Is there any opportunity for vertical quick commerce?
Vertical e-commerce has validated the opportunity in the past
Hello, 👋
Myntra for fashion, Nykaa for beauty, Firstcry for kidswear, etc. has proven in the last decade that there is a scope of vertical e-commerce in the presence of horizontal giants like Flipkart and Amazon.
Now, with new quick commerce horizontal giants like Zepto, Blinkit, Minutes, Instamart, etc., is there any scope for vertical quick commerce? There is validated customer behaviour in terms of both quickness (validated by Zepto, Blinkit, etc.) and category focus (validated by Myntra, Nykaa, etc.) but there are challenges too. Let’s understand the possibilities in this post.
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» The Quick Commerce Series | The Thoughtful Tangle
Vertical quick commerce represents a specialized evolution in India's e-commerce landscape, where companies focus exclusively on delivering products from a single category or closely related categories within an ultra-fast timeframe, typically 10-30 minutes. Unlike traditional e-commerce or horizontal quick commerce players who offer products across multiple categories, vertical quick commerce companies build deep expertise and infrastructure around specific niches such as groceries, medicines (PharmEasy, Tata 1mg), or beauty products (MyGlamm).
Vertical quick commerce is likely to follow a similar evolutionary trajectory as its predecessor, vertical e-commerce, which saw specialists like Nykaa (beauty), FirstCry (baby products), and Lenskart (eyewear) emerge as category leaders despite competition from horizontal players like Amazon and Flipkart. Just as these vertical e-commerce players succeeded by building deep category expertise, superior customer experience, and specialized supply chains, vertical quick commerce players will likely dominate their chosen niches through category-specific advantages.
The endgame might see these vertical quick commerce players expanding horizontally within adjacent categories while maintaining their core specialty, similar to how Nykaa expanded from beauty to fashion while retaining its beauty expertise.
6 core advantages of vertical specialization in quick commerce:
Infrastructure Mastery able to design and optimize every aspect of physical infrastructure - from dark store layouts to storage solutions - specifically for one category's unique requirements. This creates unmatched operational efficiency impossible to replicate in multi-category operations.
Technology Superiority develops focused technology stack with algorithms and systems precisely calibrated for single-category dynamics. This enables superior demand prediction, inventory management, and operational automation specifically tuned to category needs.
Supply Chain Excellence builds concentrated relationships with suppliers, stronger negotiating power, and specialized quality control systems. The focused approach enables deeper category expertise and better terms than horizontal players spreading attention across multiple categories.
Customer Understanding develops profound insights into category-specific buying patterns and customer preferences. This deep understanding enables better demand forecasting, personalization, and strategic product development that horizontal players cannot match.
Competitive Moat creates strong entry barriers through accumulated category expertise, specialized infrastructure, and deep supplier relationships. This specialized knowledge and infrastructure becomes increasingly difficult for competitors to replicate over time.
Entry path is not easy
High upfront costs
The model demands heavy investments in specialized infrastructure like category-specific dark stores, custom storage solutions, and dedicated delivery fleets. Unlike horizontal players who can spread infrastructure costs across multiple categories, vertical players must achieve profitability within their focused segment, making unit economics particularly challenging in the early stages.
Vertical players might get some help from 3PL delivery players in India like Delhivery, etc. who are setting up their own last mile infra including dark stores and delivery fleets.
Scaling Challenges
Growth presents a unique paradox for vertical quick commerce players. While expansion is necessary for business sustainability, it comes with significant risks. Geographic expansion requires replicating specialized infrastructure in new locations while maintaining service quality. The temptation to expand into adjacent categories risks diluting their core competitive advantage of deep specialization. Finding the right balance between growth and maintaining category focus becomes increasingly challenging as the business scales.
Future Outlook
Vertical players cleverly leverage the market education and habit creation already funded by horizontal players. While major horizontal platforms spend heavily on teaching consumers about quick commerce and building delivery habits, vertical players can focus their marketing on highlighting category expertise rather than explaining the basic concept. This significantly reduces their customer acquisition and education costs.
Vertical quick commerce in India has the potential to transform several categories by focusing on speed, convenience, and specialized customer needs. Some categories are particularly well-suited for this disruption. For instance, beauty and personal care products are in high demand, with customers valuing quick access to cosmetics and skincare. Pet supplies, like food and medicines, are another promising area, as pet owners often need these urgently. Similarly, baby essentials such as diapers and baby food are ideal for quick commerce due to their frequent and time-sensitive nature.
Health and wellness products, including supplements and fitness snacks, can also thrive in this model, as health-conscious customers prefer convenience. Artisanal and regional foods, like fresh cheeses and traditional sweets, could benefit from platforms that deliver authentic items directly to urban customers. Office and school supplies, DIY and craft materials, and even event and party essentials are other categories where last-minute needs make quick delivery attractive.
Even specialty electronics like chargers and headphones, or restaurant supplies for small eateries, present opportunities for vertical players to carve a niche. The key to success lies in solving urgent customer problems, focusing on areas where big platforms like Amazon or Instamart don’t excel, and building a loyal customer base with excellent service and curated offerings. This approach not only satisfies immediate needs but also creates a strong competitive edge for vertical quick commerce companies.
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ABOUT THE AUTHOR
Hey everyone, I'm Garvit Sahdev 😎. I'm on a mission to gain a deeper understanding of the world, and to develop solutions that can trigger significant global change.
My curiosities span various domains including food, business theories, material science, market size calculations, economics, politics, and sports, etc. 🧐
Professionally, I have a diverse background spanning startups, consulting, policy development, market research, system building, ISO, colour physics, nanomaterial synthesis, textile chemistry, etc. 🐘
Note: Generative AI has been used for writing this piece under the supervision of the author.
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