Summary 1. Quick Commerce Reality Check: Dark store-led quick commerce businesses are experiencing rapid growth in sales, but their bottom lines are deteriorating due to escalating costs associated with their ultra-fast delivery promises. 2. ONDC-Powered Alternative: Kiko Live strategically onboards small neighborhood retailers onto the ONDC platform, creating a formidable challenge to quick commerce giants that are struggling with sustainability and failing to consistently meet their delivery time commitments. 3. Dual-Interface Advantage: The Kiko Live app's distinctive two-way operational model, serving both buyers and sellers through dedicated interfaces, provides it with a significant competitive edge over similar platforms in the market.
The Fading Glow of Dark Stores in India’s Quick Commerce Landscape
The race for lightning-fast deliveries has transformed India’s quick commerce sector into a high-stakes battleground. While Blinkit, Zepto, and Swiggy Instamart collectively surpassed $1 billion in revenue during FY24, their bottom lines tell a different story. These quick commerce giants are grappling with widening losses as their ambitious business models face mounting challenges.
Financial reports paint a concerning picture: Blinkit’s adjusted EBITDA loss expanded by 15.7% in Q3 FY25 compared to the previous year, dragging parent company Zomato’s net profit down by 57.2% to INR 59 crore. Similarly, Swiggy’s consolidated net loss deepened by 39.1% to INR 799 crore, with INR 527.68 crore attributed to Instamart. While Zepto hasn’t disclosed its financial statements, CEO Aadit Palicha recently acknowledged on social media that the industry burns approximately INR 5,000 crore quarterly, with Zepto responsible for more than half of this amount.
The slowdown in quick commerce has prompted global brokerage firm BofA Securities to downgrade ratings for both Zomato and Swiggy, citing worries about growth prospects and escalating losses.
This raises critical questions: Is it time for quick commerce platforms to reassess their dark store strategy? Or perhaps, is this an opportunity for small retailers who have weathered the storm of deep-pocketed quick commerce companies to stage a comeback?
A Ray of Hope for Local Retailers
Spotting an opportunity in the changing dynamics of quick commerce dark stores, Mumbai-based entrepreneurs Alok and Neeta Chawla, along with their friend Virendra Kumar Chauhan, launched Kiko Live in July 2020. Their mission was clear – help neighborhood retailers reclaim their loyal customer base.
Kiko Live focuses on digitizing small businesses including kiranas, pharmacies, stationery shops, and even paan-wallahs. The platform enables these retailers to establish online storefronts within 24 hours, guiding them through a digital transformation that enhances both their visibility and revenue streams. As a seller network partner on the Open Network for Digital Commerce (ONDC), Kiko Live connects local retailers with buyer applications such as Paytm, PhonePe, and MyStore, significantly boosting their online presence. Additionally, the platform offers automated WhatsApp ordering capabilities and facilitates connections between D2C brands and B2B distributors with local retailers for more efficient deliveries.
“Home deliveries through WhatsApp or phone calls typically account for 10-15% of a neighborhood retailer’s business. This is precisely the segment that has been most affected by dark store-driven quick commerce,” explained Alok Chawla, an experienced entrepreneur who believes the dark store model of quick commerce cannot sustain in the long run.
The Genesis of a Lifeline for Struggling Retailers
With over 16 years of experience in payments, e-commerce, and retail, Alok Chawla’s entrepreneurial journey includes co-founding ZiPCASH, a prepaid wallet company later acquired by Ola and rebranded as Ola Money, in 2006. Three years later, he established TRISTAR International Trading Operations, which specialized in foreign trade and retail distribution.
In 2012, Alok launched Gizmobaba, an electronics brand that pioneered influencer-led marketing by collaborating with more than 700 TikTok influencers. The business thrived until it was impacted by the TikTok ban and COVID-19 lockdowns.
Confined at home during the pandemic, Alok witnessed the struggles of neighborhood retailers firsthand, which prompted him to search for solutions to help them survive.
“While digital ordering platforms like Zomato and Swiggy were available for food, grocery retail remained largely offline. Small retailers were facing store closures and lacked digital presence, resulting in significant business losses,” Alok recalled.
His observations resonated with his wife Neeta and friend Virendra, leading to months of collaborative brainstorming. “We wondered if we could digitize these small businesses and bring them online. This concept became the foundation for Kiko. We registered the brand in 2020 but became fully operational in 2021 after securing seed funding.”
The startup has successfully raised $4.08 million from investors including Venture Catalysts, 9 Unicorns, Powerhouse Ventures, and SOSV.
Exposing the Dark Store Fallacies
Fallacy 1: The Distance Advantage Myth
Quick commerce platforms establish dark stores as retail outlets optimized for fulfilling online orders and ensuring rapid delivery. These micro-warehouses or fulfillment centers are designed exclusively for online order processing and are typically inaccessible to walk-in customers, forming a crucial component of the quick commerce business model.
The founders of Kiko identified a significant advantage for neighborhood retailers – proximity. “Despite promising 10-minute deliveries, quick commerce platforms often take 20-25 minutes in reality, and at a high cost. Several platforms have introduced delivery fees ranging from INR 10 to INR 60, depending on factors like distance and order value. If these charges reach INR 75 per delivery, 90% of customers would likely choose a slower but more economical alternative,” Alok explained.
Kiko integrated hyperlocal delivery options into its seller panel, with logistics powered by ONDC. This allows sellers to request a delivery rider with just one click once an order is packed. Alternatively, sellers can opt for self-delivery, which is common for very short-distance orders (typically under 1 km), while network logistics handle longer-distance deliveries.
Fallacy 2: Building a More Resilient Retail Network
Quick commerce platforms that flourished during lockdowns created significant challenges for less organized and digitally inexperienced small retailers. Consumers increasingly preferred structured catalogs with instant checkout options, while struggling retailers needed better visibility beyond their existing customer base.
Kiko emerged at this critical juncture. To address this shift, the startup evolved from a live ordering model to a catalog-driven system and integrated with ONDC, revolutionizing the digital payments landscape. This enabled retailers to digitally list their products, reach a wider audience, and expand their business across multiple platforms. “Kiko drives traffic directly to retailers, rather than expecting them to promote individual websites,” Alok noted.
Instead of traditional product catalogs – either printed or verbal – Kiko Live allows users to place orders through in-app calls with retailers, closely mimicking the familiar experience of shopping in a physical store.
Kiko implemented artificial intelligence to detect product names mentioned during conversations, create shopping carts, and generate payment links. Retailers can also showcase products via video, helping customers make informed decisions without visiting the store physically.
The buyer-seller app operates on a retailer-held inventory model, ensuring small businesses maintain control over their stock. It helps retailers manage their online inventory by connecting it to their physical inventory if they use a point-of-sale (POS) system. Sellers without a POS can easily update their inventory using a simple Excel upload, which can be done once or twice daily. Additionally, sellers can use an out-of-stock toggle to manage product availability.
Fallacy 3: Crafting a Distinctive Strategy to Recapture Market Share
Several players in the segment are now pursuing similar strategies. KiranaPro, for instance, is one such platform empowering local kirana stores with AI-driven quick commerce capabilities. While both Kiko Live and KiranaPro leverage ONDC to enable quick commerce for local retailers, they differ significantly in their approaches and execution methods.
The Kiko Live app functions with dual interfaces – one for buyers and another for sellers – directly enabling retailers to list their inventory, manage sales, and fulfill orders. It provides sellers with an integrated inventory system, marketing tools, and operational support, ensuring a smooth transition to online selling. Kiko Live allows buyers to search for products by store, browse seller catalogs, and even paste entire grocery lists for efficient cart building.
KiranaPro, conversely, focuses on connecting consumers with neighborhood businesses through a voice-based AI model. Customers can place orders by speaking into the app, and the AI processes the request to create a shopping cart. The KiranaPro app doesn’t maintain its own seller network; instead, it routes customer orders to sellers from other ONDC-integrated platforms like Kiko Live. Its distinguishing feature is its voice-based AI model, which requires users to dictate their shopping lists rather than manually browsing or selecting products.
Kiko has processed over 650,000 transactions and serves a user base exceeding 500,000, according to its founder. In contrast, KiranaPro remains in its early stages, refining its product and testing within a smaller user group, as evidenced by its approximately 5,000 app downloads to date.
Fallacy 4: Charting the Path Forward and Addressing Challenges
Beyond competition from newer market entrants, Kiko’s primary challenge lies in maintaining operational efficiency at the store level.
“Achieving 30-minute deliveries requires each store on the Kiko platform to undergo 4-7 days of intensive training to streamline operations. Retailers must pick, pack, and prepare orders within 5 minutes, as delivery riders typically arrive within 7-8 minutes. Some stores struggle to maintain these processes after our team’s departure, leading to deactivation. High-volume stores have adapted by hiring dedicated staff and establishing pickup counters, similar to restaurant delivery setups,” Alok explained.
To address this challenge, the company plans to invest heavily in training retailers to achieve 30-minute delivery efficiency and ensure smooth execution.
Another significant hurdle for the brand has been building credibility among retailers, many of whom have been hesitant to embrace digital platforms due to past scams and unfulfilled promises. According to Alok, ONDC has substantially resolved this issue: “Before ONDC, we handled around 200-300 orders daily; now we process over 3,000. We aim to reach more than 10,000 orders daily within the next two to three months.”
Unlike the dark store model, which demands substantial upfront investment – approximately INR 200 crore for multiple stores and inventory – ONDC-enabled retail partnerships offer a cost-efficient, scalable solution.
“We charge INR 3,000, which covers onboarding, cataloging, certain marketing activities such as flyer distribution, and hands-on guidance for one week,” Alok stated. Kiko Live also offers a plan with zero joining fee, though with limited support.
Comparative Analysis: Quick Commerce Dark Stores vs. Kiko’s Retailer-Led Model
| Feature | Quick Commerce Dark Stores | Kiko’s Retailer-Led Model |
| Initial Investment | High (INR 200+ Cr for multiple stores) | Low (No upfront inventory costs) |
| Delivery Speed | Promised 10 min, actual 20-25 min | 30-minute delivery window |
| Delivery Cost | INR 10-60 and increasing | Lower, leveraging existing infrastructure |
| Inventory Control | Centralized | Retailer-managed |
| Local Relationships | None | Leverages existing customer relationships |
| Scalability | Capital intensive | Cost-efficient through ONDC |
| Business Model | High burn rate, delayed profitability | Lower operational costs, faster path to profitability |
| Customer Experience | Digital-only | Hybrid (digital + personal interaction) |
Financial Growth and Future Prospects
Joining ONDC has significantly boosted Kiko Live’s revenue from INR 3-4 lakh monthly to INR 10 lakh. The brand’s monthly gross merchandise value (GMV) currently stands at INR 1.5 crore, with ambitious plans to reach INR 5 crore within the next six months, according to Alok.
Building on this success, Kiko plans to expand its presence in key markets, with strategic blueprints already developed for three major cities. The company is also eyeing entry into Tier 2 and Tier 3 cities to tap into untapped markets.
While Kiko Live may not yet match the scale of quick commerce giants in terms of revenue, investor interest in this segment remains robust, signaling a positive market outlook for the brand. Sri Peddu, general partner at Powerhouse Ventures and an investor in Kiko, sees tremendous potential in these seller apps.
In his assessment, dark stores and retailer-led quick commerce models will coexist in the future. “There is a tremendous opportunity in the digital enablement of retail sellers, with the government-run ONDC network serving as a key catalyst in this evolution,” he noted.
As quick commerce giants continue to grapple with mounting losses and operational challenges, Kiko Live’s approach of empowering local retailers with digital tools rather than replacing them offers a sustainable alternative that may well reshape the future of neighborhood commerce in India.
Also read – Swiggy Faces INR 158.25 Crore Tax Demand From Income Tax Department
