Indian q-comm upstarts sidestep expensive dark stores in ONDC push

Bengaluru-based KiranaPro and Apna Mart, as well as Mumbai’s Kiko Live are among those pioneering this asset-light model in India’s small towns, aiming for a more sustainable path to quick delivery of an assortment of goods in markets that have proven tough for the larger players to crack. 

This new cohort of startups is focusing on merchant adoption and integrating neighbourhood retailers into their delivery networks by leveraging ONDC, which is a common digital platform that allows sellers and buyers to connect and do business with each other. It helps different online stores and apps talk to each other.

“The dark store model is not a sustainable quick commerce model,” says Deepak Ravindran, founder of KiranaPro, which is primarily operational in non-metro cities. “There are around 3 lakh (300,000) kiranas on the ONDC network. What they don’t have is us — someone who brings traffic.”

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The market opportunity in quick commerce is undeniably large, but scaling in this space has historically been a cash-guzzler. It typically requires significant investments in dark stores, IT infrastructure, and operational costs such as logistics and salaries.

A dark store in the context of quick commerce is a large warehouse that serves as a fulfilment centre for online orders.

The struggles faced by food delivery giants like Zomato in small towns underscore the unique challenges of quick commerce in these regions. Zomato’s exit from 225 smaller cities in early 2023 due to subdued performance underlined the difficulties in achieving sustainable and profitable operations. 

Plus, consumers in small cities and towns are generally more price-sensitive, and are often more accustomed to the pricing and value offered by local kirana stores and markets.

KiranaPro initially used a commission-based revenue model, in which it pocketed a percentage of each sale that a kirana store made. But Ravindran says the company is now piloting an ad-based revenue stream with select brands, where brands pay for visibility on the platform. “Our revenue comes through an ad model, but we also look at the integrity of the products. We don’t just sell condoms or cigarettes or paan,” he adds.

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On the other hand, Kiko Live is focusing on merchant adoption as a key strategy to scale its operations.

Alok Chawla, its founder, noted that 10–15% of business for neighbourhood retailers used to come through home deliveries, typically over WhatsApp or phone calls. That channel, he says, was most disrupted by the rise of dark stores, “which I believe is an unsustainable model”.

Kiko Live’s revenue model is currently structured around a 5% commission on sales, along with an annual subscription fee. Chawla said that this subscription fee helps cover the costs associated with onboarding, training, and supporting retailers.

As for the delivery fees, it is entirely up to the retailer to decide. The effort involved in training sellers will eventually become an autonomous process as the market matures, he believes.

“The dynamics of the business is that 90% of the business comes from the seller’s own trusted or loyal customers,” he said. 

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Apna Mart did not immediately respond to Mint‘s request for comment.

Apurva Dixit, associate vice-president at investment company Blume Ventures, says that both these models of quick commerce can come to co-exist. However, several challenges persist.

“Assortment, I feel, might be a bit of a tricky sort of a situation in the sense that you have to ensure that everything that you’re looking for, or a substitute, is present in the shop that you’re going to.”

Assortment in quick commerce refers to the range and variety of commonly-consumed products that customers can order online and have them delivered rapidly.

Dixit adds that currently the economics of quick commerce is heavily reliant on more mass premium and premium products, as these help drive up the average order value (AOV), making the model more financially sustainable despite the high costs of rapid delivery.

“Which means that you’re probably getting a smaller cut of the AOV than what normal vanilla quick commerce guys do,” she added.

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This reflects the shift from traditional quick commerce models, where the platform owns the entire transaction, to a more marketplace-style set-up, where third-party sellers might be involved, reducing the platform’s share of the average order value (AOV).

Venture funds tend to be cautious about quick commerce because it needs large upfront investment to scale, making it less capital-efficient than startups that can grow faster with less money, she added.

Ashish Kumar, co-founder at Fundamentum, a venture capital firm, echoes the sentiment that multiple models will coexist in the country — while noting that the dominant model in each city will likely depend on factors like geography, category, and population density.

Fundamentum’s portfolio houses Apna Mart, a grocery retailer focusing on tier 2/3 cities and towns.

“For example, in the food delivery segment, it’s harder to pick it up from a third-party store… But in grocery, where you’re not manufacturing anything yourself, its easier for you to do it.”

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However, he added that when sourcing from unorganized players (like small local shops), the customer experience tends to suffer because real-time inventory is often unreliable—leading to inefficiencies and poor consumer satisfaction.

Kumar added that while most consumers are initially price-sensitive—regardless of income—they tend to become more convenience-focused over time. This evolution reflects how familiarity with services like quick commerce gradually shifts priorities from saving money to saving time.