Delivery apps are reshaping life in India’s megacities

It’s also not clear what problem they’re solving, Singhal says, as most kiranas already take orders via WhatsApp and deliver to the customer. The only explanation, he says, is a global glut of capital seeking investment opportunities in an era of low interest rates. “For me, this excitement comes from this rampant money pressure, which is forcing these entrepreneurs to defy economic sense,” he says.

There are few signs that the money tap is closing anytime soon, says Anand Ramanathan, partner at Deloitte India. Investors have been throwing money at Indian startups for at least a decade, trying to gain a foothold in a country whose total consumer markets could be worth $6 trillion by 2030, according to the World Economic Forum. “Do these models make money? Is it sustainable? They’re not even close,” he says. “It’s all a customer acquisition game.”

India has traits that may make it better suited for rapid trade than western countries. Indians are more likely to buy groceries than shoppers in the developed world, Zepto’s Palicha says, and the busy cities make it possible to reach a large number of customers from a single dark store. “This model thrives on density,” he says.

There are indications that the kiranas are beginning to feel the pinch in parts of India’s largest cities. In a residential area on the outskirts of HSR Layout – an up-and-coming suburb in southern Bangalore that has grown into a major start-up hub – retailers were unanimous that online shopping was hurting their bottom line. Ashraf Puncheehar says sales at his store have fallen 20% in the past six months. “Day after day, new companies come online,” he says. “You can’t compete with them.”

Even if kiranas are unlikely to become widespread in the near term, local austerity measures are a possibility. That could lead to a process of what’s known as “infrastructural exclusion,” said Aaron Shapiro, an anthropologist at the University of North Carolina at Chapel Hill. In the West, the shift from convenience stores to larger supermarkets has seen businesses move away from what they viewed as “unviable markets” in poor areas, leading to “food deserts” where residents have limited access to healthy, affordable groceries. In India, the phenomenon could take on a unique flavor. Mohammed Ryaz, a regular at a kirana in Chamrajpet, says the store served as a lifeline for less tech-savvy customers during the lockdown. “These are not well-trained people – they don’t know how to place an order [online],” he says.

Another concern is the impact on deliverers. More than 80% of India’s economy is informal, meaning that workers do not have an official contract of employment and are not protected by labor laws. So for many Indians, the performance of gigs does not differ substantially from their alternatives. But the unpredictability of wages resulting from sporadic work and reward-based earnings still bothers many gig workers, said Aditi Surie, a sociologist with the Indian Institute for Human Settlements (IIHS). “It makes people feel an inner sense of insecurity,” she says. “You have no way of really calculating what will happen to your pay next month.”

A Dunzo delivery man, who declined to be named, said he doesn’t mind the work and regularly works 12-hour shifts. But it won’t be worth his time until he hits an incentive target of 21 orders per day, which increases his pay by nearly 50%. “It’s a shame if I don’t get any incentives,” he says. “All my efforts have been in vain.” He usually achieves the goal eight to 10 days a month.

A helping hand

Why, if India already has a hyper-local retail network perfectly tailored to the needs of each community, should someone spend money building a new network? A large number of ‘kirana tech’ startups have decided that this is not necessary. Instead, they’re building tools to help the stores compete with the giants of modern retail. “We see the network of kirana stores in this country as a national infrastructure similar to probably the power grids or the railways,” said Prem Kumar, CEO of digital technology company Snapbizz.