Franchise model to drive quick-commerce growth in smaller cities

India's quick-commerce sector is entering a more disciplined phase of growth, with franchise-led models expected to support expansion into Tier-II and Tier-III cities by 2030, according to a report by CBRE.

The report noted that major quick-commerce platforms are moving closer to contribution-margin breakeven, reflecting a growing focus on sustainable growth and cost efficiency.
Currently, nearly “65-70% of all dark stores are currently located in the top eight metros, with operators now deepening presence in markets such as Jaipur, Lucknow, Surat, Coimbatore and Nagpur.” Rising internet adoption is also supporting growth in order volumes in these cities.

According to the report, tier-II and tier-III cities are attracting quick-commerce operators due to “cost-effective real estate” and “lower” overall overhead costs.
It further stated that “The expansion of q-commerce is anticipated to serve as a significant driver of in-city warehousing demand during the latter half of the decade,” highlighting the sector's growing role in driving demand for urban warehousing.

As companies shift their focus from rapid expansion to cost-efficient operations, they are expected to increasingly adopt franchise-led, outsourced and shared infrastructure models instead of relying solely on company-owned networks.
Within this trend, the report said, “Franchise-led dark-store models may emerge as a route to rapid penetration into tier-II and tier-III markets while reducing network expansion costs.”
Such partnerships could allow companies to focus on customer acquisition, technology and inventory management while relying on logistics partners for operational support.

The report also pointed to the potential use of neighbourhood grocery stores to support quick-commerce deliveries. “Operators are expected to use existing neighbourhood kirana stores as microwarehouses, fulfilling orders through their own apps and delivery fleets,” it said.
Advertising is also emerging as a high-margin revenue stream for the sector, with brands and direct-to-consumer (D2C) companies paying for sponsored placements and product sampling through quick-commerce platforms.

Summing up the outlook, the report said, “After a phase of capital-heavy expansion, India’s q-commerce sector is entering a more disciplined growth cycle, backed by category diversification, non-metro penetration, and emerging high-margin revenue streams,” it said. - ANI