Fast & Furious. It is not just a reference to the famous franchise, but a principle the time-scarce millennials today live by. Whether it is content to be streamed, coffee or noodles – everything must be instant, and the sooner it is, the more appreciated it is. The latest to join this trend is Q-commerce, promising to deliver customer delight in 30 minutes or less.
Valued at around USD 20-25 billion in 2021, the quick-commerce industry is expected to grow to USD 72 billion by 2025. A major contributing factor for this is the ongoing pandemic, which has not just fast-tracked digital transformation by decades for businesses, but also altered consumer behavior, a shift that will stay for years to come. Consumers who were earlier willing to step out and visit their neighborhood mom and pop stores or malls now prefer to stay home and be served. Add to this the work-from-home lifestyle for the busy professionals and the concerns of the aging population to step out, the consumers today are willing to pay a higher price for on-demand instant delivery. As shifts like urbanization, rising disposable incomes and single households continue to grow, this number will only multiply.
Beyond US, quick-commerce is a global phenomenon. According to a report, 30 new quick-commerce companies have emerged in ten months in Western Europe alone. Berlin-based Gorillas became the fastest company to achieve unicorn status in Europe – just nine months into launch. In India, while existing delivery startups are overhauling their operations & supply chain to cater to this segment, specialty players are now targeting this segment, with a promise of 10 to 15-minute deliveries. A consumer tweeted that a brand delivered groceries in unbelievable 2.5 minutes – which was then used on its billboard.
The Q-commerce ecosystem consists of:
Third-party delivery platforms: existing delivery platforms who deliver items from neighboring retail outlets, usually just fulfilling delivery or picking the order. From promising one-day delivery, they have now moved to several hours to 30 minutes or less.
Popular retail giants: both offline and online giants have initiated the shift to an omnichannel experience & Q-commerce with drone deliveries, faster processes
Vertically integrated specialists: These companies create neighborhood warehouses, called dark stores and delivering often-purchased items to shoppers, typically within 10–30 minutes. In India, many of them target the ‘top-up and unplanned purchases’ of Gen-Z and millennials, by solving inefficiencies of the familiar neighborhood store.
With the threat of further lockdowns looming over the consumers, convenience and safety will be paramount, leading to a large influx of consumers ordering online. It will also subsequently lead to more players & investors entering the ecosystem. However, players will be under immense pressure to acquire customers as fast as possible and with low profitability margins, especially on grocery items; this will be a challenging exercise. The key will be to find a differentiation factor outside of similar items, offers and prices for the brand.
Here are some trends apparent in Q-commerce in 2022:
Diversification of inventory: While grocery items today form most of the stock of a Q-commerce setup, the premise of <60 mins delivery can be extended to other categories like medicines, books, food items and even electronics & accessories. With the right infrastructure & logistics, this is a plausible option with startups like Glovo a Spanish quick-commerce start-up, leading the way with electronics & furniture.
Better inventory & supply chain Management: The constraint of a rapid delivery makes inventory & supply chain management an essential part of the equation. The supply & inventory management for dark stores will be more tight-knit in 2022, with the delivery partner able to check in real-time the nearest next store option in case of stock-out. Real-time inventory management tools will have a critical role here- constantly updating the status of inventory, calculating & estimating times for delivery and freshness of products (especially for perishable items) to ensure that the delivery partner does not waste precious minutes figuring this out.
Personalized customer experiences: In a market where everyone has the same inventory, offers, and prices a personalized & seamless customer experience will be the key that differentiates a brand and makes them a market leader. With AI & ML, tailored customer preferences based on past purchases and frequency can be suggested. Personalized messages & notifications can help users feel more connected to the brand and lead to user retention. A distinct UI, intuitive design & hassle-free user journey can also drive retention. For instance, here is how McDonald’s India enhanced their delivery experience & conversion through a revamp of experiences on their website & app.
Brand Partnerships & Influencer-based marketing: Brands have already started to see Q-commerce as an opportunity to get their product to their consumers the instant they think about it. Even premium brands like Estee-Lauder signed up with Uber in 2021 for a 60-minute delivery of their products. 2022 will see a rise of many brands trying this out. Another prevalent trend might be the rapid delivery of brands promoted by influencers
More strategic warehouse hub locations: At the heart of q-commerce lie the dark stores, the mini-warehouses located conveniently across delivery points. The strategic location of various hubs and their proximity to each other can determine the efficiency of the delivery process. AI & ML have a vital role in providing valuable insights about the purchase volumes & values, suggesting locations where a new store can add value.
Sustainability & eco-friendliness: As Sustainability & Net-zero emissions initiatives take global center stage, sustainable options must be chosen in every process. Some low-hanging fruits here can be using eco-friendly or reusable packaging options for delivery and electric vehicles for delivery executives to save unnecessary strain on the environment.
Quick commerce is a great opportunity globally. The right mix of technology, infrastructure and an unwavering focus on customer experience can succeed in this rapidly evolving landscape. 2022 promises to be an exciting watch-fest, with popcorn delivered in 15 minutes or less.