Quick Commerce: An Essential Guide for 2023
Quick Commerce: An Essential Guide for 2023
In 2022, the modern consumer journey demands speed. From takeaway food, to online shopping deliveries, the sooner a customer has their purchase in their hands, the better.
With this in mind, the arrival of quick commerce (or q-commerce) is something that shouldn’t come as too much of a surprise. If you can order a takeaway in under an hour, then surely consumers should be able to order other things super fast!
Let’s take a closer look at quick commerce, the advantages that it brings, and how brands can implement it.
The ever-changing eCommerce landscape
Prior to the Covid-19 pandemic, a study by PwC highlighted that most consumers around the world valued efficiency and convenience more than anything else. In the US, 80% said they’re the key ingredients of a positive customer experience.
Traditionally, four things drive the need for speed and convenience; they are busy lifestyles, smaller households, urbanisation and aging populations.
But the pandemic accentuated these needs even further, particularly in terms of commerce delivery. Today, the prevalence of remote working means consumers are less likely to drop into a store. So convenient commerce delivery is more sought-after than ever.
According to the OECD, 21% of US consumers ordered groceries online from a nearby store as a direct result of the pandemic. Interestingly, 19% of over-65s did this too, adapting new technologies and habits in the process. And this trend continued into 2022, with online grocery deliveries increasing 37% year-on-year.
Further research also suggests that the last-mile delivery market for groceries, which was valued at an estimated $25 billion in 2021, is set to be worth a massive $72 billion by 2025.
Brands that have embraced quick commerce, or q-commerce, have been the biggest beneficiaries of this new behaviour – and their good fortune is set to continue for the foreseeable future.
What is quick commerce?
Quick commerce is the next step in the evolution of eCommerce and, as the name suggests, it’s all about speed. Quick commerce generally means consumers can expect delivery within one hour of placing an order.
This may seem like a very short timeline but quick commerce is usually reserved for small orders, rather than the weekly grocery shop. Consumers might purchase a product they unexpectedly ran out of or an ingredient they need for making today’s dinner.
To get orders out as soon as possible, retailers rely on online ordering systems, local warehouses and delivery team on two wheels.
When you think about it, quick commerce is nothing new. It has been used in the takeaway food industry for many years. With eCommerce brands consistently cutting delivery times, it was just a matter of time before consumers could get other products delivered to their doorstep without delay.
The benefits of quick commerce
While quick commerce brings the benefit of ultra-fast service to customers, there are plenty of perks for brands who take advantage of it too. We’ve listed three of the top advantages of quick commerce for brands below:
1. A competitive USP
Q-commerce provides businesses with a new value proposition, which can really set them apart from competitors. Customers in need of immediate delivery may be willing to try new products and order from new stores.
The added convenience that comes with quick commerce offers online retailers a way to compete with large multinational marketplaces, like Amazon, as well as brick-and-mortar stores.
2. The potential for greater margins
Quick commerce holds a lot of potential profit for those who take advantage of it.
One study from Deloitte suggests that, during the pandemic, 50% of shoppers spent extra money to conveniently get what they needed. They paid extra for on-demand fulfillment, as well as buy online pickup instore (BOPIS) options.
Because q-commerce is associated with a smaller selection of products, retailers can also use this opportunity to drive sales for their most profitable lines.
It’s also worth noting that convenience often appeals to wealthier demographics. For example, time-strapped professionals and business leaders who tend to value convenience more than discounts.
3. Providing the ultimate customer experience
As consumer expectations grow, quick commerce can help online retailers meet and exceed them. This, in turn, will foster brand loyalty.
The customer pain points that quick commerce addresses are often meaningful. It can save a party host who has run out of food. It can help an uncle who has forgotten to buy his niece a birthday present. Or it can simply help someone who can’t make it to the shop to stock up on essentials.
There are many situations where the convenience of q-commerce can reduce stress and maybe even avert disaster. How could customers be anything but satisfied?
How to implement quick commerce
Quick commerce is a must for brands that target professionals and older people. It also makes complete sense for CPG brands with broader audiences. But, eventually, all consumers will come to expect the availability of super-fast delivery, so it’s a good idea to start implementing a system of q-commerce now.
Here are three essential steps for your quick commerce to-do list:
1. Set up local hubs
If you want to pick, pack and deliver products in less than an hour, you need to be located pretty close to your customers. For this reason, quick commerce relies on local warehouses which can serve people in the immediate proximity.
Most quick commerce delivery services are based in cities and employ their own community of riders to deliver products. The duration of two-wheeled deliveries are less likely to be impacted by heavy traffic. They don’t have to find parking spaces either.
Alternatively, businesses can enlist the help of local partners or third-party services. For example, Deliveroo and Uber Eats have both made their services available to supermarkets.
In China, Alibaba has taken a unique approach by opening hundreds of brick-and-mortar ‘Fema’ stores. These act as quick commerce hubs that deliver in under 30 minutes. But they also offer other omnichannel services, such as collection points and in-store scanning which can be combined with online payment.
2. Carefully choose your q-commerce stock
Right now, quick commerce works best for some specific product niches. Immediate delivery makes sense for food, drinks, cosmetics and other CPG products that consumers use every day.
Gifts and medicine are also ideal for quick commerce delivery. And, with the rise of working from home, office supplies and electronics are also excellent candidates.
Businesses specialising in q-commerce tend to fill their local warehouses with their most commonly purchased products – particularly those popular among Gen Z and millennial customers as they’re most likely to seek out quick commerce delivery.
However, you should also consider stocking items that are in-demand among aging consumers who may prefer to stay at home. Your decisions will all depend on your target personas.
3. Ensure you have the right software in place
To make q-commerce work for your business, it’s essential to have a real-time inventory management tool. This will facilitate speed and efficiency, while also ensuring your online stock information is accurate.
It can also prevent stockouts, which could hurt sales, and deadstock, which could really run up storage costs in high-priced urban warehouses.
Reporting tools, like ChannelSight’s price and inventory monitoring, provide stock level oversight across your entire retailer network, so stock can be reordered or redistributed without delay. It also allows logistics teams to see which products sell best through your quick commerce delivery networks. Retailers can then optimize their offerings.
Many brands offer quick commerce delivery directly to their customers. There’s Walmart, Walgreens and Amazon.
However, if you’re not ready to take that step yet, there are plenty of 3P delivery platforms out there that specialise in connecting stores with local customers by delivering orders in record time. Think Uber, Gopuff, DoorDash and Gorillas – to name just a few.
Their prevalence in cities around the world means that quick commerce is available to almost any brand that wants to implement it for their customers.
The fast future of eCommerce
The Covid-19 pandemic completely disrupted consumer shopping behaviour. Though some consumers have returned to shop in-store, others still prefer to do it online due to convenience.
The use of quick commerce has certainly accelerated, but it was already on the rise pre-pandemic. Now, these newly formed habits aren’t going anywhere. Digital natives will continue to demand instant gratification from their online shopping experiences.
And now that the technology is available, more and more eCommerce brands will start to offer delivery in minutes.
New quick commerce offerings
As quick commerce services expand, the number of products that are in demand will grow too. Right now, many quick commerce services specialise in delivering groceries, but this is likely to expand to other FMCG products and beyond. Beauty, health and medicine are key categories that are already emerging. This is likely to extend to books, entertainment, office supplies and luxury items too.
In fact, Spanish quick commerce service Glovo has already expanded its service offering by fulfilling orders for furniture, medicine and technology in under an hour. It can pretty much deliver anything from the largest shopping mall in your city to your door in just minutes.
Issues facing the quick commerce industry
However, there are also significant problems facing the quick commerce industry that will see its hypergrowth slow.
In fact, this is already happening as investors turn their attention elsewhere post-pandemic. The likes of Getir, Gorillas and Zapp are currently downsizing in response to dwindling capital investment.
Then there’s problems like traffic congestion in cities and safety concerns. Authorities in New York, for example, may ban 15-minute deliveries over concerns that they put pressure on drivers to speed.
Technology will become the driving force behind q-commerce
These issues may limit how much the quick commerce industry can grow in the short-term. But new technological advancements, like drone delivery and machine learning, will help address them and nurture q-commerce. Because of drones, greater areas will be reachable within an hour, delivery times will be more reliable and the introduction of quick commerce will cost less. It will also make this a greener industry. Companies like Uber, Walmart, Target and Amazon are already working hard to introduce these cutting-edge innovations.
Quick commerce is a relatively new term and, to date, it is an opportunity that has largely remained untapped in eCommerce. But as consumers demand more convenient options, quick commerce will only grow in popularity.
While it can be difficult to know if it’s right for your business, testing it out won’t require too much investment. You can introduce it to one region at a time, ironing out kinks in the system, assessing the results and adapting your strategy to suit the local area.