same cost because any lighter going had to come back. Correct. Right. But processing the order again and putting it onto the shelves, it's it's a very simple math. If I need a separate tailor at the store to do this and the store is processing 500 orders a day, right, 50,000 orders a

29:02 month, assuming 15% of the orders come back, you're essentially processing about 20 to 50 orders on return. divided by 30 days. It's about 70 75 orders a day. Um your cost per order to process it is approximately 15 to 20 rupees per article. Is per article and and and on this you already spent forward and reverse logistics even if it was 80 bucks right because net realization on this article is zero. While the customer may have ordered three articles, retained one article, returned two articles, those two articles coming back at the store being

29:49 refurbished and rebined eats into the bandwidth of the tear at the dark store along with maybe some picking packing bandwidth, right? Um, so about 15 rupees per article is a fair assumption. Sanjay, correct me if I'm wrong. Yeah. Yeah, it's ballpark. It's you're right. It's it's pretty much in that range. Now, just one more question to Mother if you don't mind. Mother, do you um offer fashion uh quick commerce um or do you have clients who do fashion e-commerce? We work with the three fashion marketplaces of the five ones that offer 30 to 60 minute delivery today. Got it. All right. Sorry, Sanjay. Please continue. Yeah. So, that way now this is very different from Myntra. The Myntra

30:34 reverse logistics is built very very differently as a horizontal marketplace. the lots more that the same SKU travels and hence the cost is very high by the time it gets restocked and resold it's very very different right so hence quickcommerce from if you do it well it's far more efficient out here you know because it goes to the point of sale pretty much immediate right so I think so that's the other piece now going back to I think sorry also the second point is I believe Myntra's try and buy is not quote unquote real time it's not like the person is waiting for you downstairs while you try and You have to try policy. It's a liberal return policy. It's just a return policy. You're trying it up. Exactly. And hence the lots of people who No, no, guys, they don't have try and buy now, right? But when they did have many years

31:20 ago, when they did have it was actually a live try and buy, the person would wait and of course they stopped it and now they have a return policy. Yeah. Yeah. So, so, so, so there are, you know, few points. One is in the case of Slick, the way it works, the kind of consumers who kind of buy into it, why it's positioned at this point in time as a lastm minute fashion app. Uh why Jenz's kind of love it just the number of occasions, right, for the Gen Z's to not just Gen Z's, even early minilians, right? The number of occasions wherein you want to wear something different, something new and if it's affordable, you end up kind of, you know, buying. So I think that that has kind of increased substantially and we see that increasing as we as the time goes by. That's one. Now the second part is about profitability so on and so forth. I

32:05 think we are way too early right now to even kind of you know look at you know what that structure would be. Uh right but this is I mean at least one thesis when we wrote the you know when we kind of invested is this right. uh and why again it's going to be very different from you know you quoted the number of either Flipkart or you know others is very very different uh I think cumulatively I think people like Flipkart Myntra over the last 15 years you developed the category educated the consumers there lots of journey that you went through uh when Myntra started I I think we were at sub $200 million I mean 200 million internet users in the country that's how we kind of started right so with absolute absolutely nobody wanting to go buy fashion out there. you have educated I mean currently our 800

32:52 million plus you know internet users uh very very wellversed with you know buying online and uh so I think that entire bit of education that first decade went through for flipkart I think even costed them quite a bit in terms of building the category building the belief building the trust right which I guess the next 10 years won't have so have you kind of you know really kind of thought through when this will be profitable no it's still year one for slick but few things that have we've been kind of experimenting with slick right are people willing to pay a little more for try and buy are people willing to pay a little more for convenience right what is the price elasticity out here is it a very clear tier one tier 2 phenomena or is it kind of extendable and those are things when I say market forces will decide I I can kind of keep

33:38 guessing everything but market forces will decide in terms of you know absorption of any of these and how extendable these are you know in terms of how deep you can kind of go into India but definitely top 10 25 cities is very very clearly this is kind of possible and we see that as what you know the next two to three years for slick could be okay got it I sorry uh can I just come in and like just I I want to reference something that Madav said earlier when we were asking him about like you know what kind of categories work do not etc he had mentioned you know the can you narrow it down through a parado principle to a set of SKUs that will move right and that's one of the reasons I assume you said that electronics is not a category like that because there is like you know just an infinite there's so many products that you can buy. Isn't fashion even

34:26 worse than that? Isn't the entire promise of fashion that there is just virtually infinite brands and infinite styles? So therefore how does it fit into this model of reducing? And I asked this because I went to I mean with all the disclaimer of me not being the target audience I get it. I'm not one of those people who wants to buy something last minute for a party for which I'd need to get invited to a party. But that said, let's assume there are those people. I mean there the standard brands aren't there. The selection is very tough and stuff like that. So how do you how do you decide you know how do how does this square with Madav's point about like you know the perto um focus on certain SKUs? Yeah. Yeah. So let me

35:13 kind of address two points right are the brands that you and I wear will kind of come in in the next 12 months time on Slick as well right again I think it takes time for incumbent large brands to kind of adopt right some of them you know they need to kind of see right same thing myntra we had to I had to kind of sit in Puma's office Nike's office to kind of tell them that we are an online destination why don't you give us your brand and I still remember many brands kind of calling us you're a right uh and that was those days right uh to now I think brands take time the national brands will kind of take some time but they will kind of 12 months from now if you're having the same conversation the number of brands that's going to be on slick is going to be fair you know much higher number one uh number two the question is I think way it works is if

36:00 you're able to kind of really look at consumer behavior and interest at a hyper local level and that's what you're trying to do right and if you can kind of gather all the data and talk to brands uh in terms of what is moving, what is not. I think the curation can be largely about the best sellers, the most trendiest for that particular brand in that particular area is what you're trying to kind of sell, right? So, if I kind of work backwards and let's assume uh let's take a brand out here. Let's say snitch is kind of retailing on uh slick. snitch can over say a 24 to 36 months period really kind of look at and if if slick is present across let's say 15 to 20 markets you can kind of go

36:47 about saying that my best sellers set is this 80 or 100 products they sell so well in these 20 markets and I can of produce it with lots more from production to delivery I can kind of you know actually invest from production to delivery in a far more seamless manner and curate this for slicks consumers, right? So you need not have the plethora of brands that you need. You still need width is still important but width is not about having infinite, right? Width has a curation list. Same thing in brands. So you can be a connoisseur of brands across categories but even the most connoisseur brand right uh if you kind of talk to a consumer he or she will be able to kind of rattle if I ask in this audience tell me you know 10

37:33 clear genz brands right maybe till five or six or seven we might 8th nth is going to be a struggle and after that add 15 five more it's going to be even more a struggle right so brands are there you discover so discovery is one part that quickcommerce will solve for but most importantly trending fastmoving you know for that particular brand is something that you can really curate and schedule it in hyperlocal level it'll be far more efficient. Got it. I'm just going to bring Madav in because I think Madav said something interesting to my question of why won't we have a future where we are all continuing to buy from Zeppto and Instamart and Blinket like we do today. Madav's point was essentially that look certain categories have to be treated differently and he gave examples of four categories like gifting farmer etc. He says that the I imagine the

38:18 front end experience the consumer experience is going to be different. The dark store experience is going to be different and specialized. So mother how does I mean the thing that I really want to ask is I imagine that Zippy solves for some of this or all of this. Can you tell us how how does this work for you and why is it that arguably a Blinket or an Instamat or Zepptor or anybody else can't just do the same thing? I'll tell you because when a Zeppto blinket, Instamart, Flipkart, minutes and BB now goes live with a new dark store, right? They're entering the new market is um with the easiest and fastest categories which is fruits, vegetables, um confectionary, bread, eggs, morning

39:05 category, all of those categories. Right. Correct. And then they'll get to a bit of beauty, personal care. By the time they reach fashion, they only have 300 ft left for fashion. And when you start fitting SKUs and and sizes and colors in those 300 ft, then fashion becomes a day zero failure. Because when you and I go and we're surfing through say a fashion marketplace such as a Slick or a Myntra Mnau or an AGOQ or a bunch of others, right? You need those money styles to sort of surf through to arrive at at least adding two or three in the cart and eventually going to the cart and maybe removing one or two and eventually buying one.

39:51 So it's not that easy for these horizontal quickcom players to bring in a category as large as fashion. You can still do some of it with pharma. I heard Swiggy Instamart did a partnership with Farm Easy where I think uh their dark stores were also doubling down as far easy pickup stores and there was some synergy going on at the back end. Right. That is correct. But but but um fashion there's a reason why there's a reason why MNRA is setting up dedicated DS for um M now. Otherwise, Flipkart minutes already had 200 stores. H. So how does Zippy solve this problem? So Zippy at least for these marketplaces

40:37 sets up dedicated drugstore facilities across cities. Um so sorry. So help me understand this. Let's say for instance I am a fashion brand. Let's say I mean I'm taking hypothetical. Let's say I'm Argo and I'm saying that hey I want to start quick commerce. I come to Zippy and I come to you Madav. Do you set up dedicated dark stores just for me? Just for you. Interesting. So it's not like shared dark stores that multiple brands use or something. Never work for marketplaces. Oh, interesting. They never work for marketplaces. Fashion, there is a very interesting angle and I'll come to that in the next couple of minutes. What's going to cook in the next, I'd say 6 months to 18 months. But otherwise for any platform, right, the drawing board is that you need a dedicated dark because you're a marketplace, right? You're keeping that

41:23 width of SKUs. You need that space. You're operating on your own native technology. you're operating on a separate WMS system. There is only so much commonality that you have can have can have with another customer in the same dark store under the same. Correct. For our listeners, WMS is a warehouse management system and I'm reminded of all the products that I built or not built really but worked within Myntra. So, yes, cut you please. Yes. And for that reason, um, every marketplace even if you're running a 200 ft² small pharma store for any of the pharma marketplaces, you need to have a dedicated store. You may be within a large compound of dark stores, but your infrastructure, your storage um design, your crew members, your technology needs to be native to the marketplace. H

42:08 so we set up these dark stores. We we let's take a step back. We uh scout the sites. We we sort of do a compliance check on the site. We sign the site. We set up the site. We hire the crew members. We do the call for inventory. We do a dry run of an order or two or three or four and we attach our own last mile to the dark store and we go live. So the entire post orderer experience for the marketplaces we operate for the dark stores and the hyper local zones in which we operate is entirely managed by Z. Understood. And you're telling us something about fashion from a fashion lens you know after having spoken to so let me give you a landscape and I

42:54 think Sanjay will be able to add to this more than because he's on the other side right he's on the dollar side of the landscape um but there are 15 new insurgent players focusing on fashion quick commerce five of those 15 are already live in their own trial phases in their own homeground cities. Got it. Sorry M just to interrupt you when you say there are 15 insurgent you mean do you include the examples that you had said earlier like myntra now aio etc. No, no. Oh, they are the incumbents. This is insurgents. There are 15 insurgent brands. Insurgent. I have a list of these ones, right? But I'll do that later. And these are not brands. These are marketplaces. Okay. Got it. Oh, wow. Okay. Yeah. These are the likes of Slick. The likes of

43:41 Slick. Understood. Huh. Five of these are already live and a separate set of five of these have already raised between $3 to5 million uh with one bet being done by Info Edge of course one bet being done by Nexus, one bet being done by K Capital uh one bet by Seoa. So a bunch of these ones right there are already rounds which have already taken place. They've just about to be announced. Some of them are going live. Uh some of them are about to go live. Some of them are setting up dark stores. Fortunately, three or five of them are working with us. Right. So my larger point is the problem statement. The problem statement is all of these guys are going to um scale up

44:26 in their first, second, third markets. Set up the first cohort and the second cohort of 5, 10, 15 dark stores. Begin enabling 30, 60 minute deliveries. do a very decent job at try and buy uh fast returns, 60-minute returns, selection, branded riders, a bunch of this, right? But what's actually going to become a problem one year down the line is fashion is very fast in nature. Styles keep changing, seasons keep changing. Um take for example Fab India or Libas. M the same libas ki the same color the same size cannot be kept at five different points in koramangla in bangaluru as rohin said right so

45:13 that's going to need a solution you can keep the same maggi packet and the same diet cook as you mentioned at five different duck stores in kor mangla correct but you can't keep the same libas korti of the same size and color in the same hyperlocal zone within 5 kilometers with five different sets of inventory being kept and that will need um aggregation and enablement by a player who comes with common inventory and exposes the inventory to a bunch of these marketplaces. This is going to be only required in fashion. It's not going to be required in even beauty personal care. Lakmea same eyeliner thus dark.

45:58 Croine same strip can be kept at five dark stores. Maggie can be kept at five stores. But in fashion because every four months you are changing selection, right? And there is only so much you can keep even after 5,000 feet duct stores. And the ones I'm now building for fashion like 5,000 7,000 square feet duct stores. Like we're literally entering the range of warehousing now. Correct. within the city within 200 rupees a square feet within 150 rupees a square feet like you're you're essentially building those beyond this you can't go like beyond this I I you just have to like keep getting better at selection yeah beyond this you have to build a mall or something I guess you're there I mean beyond this you have to build a sorry ma may I ask you a question it's a hypothetical you said there are 15 um fashion uh quick

46:45 commerce players that want to win Now let's say for a minute let's assume that capital is not the constraint right all 15 of them are funded equally because in many cases what happens is somebody will use capital to kind of create a bud so let's equalize that let's say they're all equally funded a year down the line what are the factors and this question is of course directed at you also Sanjay what factors will determine who are the top two or three and who's everybody Can I add a constraint? Nobody can say the word execution. Okay, I know you'll try to say that but still. No, but we'll ask then we'll ask for no reason. No, we'll ask what does it mean? Five. Okay, go for it. I think this has played uh many times uh in the past across categories,

47:33 right? Myntra was not the first fashion retailer and Flipkart was not the first I mean Flipkart possibly was the first book retailer or maybe a horizontal retailer from that point of view. funding once you take away funding as a variable a lot of those assumptions are not true. Myntra did um you know manage to succeed like MKkesh did a great job of it and of course after it got bought bought by Flipkart it continued to get that support right did acquire let's buy did acquire what so many of the other compan Jabong that's right right so capital did play a role so which is why I want to kind of take capital out of the equation and say if capital is not an equation yeah yeah I think lots of things lots of things right uh so so number One is u even within the fashion

48:21 e-commerce or generic e-commerce we remember only these two but there were many snap deal was one shop clues was one there were enough and more horizontal e-commerce that came and said some adjacency in terms of positioning but there were lots of generic e-commerce companies in the country not I can name a couple there's this company called be stylish there were few others yeah so a whole bunch that kind of got initial funding so on and so forth and finally you you know you kind of uh you know to every stage either because you didn't find enough product market fit or lack of funding or or whatever it could be any other execution risk you kind of you know fade it away uh so uh so I think capital being equal finally you know if you kind of give it time I think

49:07 all of us will have our preference in terms of you know audience uh so this could be whether you're kind of addressing a very very clear subset of an audience so again we've kind of played this out many times. Can eventually, and this will take all, you know, forms of shapes, right? Will Slick be catering only to Gen Z? There's one possibility. Your entire thing is Gen Z brand, Gen Z curation, Gen Z experience. Everything is for Gen Z. You're not having any other brand curation out there. Or you are kind of, you know, saying, uh, I'm going to have the most sustainable kind of a quick commerce marketplace. So, your angles could kind of differ, you know, at at at any end point. But finally you know what will decide and I keep going back to this right I think founders can do everything

49:52 from their point of view investors can do all the thesis from their point of view and invest but market forces will decide you know and market forces are clearly in terms of there could be value that I kind of find as a consumer right in that you know particular marketplace and I think the most important example out here for me has been zudo right zudo in terms of what they have built in the time period of building a fast fashion brand completely offline, right? A very very young audience that goes and buys out there a billion dollars in terms of annualized sales. Right? Now, nothing that is there in the online world, right? Everything is offline. Uh is is a classical case of you have grown faster, you've built something bigger than possibly the you

50:38 know the guys who started it all, Azara and H&M, right? within the Indian context you came in late and you conquered a market like India in terms of fast fashion in offline as a model right market forces decided they gave something to the market that otherwise was not and if I kind of go and really classically study zodio it was for the family it was not just for an individual you could get price point the stores were built so beautifully for you to kind of go and experience right so uh so similar thing will happen here right I I can take all the guesses in terms of who will win but it'll be very very different you know 5 to 10 years from now everything being equal who will kind of win or maybe there'll be few few players who will kind of you know win this not justly one in fashion you'll have multiple fashion is a category where you can have multiple destination and that will reflect I think offline

51:23 behavior is always reflected in online as well if I look at value retailer in India there are possibly five very very good value retailers in India zoo being one max being the other one from landmark group you have if you kind of go even more lower vishal mega mart today kind of got funded so value retailing if I look at that as a concept Except there are about five or know 10 real you know retail outlets in the country all equally you know wellunded some bootstra but doing very very well fashion will have its own play but I don't think currently I have the luxury of saying what will kind of drive that and I always say market forces will kind of drive that and I don't know what those things would be. Mad, what's your POE? I think I'd sort of second what Sanjay just mentioned, right? It's a test of time. While we may have a certain bias towards certain traits that

52:11 may um sort of be inflecting for certain platforms, right? But um the vanilla answers are selection, speed, service, right? Selection has to be on point so that your uh sell through rates. A very big metric in fashion is sell through rates, right? Because the SKU width is so high and large, uh it's very important for you to study your sell through rates, the percentage of units being sold divided by the by 100 units being stored, right? That's the typical formula. So selection, speed, um and uh overall service quality. I think I have one. Okay, I'm understanding what the two of you are saying. What you're really saying is that there are reasons why in some ways

52:59 there will be a replication of what happens in quick commerce similar to what happened in e-commerce. But I guess the fundamental thing that I'm still wrapping my head around maybe you've already answered this but I'm still trying to understand this. One of the reasons why verticalization happened in e-commerce which means that companies like say urban ladder and nika and all of these guys emerged as opposed to say a flipkart and Amazon and all of these other horizontal companies was because of the reasons that you said earlier Sanjay which is that there is such a wide selection in Amazon and Flipkart that give me a smaller place that gives me a curated selection and I will be much more likely to shop from there. Isn't that true about quickcommerce though? Isn't that where the root the

53:44 analogy breaks between e-commerce and quickcommerce? Like even if I go to a blanket or a zeppto or an instart? Now I understand Madav's point about the square footage but at the end of the day the apparel that I get over there or certain categories that I get is curated because it's limited right so why would the differentiation for why would the need for a vertical thing even emerge? Oh, I think it's fairly straightforward, right? Why? See, uh uh u why will you Okay, so I'm going to kind of throw some random questions out here. Sure. Tomorrow Chroma starts selling vegetables. Will you buy them? In your head, can you imagine buying vegetables from Chroma? No, I think the counter to that would be that I I don't think enough people could imagine themselves buying printouts of Blinket, but they

54:30 are doing that. Yeah. Or or fridges or PS3s or or RO systems. Yeah. Exactly. So actually this is where Rohin's age is showing because PS3s have not been around for like 15 years now. Sorry Mad was saying something. M is saying go ahead. Madam go ahead. Yeah that that's a very horizontal marketplace problem. Oh sorry that's a very vertical marketplace problem where you see you can't buy vegetables from Chroma. You can't buy an iPhone on Nika. You can't buy a packet of biscuits from say Tira. Right. But in horizontal you don't have that problem. Correct. You can keep adding more and more correct categories and selection. Correct. True. Yeah. Yeah, which is which is what my point is. You can add it and those it's not going to be infinite or semi- infinite. Like today if I go to Amazon and I search for jeans, I'm going to get a ton of jeans. I don't know which

55:16 brands there. I don't know. You will you'll get a fairly decent. Yeah. So I understand why I would want to go and buy a Kora jeans. Why I would want to buy like you know a specialized limited and curation are two different words. Okay, fair enough. If I kind of currently if I go to any of the three horizontal quickcommerce website Yeah. and search for fashion. Yeah. Within my first scroll, most probably that product won't be there. It is just just the nature. They have fashion. Yeah. But they have fashion because they also want to kind of add that category, right? But I have kind of tried searching on all the three platforms. Just if you want to kind of buy jeans and if you just go and look at curation of jeans in these three platforms, it's very very limited and

56:01 you will have hardly any products out there. And it's not because they can't as Madav's point. I think Mad's point is they can't in the sense that they're limited by space and it is and because you are you're if 80 85% of your revenue is coming from groceries plus staples and some electronics that's what you're kind of that's what you're known for. That's where the velocity is. Why and fashion needs a very very different experience both from UXUI selection how your dark stores are made your supply chain everything is kind of different out there. Got it. And you really kind of you know just by adding you know 10 products you can't say I'm also selling fashion right add to what Sanjay mentioned yes please part of what Sanjay is saying also sort of um makes sense at

56:46 least in my head reason being perception of the user with respect to the platform is super important reason being while blinket zepto instamart minutes and baby now may have a lot of these peripheral categories Yeah, like electronics, like curated um premium beauty, personal care, uh like some gifting and accessories and fashion. But till today 80% of the checkout comes from its grocery, confectionary, daily needs category. Hm. But isn't that mad, isn't that the fundamental retail holy grail that you walk into a super uh supermarket to buy groceries and then it manages to convince you to buy something

57:32 else which you hadn't thought of and in some ways with an instart or a blanket you I mean if you can aim for frequency and engagement at some point you kind of hope that 80% of my you know uh buys will come from those categories but every now and then I can convince them to whatever during Diwali buy like a gold uh Lakshmi or like during some other time and therefore my the counter to that is that yeah sorry go ahead go ahead I mean that's not what the business is built on those those uh Diwali and holy related purchases and no I was just using that to say that it's an alternative to the grocery FMCG uh but it's been three four years understand it's been three four years and that 99% has only moved till about 85 till now right and that's a and I

58:18 have also So having witnessed this space from the very front row and having worked with 175 plus brands currently I also know for a fact that a lot of these brands got on boarded to quickcommerce didn't do well because searches were not coming it's not that they were not listed there were no null searches for that category right and they eventually just pulled null search being user searches for a particular product it isn't found and then the quickcommerce company decides to stock decides to stock it or onboard it. Got it. There was no null searches for a brand in that category or that category and there are a bunch of these categories right whether it's coolers and arros and etc etc and eventually these brands pull back. So mother for

59:03 these brands that you're talking about which I understand the logic right how do these brands I guess how do these brands generate demand do you help them with that as well or do you just do the dark store and the logistics part of it post order experience poster experience do you think the two of you that is something that they're going to how are they going to solve that problem do they have to solve that problem yeah Slick will have to solve that problem in the CA so Slick will kind of have to kind of look at are the rules for that a little different or is it the name uh I think it's like any other marketplace right so you when you kind of become a destination right uh Nika is a beautiful example of again I think myntra and flipkart possibly have been around for a while but beauty and personal care in the country and if you kind of go back

59:49 10 years to now what Nika solved for is multiple things in this entire thing of horizontal marketplace for beauty one I think it educated lots more consumers in India about what is available number two it educated ated people on ingredients. It educated people on what all is possible both in India and outside. It gave me access to international brands. Uh I think it just made people far more knowledgeable about what they are kind of buying into in beauty and personal care discovery curation and what I ended up kind of know buying and hence I think Nika became this destination for what it is right now. Right. So anything that they do in that space will always be you know seen very very differently. Nika also tried fashion saying that it has still been not easy for them. I agree.

1:00:35 Right. So I think consumers once you perceive where my what my destination is and I think to Madav's point that all of us finally kind of decide in each of the category in terms of what is our first preference and we'll have I think all of us have a top three preferences in terms of whether it's a marketplace or a brand and if you're able to kind of find that quickly in a kind of curation that we want I think that becomes your you know point of that's how you kind of start your journey. Got it. One question from my side and then I'll just throw it to Rowan which is okay I understand all of these points. I understand this point from the consumer standpoint. You made great points from the consumer standpoint why they are going to probably there are reasons why they will not end up necessarily buying at the three or five large horizontal quickcommerce places because these things are going to happen. Mav I

1:01:21 understand your point from the brand standpoint. We've spoken about that as well. Now here is a counter and this is my last counter and if you can counter me here then I guess uh it's going to be interesting. So what is stopping the five large uh horizontal players which is in this case the blanket, instam, zepptos, flipkart minutes and now of the world to create specialized front-end products and apps that solve this problem. So as an example, what is stopping something like say hypothetically an Instamart? You're right. Maybe you're saying oh we don't think of Instamart, we think of fashion. Maybe Instamart can launch another apps. Wiggy as we know is launching apps, combining apps, they're doing something on super apps. We can create another app that says here is a special app that we have created called Swiggy fashion. Come here. We have dedicated dark stores for

1:02:08 that and you come here and you buy and you can like make this happen. The example that I'm taking from this is exactly what Zeppto did with Zeppto Cafe. They had cafe inside Zepto the main app. And as Madav makes the point, of course he was not talking about Zeppto, but you're saying the very similar point that when you basically go to create a basket, you don't think of these things together. Zeppto figured this out. Oh, people probably don't buy a cappuccino and ata together. Let's create a separate app for this. Uh, presumably Zepto Cafe has separate dark stores. They're going to do exactly the same thing. What's stopping them from doing that for categories like say fashion or furniture and home or something like maybe farmer? What's stopping that from happening? Why can't that future be real? 3 years from now, I'm buying fashion from one of these

1:02:54 place. I'm buying farmer from one of these places. Yeah. Yeah. So I think if any of them are able to kind of really So right now the organization of that scale is built with a certain core value prop that you're going to provide to a consumer. A horizontal marketplace like a flipkart over the last 15 years has been built saying that my core is India not a tier one tier two. I want to kind of cater to India. I want to give maximum width in terms of offering a

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