The Shelf Has Become an Auction

Open an app for quick commerce, scroll down to toothpaste. Several brands show up right away. One appears at the top of the search result. Another is tucked into a vibrant banner. A third comes wrapped in a bundle with a discount offer. Further down the page, there are tens of other options. It feels like a shelf in a supermarket miniaturized onto a smartphone screen. There is one crucial difference.

The shelf in the physical store remains the same for every customer. The one on a phone screen can be reordered. Sometimes based on availability, previous purchases or an algorithm, more often because a specific brand has paid extra to get there. The quick commerce app is auctioning off slots in the customer’s basket.

The Expensive Promise of Ten Minutes

Quick commerce companies in India have created something remarkable. Inside their dark stores, products are placed within easy reach of pickers who assemble the order. Delivery partners stand by ready to move the goods. In fact, the inventory has to be placed close enough to meet the expectations of the customer waiting at their home for ten minutes.

This business model has seen explosive growth. Quick commerce fulfilled over two-thirds of India’s e-grocery sales in 2024, when the market was worth $6–7 billion. Bain and Flipkart forecasted that they would grow at a rate of over 40% year-on-year till 2030, and the valuation would hit $50 billion (Reuters). But this does not mean that the last mile is free.

Each order comes with picking, packing, warehousing, technology, and discount costs. The delivery charge of ₹30 can irritate the customer. The markup on the product can make comparisons easy. Increasing either will damage the perceived value of speed. A far more profitable source of revenue is advertisements.

Advertising at the Moment of Hunger

A traditional form of advertisement aims to capture the customer’s imagination long enough for them to remember the seller at the point of purchase. A company selling biscuits places an ad on TV, hoping that some viewers will remember it when they go to the supermarket.

Quick commerce advertising narrows the distance between the two dramatically. The customer is already looking for biscuits because they want to buy them. The brand merely has to appear before a similar product to capture that intent.

Companies can buy sponsored search results, category headers, related products, push notifications, and home-screen placements. Pitch Madison estimated that quick commerce ads in India would grow from ₹300 crore in 2023 to ₹4,000 crore in 2025 and reach ₹6,000 crore in 2026. (Financial Express)

This is known as retail media; the channel sells advertising space in its own media to customers. It is a valuable asset because the company knows precisely what has happened after the ad was displayed. A television channel can only guess at how many viewers saw it and how many of them went and bought the product.

A quick commerce company, however, can say with a reasonable degree of certainty that this percentage of viewers clicked on the ad, this many added the product to their basket, and this many completed the order 8 seconds later.

Visibility Equals Market Share

A supermarket has a few premium slots on its shelves and at its registers. One or two eye-level shelves, one or two registers, and a couple of aisle endcaps are all the real estate a company can buy. An app has dozens of places where ads and banners can appear. It can sell the number one spot on search results for shampoo and a category header for personal care, and notify the user of an ad at 7 am and a recommended product at 7 pm. This transforms the way companies compete.

A small regional brand can buy the first result for a search in a local language and appear before national competitors. A big company can buy enough space to make it impossible to miss, and smaller players can compete by appearing in more relevant places. Instead of focusing on broad fame, advertisers can target customers at the exact moment of choice. The feedback loop can be virtuous.

More visibility leads to more sales which leads to higher rankings which lead to more visibility. The company appears popular because it is visible, and it is visible because it is popular. It may well be that the customer has not decided what to buy, but the options have been narrowed down to one.

The Platform Knows More Than the Brand

Quick commerce companies can do something else remarkable. The algorithms know what customers are likely to buy based on the time of day or temperature. They can identify patterns invisible to manufacturers.

For instance, a customer may purchase protein bars every weekday at 10 pm, switch toothpaste brands when a 15% discount appears, and always buy chilled drinks when the weather is hot. The company can use this data to target individual customers better.

It may also have demographic or geographic insights. It knows what kind of ad works best at different times of the day or what customers in a particular neighbourhood may be interested in. This helps it provide a more personalized experience.

Essentially, it has first-hand knowledge of the market that no manufacturer or traditional retailer has. It has replaced the middlemen and has cut out entire supply chains, putting itself in a uniquely dominant position.

Convenience has a Second Customer

The customer placing the order appears to be the sole buyer in a quick commerce transaction. In reality, another party is purchasing visibility. This does not necessarily make the advertiser’s money wasted. Quick commerce companies may provide relevant recommendations that make the customer’s life easier. The revenue from ads may also reduce the delivery charges the consumer has to pay.

The danger occurs when the recommended item is indistinguishable from an organic search result. The customer is given a choice between two items, one of which has paid to be there. The word ‘sponsored’ may be written in tiny font at the bottom, but the prominence ensures that most will click on the first result.

Quick commerce promised to make choosing what to eat easier. It is now auctioning every visible slot to the highest bidder. Every second the customer spends deciding is a moment the company can use to sell something else.