Franchise Models to Fuel Quick-Commerce Leap into India's Smaller Cities
CBRE report reveals how franchise models and shared infrastructure will drive India's quick-commerce growth into smaller cities by 2030.
India's quick-commerce sector is shifting gears. After a period of aggressive, capital-heavy growth, the industry is now entering a more disciplined phase. According to a recent report by CBRE, the next frontier for rapid deliveries will be tier-II and tier-III cities, with franchise-led models expected to spearhead this expansion by 2030.
Moving Beyond the Metros
Currently, the quick-commerce landscape is heavily concentrated in major urban hubs, with approximately 65-70 per cent of all dark stores situated in the top eight metropolitan cities. However, the tide is turning as operators begin to deepen their footprint in cities like Nagpur, Coimbatore, Surat, Lucknow, and Jaipur.
This shift is being powered by two primary factors: the rising adoption of the internet among residents of smaller cities and the availability of more cost-effective real estate. Lower overhead costs in these regions make them an attractive destination for operators looking to scale without the exorbitant expenses associated with tier-I cities.
The Strategy: Franchises and Shared Spaces
To ensure sustainable growth, companies are moving away from relying solely on company-owned networks. Instead, the report suggests a pivot toward cost-efficient operations through several innovative models:
- Franchise-Led Dark Stores: This model is seen as a primary route for rapid penetration into smaller markets, allowing companies to expand their reach while significantly reducing the costs of network expansion.
- Shared Infrastructure: Multiple brands and quick-commerce operators may begin using common logistics hubs and fulfilment facilities. This approach aims to improve space utilisation and lower operating expenses.
- Third-Party Logistics (3PL): There is an increasing trend toward outsourcing the "heavy lifting"—such as warehousing, dark-store management, and last-mile delivery—to specialised 3PL providers. This allows platforms to focus their energy on technology, inventory management, and acquiring new customers.
The Role of the Local Kirana
In a nod to traditional Indian retail, the report highlights the potential of neighbourhood grocery stores. Quick-commerce operators are expected to leverage existing kirana stores as microwarehouses, using their own apps and delivery fleets to fulfil orders from these local hubs.
The Path to Profitability
The industry is not just expanding its reach but also refining its finances. Major platforms are now moving closer to reaching a contribution-margin breakeven, signaling a transition toward long-term sustainability.
Beyond delivery fees, advertising is emerging as a lucrative, high-margin revenue stream. Direct-to-consumer (D2C) brands and larger companies are increasingly paying for product sampling and sponsored placements on these platforms to gain visibility.
"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," the CBRE report concludes.
As the decade progresses, this expansion is anticipated to become a major driver for in-city warehousing demand, fundamentally reshaping how goods move within India's urban and semi-urban landscapes.