Quick commerce in tier-II cities: Is it finally viable?

Why was q-commerce limited to metros?

Quick commerce, or 10-minute delivery, has so far been largely limited to metros and big cities as the model relies on dense demand and high order volumes to be scalable. It also needs efficient infrastructure and dark stores close to high-demand areas across cities. Urban consumers also tend to have higher purchasing power and greater willingness to pay for convenience through delivery and platform fees that these companies charge. This combination creates a high-frequency, high-margin environment that has helped offset the model’s steep operational costs—conditions that have so far been largely absent in tier-II cities.

Are things changing in small cities?

A report by brokerage firm Emkay suggests tier-II cities like the wider product selection offered by these platforms. While local grocers typically stock around 1,000 items, quick-commerce players offer up to 8,000, said the report. It noted that unit economics, which has been a major point of contention, also look favourable in these cities. Although order volumes are less, the model benefits from lower operating costs, like rent and wages. As a result, the breakeven point—the stage at which a store’s revenue covers its costs—comes down to 800 orders per store in tier-II cities, compared with 1,300 in tier-1 markets.

Where is quick commerce active now?

All q-comm firms are rapidly ramping up expansion in tier-II cities. Swiggy is now present in about 100 cities, including tier-II and III cities, and Blinkit covers over 40 tier-II cities. New cities include Thrissur, Mangaluru, Kanpur, Udaipur, Warangal, Salem, Amritsar, Bhopal, Varanasi, Ludhiana, Kochi, Bhatinda, Haridwar, Vijayawada, Jaipur, Chandigarh and Patna.

What could be the challenges?

Logistics costs tend to be higher in tier-II cities, according to the report. Another challenge is the physical infrastructure, which can create problems for a tight 10-minute delivery. In many of these cities, addresses are not accurately mapped online. Additionally, average order values in tier-II markets are likely to be lower, which can strain margins. The availability of trained delivery personnel and on-ground operational staff is also limited compared with metro cities, posing another challenge.

What does it spell for the future of q-comm?

Swiggy Instamart CEO Amitesh Jha said one in four new users in the first three months of 2025 came from tier-II and III cities. In tier-II, a behavioural shift suggests quick commerce is moving from being a premium to a mainstream offering. While there are positive signs as far as demand and unit economics in India’s smaller towns are concerned, if these firms manage to crack tier-II cities by optimizing logistics and pricing while maintaining service quality, it would expand the total addressable market significantly.