Fast commerce firms brace for rising dark store employee turnover amid growing competition

Zomato plans to double the number of Blinkit’s dark stores from 1,007 to 2,000 by the end of the year, while Swiggy Instamart aims to increase its number to over 1,046 by March 2025 from 523 in March 2024. Zepto aims to increase the number of dark stores to 1,200 by March 2025, up from the current number of 700-750 in December, Mint earlier reported.

“As fast commerce companies scramble to keep up with increasing competition, attrition rates for warehouse workers and delivery partners will increase. We may also see platforms increase wages and incentives to keep workers on the job longer. Stay happy,” said Madhav Krishna, founder and CEO of Vahan.ai, a Y Combinator-backed blue-collar recruiting platform.

Frontline workers, including store associates and delivery partners, are critical to grocery and food delivery operations because the business model depends on speed and employee convenience. To support this growth, Zepto raised over $1.3 billion last year, Zomato $8,500 crore for its fast commerce arm Blinkit.

Incentives

According to Vahan.ai’s Krishna, dark store workers earn $15,000-18,000 per month, and the income increases by 5% every time you change jobs. Additional incentives include $2,500-3,000 for meeting monthly working day targets and performance incentives $3,000 to achieve 97-98% accuracy. All in all, this adds up to potential $He said he received $6,000 in additional income on top of his regular salary.

Fast commerce companies Swiggy and Zepto did not respond to Mint’s queries. A Zomato spokesperson said it has created flexibility for delivery partners in terms of login timing and duration, creating an opportunity for them to earn as much as possible $The average is 28,000 per month. It did not disclose specific details about the dark store’s employees.

Teamlease data shows that Kuaishangcang’s monthly employee turnover rate is 12-15%, while the employee turnover rate in the entire e-commerce and logistics industry is 8-10%, and some older and more stable companies are 6%. Generally speaking, for dark store employees, their average tenure with the company is 7-8 months, after which they receive a retention bonus, although many platforms offer one-year contracts. This essentially means that Zepto, Blinkit or Instamart’s entire dark store workforce could change from year to year, increasing recruitment costs for these deep-pocketed players.

Swiggy’s voluntary attrition rate will be around 34.5% in 2024, including frontline and call center employees. “Voluntary attrition rates remain high, primarily due to the loss of frontline and call center workforce, which are prone to high turnover rates,” the company’s prospectus said.

Dark store revolving door

There are at least 8,000 to 10,000 vacancies for such positions every month in express commercial warehouses and dark stores in major Indian metros where these platforms operate. “If you want a dark store job, I have four job opportunities for you today,” said Teamlease’s Narayanan.

“Typically, within half a kilometer of the same location, you’ll find five or six dark stores from different companies. It’s the same piece. Once you experience one dark store, you can easily move on to another. .If someone pays $500 more and they’d be jumping, because why not? “

HSBC said in a report on Wednesday that the total number of rapid commercial dark stores could reach 5,000-5,500 by the end of fiscal 2026 or earlier, with throughput at optimal levels reaching nearly $35-40 billion.

Consumption also depends on local supply and demand. Areas like south Mumbai and Koramangala in Bengaluru have higher attrition rates as demand is high in these places but relatively few workers are available. In comparison, areas like Andheri in Mumbai have a balanced supply and demand, while areas like Thane have a surplus of labor and relatively low demand.

It is true that the turnover rate of couriers is also high, as high as 15-20% according to earlier reports. A Zomato spokesperson added that nearly 1.5 million delivery partners are working with Zomato in 2024 alone, and most of them prefer part-time jobs to earn a second income.

Nature of work

Teamlease’s Narayanan explains that due to the unpredictability of workloads, dark store staff turnover is high and orders can change dramatically, sometimes doubling or tripling in a day.

Sudden needs for additional staff, particularly during the night shift, often require staff to be reassigned to different roles within the store as needed. Employees who initially look forward to receiving packaging orders often find themselves faced with the grunt work of loading and unloading goods. “You end up rotating these people around in the dark store,” he said, adding that a lack of character stability was a major reason for dissatisfaction. Employees processed up to 150 orders a day in a fast-paced, repetitive manner, a high-pressure environment that fueled employee dissatisfaction.

Additionally, unlike what is the case with delivery partners, dark store workers receive a fixed salary that does not vary based on the number of orders processed. “So the motivation is mainly around compensation, so there’s less platform loyalty,” Vahan.ai’s Krishna said.