Thinking about receiving your online orders instantly? Or are you apprehensive that the delivery charges for a small good, will outdo the price of the good itself? Not to worry a bit, quick commerce will have you covered.
Quick commerce (q-commerce) is being called the new generation of e-commerce. It is
an emerging business model that ensures delivery of goods within 30 minutes (the name itself suggests speed) and breaks the logistics barrier of online deliveries that usually takes 1 or 2 days.
The promise of grocery delivery within the next half hour or 10 minutes has given
consumers a new meaning of convenience. Let’s take a peek into the future as to how the year 2022 will be when it comes to quick commerce.
The Growth of Q-commerce
The quick commerce (or q-commerce) market size in the Middle East and North Africa (MENA) is expected to grow by 24% and reach $20 billion dollars by 2024. This is said to be fueled by the growth in the number of digital shoppers during the pandemic.
In the next few years, quick commerce will not just remain limited to grocery retail but will cover almost all the products that can be delivered within a short period of time. For example, Glovo, a European company has started quick deliveries in electronics and furniture in some selected regions.
The same q-commerce market is seeing a positive growth trajectory in Germany and is expected to reach approximately 560 million euros by 2030. What are the reasons that are driving the q commerce industry to its zenith? Let’s take a look!
Rationale Behind the Growth of Quick Commerce
Convenience is slated to be the biggest rationale behind the concept of q-commerce. But what is driving people towards such convenience?
The Need For Speed Trend: Consumer Behavior
During the pandemic, people were encouraged to stay home. This has resulted in the
growth of the number of digital shoppers. The number of digital buyers was 1.66
billion worldwide in 2016, which shot up to 2.14 billion just last year! This is one of the reasons why high-speed delivery of groceries have become more in demand.
Another trend boosting the expansion of q-commerce is the growth of working-class
people who are too busy on workdays to shop for goods. They come home tired at the end of the day, and instant delivery of fresh vegetables seems to put off another task from their plate.
Customer behaviour is evolving. Speed and convenience are the most important aspects of
any service for the growing class of young people who suddenly find themselves out of things like milk or menstrual pads to name a few.
Not only technology-savvy youngsters, but even senior citizens are going to find q-commerce beneficial.
Growing Logistics and Technology Expertise
Technological innovations are driving new trends in the market, and quick commerce has indeed adopted this trend quickly. It is now famously being called e-grocery.
Quick commerce works with an integrated strategy of online ordering systems (technology), a network of local warehouses and delivery personnel for quicker delivery. However, some companies like Uber Eats and Deliveroo have partnered with local supermarkets to complete the circle.
The past few months have taken an interesting turn with mighty disruption in the grocery delivery space with a new entrant Zepto. Zepto has taken up a 10-minute grocery delivery service. Grofers has rebranded itself as Blinkit and is promising a 10-minute delivery.
While Swiggy has further increased its investment with $700 million in its express grocery delivery service Instamart. Swiggy is meanwhile eyeing the quick delivery market scene by making deliveries in 15 minutes starting January 2022.
Major Players in Quick Commerce In 2022
Zepto, an online grocery delivery venture of India that promises 10-minute delivery has raised an investment of $60 million in 2021. It recently raised $100 million in Series C. If we talk about the US market, GoPuff, which promises its users a 30 minutes delivery, has raised an investment of $1.7 billion in December 2021.
Gorillas and Flink
German startups Gorillas and Flink, both of which offer delivery within 10 minutes, have raised around 1.3 billion and 1.1 billion dollars respectively, as of January 2022. Another company Delivery Hero which began off by opening its first Dmart in Turkey in 2019, has expanded to over 43 countries.
It has also been estimated that the valuation of quick commerce in the markets that Delivery Hero operates will be worth $56 billion dollars. Quick commerce is estimated at $ 0.3 billion in CY2021 and is expected to grow 10-15x in the next 5 years, to become $5 billion by 2025.
So, what could be possible reasons firms are focussing on quick commerce, where the promise of delivery is within 10 or 20 minutes? Experts attribute this to change in consumers’ purchasing behaviour and preference.
A big concern for quick commerce is its scalability. Companies looking to dominate this niche will need to accelerate their scale of business to reach more consumers.
Also, consumers are now preferring fresh products with consistent quality that they want to be delivered in quick time. Zepto wants to gain access to customers in micro markets. Therefore they are working on ways to expand delivery to tier-2 and tier-3 cities as well.
In absence of scale economics, profitability will become difficult. There are also doubts regarding the market potential of quick commerce post lockdown that is keeping some investors away from putting their buck on it.
Companies will be using more technological innovations like machine learning and drone services for the instant delivery of goods. Uber is already experimenting with the cutting edge technology of drones to make more areas reachable.
Quick commerce is providing a frictionless delivery experience to customers who value time over money. It is going to transform the shopping experience of customers in cities all over the world.
Emerging as one of the fastest-growing e-commerce models, q-commerce is serving the need for faster delivery among convenience seeking customers.
Most founders of the operational q-commerce firms are sure they will be able to sustain and see more traction in the coming years. And not to forget, back-end technology and supply chain will play a vital role in timely deliveries.
It is touted as the third generation of commerce which will keep becoming fast and ultra-fast
in the future. It would be interesting to see what other interesting features quick commerce can offer customers to hitch on to this bandwagon.