The Dark Secret of Rapid Business Gains.
Referene to News 18. One of the recent posts on Reddit has shown a harsh reality concerning the idea of launching a small snack brand in quick commerce lists such as Instamart and Zepto. Initially, the start-up was promising, the sales were increasing day by day, the brand became known to many people and all things appeared to be going well. But in half a year the reality came to a crash. The profit margins were agonizingly low, although the sales were high.
The author of the post was the user who posted the post with the title, I watched my friend snack brand destroyed by quick commerce. Here’s what nobody tells you.”
The Numbers Look Good–Until You Do the Math.
The Reddit post states that it was almost 78 more expensive to prepare one snack pack of 99 rupees. After factoring in commissions, packaging, storage, and promotional costs, we earned only ₹15 profit per unit. The company even lost 10 per pack in certain instances.
Fast commerce sites charged approximately 28 percent commission on each sale. The cost of packaging increased 3 times because of the moisture and breakage protection requirement.On top of that, nearly 7.5 lakh units just sat unsold in dark stores and went to waste. We were also spending around ₹35,000 every month just to stay visible on the app. And to make things even tougher, our margins kept shrinking because we had to keep offering discounts to compete with the big brands.
Although there is an increase in sales, the bank account of the founder continued to reduce.
Fast Business: Sales in the Vein of Marketing.
The Redditor has summed up the ugly reality in a nutshell: to small businesses, fast commerce is not a sales channel, it is a marketing expense masquerad. The platform provides exposure to the brands, but at it is not sustainable. Instead, small brands, he explained, would be forced to acquire customers at an insane price which usually causes burnout and financial losses.
This is what has come to be a warning to aspiring entrepreneurs who would have ventured into the quick commerce system.
The major lessons: What the Small Brands must learn.
The post also stipulated some of the useful pieces of information that every entrepreneur must remember before immersing into such platforms as Zepto or Instamart:
Start small – Start with a city and platform then expand.
Work on high margin products – Dump the money drainers.
Establish a definite loss target – First six months should be used as a brand-building period rather than a profit making period.
Develop a D2C channel Direct-to-consumer channels may have more control and greater profits.
Negotiate it all – The inventory space to advertising expenses, all deals have an impact on your bottom line.
These lessons indicate a truth that most new-age brands fail to consider in their quest to be seen and grow on the online platforms.
Professional Testimonies and Internet Responses.
The Reddit post already attracted thousands of replies, with many saying that they have had this experience with quick commerce. Some of the users indicated that offline retail is also characterized by the same difficulties, namely the listing of stores, late payments, and high margins imposed by distributors.
A user has said that, offline retailers charge over 50 percent in margins, and thus quick commerce continues to appear more affordable. But cheap, the profits run away like rabbits, unless you are on top of costs. Another one stated, “It is not that new, retail has always been and will always be visible first, profit later.
Other industry analysts also commented that quick commerce visibility may still work to build a brand, although they must use it as a component of their marketing strategy, not as a sales vehicle.
The Unseen Price of Visibility.
Fast trade sites have the potential to reach many millions of customers instantly, yet such exposure may be costly with hidden costs. Storage charges, delivery commissions and ongoing promotional expenses soon run high. In the small startups with limited capital such costs can quietly eat up resources to the extent of forcing businesses out of operation.
As one of the commenters succinctly put it down: Quick commerce is sales growth but a potentially draining force to a small brand. Gaining visibility does not mean gaining profit.
Final Thoughts: Run the Numbers Before You Launch
It may seem to be an exciting task to launch your brand on quick commerce platforms, yet the entrepreneurs need to consider all the numbers before leaping. Commissions, discounts, lock-ins of inventories, and advertisement fees: all the unseen expenses will accumulate in an unexpectedly short time.
Founders must consider unit economics, profit margins, and D2C scalability before getting in the market. The awareness can be created in quick commerce, yet unless there is good financial planning to it, it may only turn out to be an expensive marketing exercise in the form of growth.
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