Government Directs Quick Commerce Companies To Halt 10-Minute Guarantee
Shares of quick commerce companies Eternal and Swiggy were in focus on Tuesday following news of the government directing these companies to halt the 10-minute guarantee on their platforms. The move has sparked a debate among investors and traders, with many wondering how it will impact the stock prices of these companies.
However, according to a note by Elara Capital, the removal of the 10-minute benchmark from quick-commerce apps is net neutral to positive for Swiggy and Eternal. The brokerage firm believes that metro demand for quick-commerce has already been entrenched, thus ruling out any significant impact of the move.
What Does This Mean For Investors?
For investors, this move could be seen as a positive development. With the removal of the 10-minute guarantee, companies like Swiggy and Eternal may be able to reduce their operational costs and improve their profit margins. This could lead to an increase in their stock prices, making them a more attractive investment option. To learn more about stock market investing, check out our guide.
In addition, the move could also lead to an improvement in the overall customer experience. With the pressure of delivering products within 10 minutes removed, companies may be able to focus more on providing high-quality products and services, leading to increased customer satisfaction and loyalty. For more information on customer experience management, visit our website.
Elara Capital’s Note
Elara Capital believes that the ten-minute delivery threshold was largely optics-driven rather than a fundamental business guarantee. Actual delivery timelines shown on these apps were largely dynamic, quite unlike the 30-minute pizza delivery that was guaranteed by Domino’s.
Therefore, Elara Capital believes that the removal of the 10-minute benchmark won’t be business-altering for either of the two counters. The firm further points out that the move won’t impact volumes or growth either.
Eternal’s Response
Eternal itself clarified late Tuesday that there is no change in the business model of quick commerce business Blinkit after reports earlier in the day said it removed the 10-minute delivery promise from its branding to comply with government directions.
This comes at a time when the quick-commerce space has been rocked by protests and concerns around workers’ well-being and earnings, leading to widespread protests and media chatter. To learn more about quick commerce business models, check out our article.
Labour Ministry’s Proposal
Earlier this month, the Labour Ministry had proposed a 90-day annual work threshold as the mandatory eligibility criteria for gig and platform workers to access social security under new draft rules on the Social Security Code 2020, published on Dec 31.
Union Labour Minister Mansukh Mandaviya met representatives of these platforms and told them to prioritise the safety of delivery partners instead of guaranteeing 10-minute deliveries. For more information on social security code 2020, visit our website.
Conclusion
In conclusion, the removal of the 10-minute guarantee from quick commerce platforms may not have a significant impact on the stock prices of companies like Swiggy and Eternal. However, it could lead to an improvement in the overall customer experience and a reduction in operational costs for these companies.
As an investor, it’s essential to stay informed about the latest developments in the stock market and to do your own research before making any investment decisions. To learn more about stock market analysis, check out our guide.
