Amazon Quick Commerce Expansion: Business Case

Amazon’s rapid expansion into India’s quick-commerce sector aims to capitalize on its
unparalleled ecosystem advantages while meeting intense competitive pressures in urban
markets. Beginning with a focused rollout in Tier 1 metros such as Delhi-NCR and
Bengaluru—where Prime member density exceeds four million and digital shopper
penetration surpasses 40 percent [see Table 1 in Appendix]—Amazon will deploy over 550
dark stores and 36 light stores during the first twelve months to secure customer loyalty
before competitors can erode market share. This foundation phase leverages Amazon
Fresh’s existing fulfillment network to accelerate time-to-market and contain setup costs by
up to 25 percent [see Table 4], ensuring that initial investments of ₹1,385 crore yield a
projected ₹1,650 crore in Year 1 revenue [refer Chart 5].

In the second year, the strategy pivots toward cost-efficient Tier 2 expansion, deploying an
additional 250 dark stores and 40 light stores in markets like Jaipur, Lucknow, and
Chandigarh by utilizing the “I Have Space” initiative to convert 2,500 local partner locations
into micro-fulfillment points at 60 percent lower capital expenditure [see Table 2]. By
harnessing AWS-powered demand forecasting and cross-platform synergies with
Amazon.in and Prime Video, Amazon projects a two-year revenue of ₹5,900 crore against
total investment of ₹2,365 crore, achieving break-even in month 15 and an ROI of 149
percent [see Chart 5].

Amazon’s ecosystem integration drives a Customer Acquisition Cost of ₹200–250—45

percent lower than pure-play rivals—through natural conversion of 100 million Prime
members and seamless omnichannel promotions [see Chart 8]. Operational efficiencies
emerge from route optimization and inventory management that reduce delivery costs by
35 percent and inventory waste by 30 percent, positioning Amazon’s Year 2 revenue per
store at ₹4.26 crore versus the industry average of ₹1.8 crore [refer Chart 4]. The balanced
approach between rapid market share capture in densely populated metros and disciplined,
asset-light growth in Tier 2 cities addresses the dual imperatives of customer acquisition
and sustainable unit economics.

The financial model underscores Amazon’s decisive advantage: a strong Prime base, AWS-
driven operational excellence, and robust financial resources enable it to outmaneuver
competitors such as Blinkit, Zepto, Swiggy Instamart, and BigBasket. By delivering reliable
15-minute service backed by 30,000 SKU selection and leveraging existing infrastructure,
Amazon is poised to secure a 22 percent quick-commerce market share in India by the end
of Year 2 [see Chart 3], establishing itself as a dominant, profitable leader in this rapidly
evolving retail segment.
Appendix: Tables
City City Population Digital Prime E- Digital
Tier (M) Shoppers Members commerce Adoption
(M) (M or Penetration Score
’000) (%)

Tier-1 Delhi-NCR 32.9 12.5 4.2M 40 —

Tier-1 Mumbai 20.4 8.9 3.1M 44 —

Tier-1 Bengaluru 13.6 6.8 2.8M 50 —

Tier-1 Hyderabad 10.3 4.2 1.8M 41 —

Tier-1 Chennai 11.0 4.6 1.9M 42 —

Tier-1 Pune 7.2 3.1 1.2M 39 —

Tier-1 Kolkata 14.8 4.8 1.6M 33 —

Tier-1 Ahmedabad 8.4 3.2 1.1M 35 —

Tier-2 Jaipur 3.9 — 180K 32 8.2

Tier-2 Lucknow 3.4 — 150K 28 7.8

Tier-2 Chandigarh 1.2 — 95K 38 8.9

Tier-2 Coimbatore 2.2 — 125K 35 8.1

Tier-2 Indore 3.3 — 140K 26 7.6

Tier-2 Kochi 2.1 — 110K 34 8.4

Tier-2 Vadodara 2.5 — 135K 30 8.0

Tier-2 Surat 6.5 — 220K 29 7.9

Tier-2 Bhubaneswa 1.2 — 75K 25 7.5

r

Tier-2 Mysuru 1.0 — 65K 33 8.2

Aspect Year 1 Pilot Year 2 Scale-up Financial Impact

Partner Network 500 partners (Jaipur, 2,500+ partners 60–70% lower

Chandigarh, Kochi) (10 Tier-2 cities) setup costs vs
standalone model

Setup Cost per Store ₹3.8 M → ₹2.85 M ₹3.8 M → ₹2.85 M ₹2,950 Cr annual
 (25% reduction) savings at scale

SKU Range 300–500 fast-moving 800–1,200 SKUs 30% lower

items inventory holding
costs

Revenue Sharing 15% to partners Tiered 12–18% Asset-light, shared-

risk model

Technology Basic inventory AWS real-time 40% IT cost

Integration tracking analytics reduction

Geographic 3 Tier-2 cities 10 Tier-2 cities Rapid 300+ city

Coverage penetration

Cost Component Tier-1 Metro Cost Tier-2 Cost Amazon Advantage

Reduction

Dark Store Lease 275,000 180,000 Metro 15%; Tier-2

(₹/store/month) 50%

Light Store Lease 35,000 25,000 20%

(₹/store/month)

Dark Store Setup ₹5.5 M ₹3.8 M 25%

(one-time)

Light Store Setup ₹0.8 M ₹0.6 M 25%

(one-time)

Technology 180,000 120,000 40%

Integration (per
store)

Initial Inventory ₹9.5 M 6.5 M 30%

(per dark store)

Initial Inventory ₹2.2 M 1.8 M 30%

(per light store)

Operations Staff 380,000 280,000 20%

(per dark
store/month)

Delivery Staff (per 420,000 320,000 25%

dark store/month)

Marketing CAC (₹ 240 180 60%

per acquired
customer)

Delivery Cost (₹ per 28 24 35%

order)

Category Year 1 Cost (₹ Cr) Year 2 Cost (₹ Cr)

Lease & Rental 53.6 156.4

Setup & Equipment 128.6 112.4

Technology & Integration 35.0 28.0

Appendix: Charts