In terms of convenience and instant gratification, quick commerce does a great job. Be it senior citizens or busy young professionals, QuickCommerce has satisfied everyone with its convenient and instant service. It has established itself as the golden child of e-commerce. The quick commerce market is expected to generate more than $200 billion in sales globally by 2027, as per Statista. Let's take a look at what quick commerce is and why this term is buzzing around the world.
What is Quick Commerce? Why is it gaining traction?
Quick Commerce is a product of an e-commerce domain whose primary focus is on delivering orders in less than an hour. Sometimes it is also known as on-demand delivery. However, features like instant delivery and convenience retail differentiate it from traditional e-commerce.
It is applicable for the shopping of FMCG (fast-moving consumer goods) and CPG (consumer packaged goods) products.
Since COVID hit, quick commerce has been considered a favorable choice for secure and quick delivery. However, it was in trend even before COVID-19, but after the pandemic, Quick Commerce gained immense popularity across the world.
Convenient delivery times and an increased number of single-person households are some of the most common reasons for its worldwide expansion. These factors demonstrate the importance of quick commerce, which holds a very bright future.
How does the quick commerce business model work?
Quick commerce relies on suitable business models that fulfill the requirements of instant delivery. For the establishment of an instant delivery model, technology, dark stores, and delivery partners are crucial aspects.
Seamless usage of any website or mobile app under the process of technology, dark stores where items are collected and dispatched for an order within 5–10 minutes, and the last but very important aspect, delivery partners who collect the order from dark stores and then deliver it to the customers. All these factors are responsible for last-mile delivery.
With time and the advancement of technology, businesses are trying to find models that align with their idea of quick delivery service. From a broader perspective, there are two types of models that different businesses use for their specific needs:
Vertically integrated model:
This model provides full control over inventory management, picking, and delivery. Companies that want tight control over their business model are the right fit for the utilization of a vertically integrated model. It offers outstanding services like ultra-fast delivery and a quality personal customer experience.
However, the deployment of this model requires a huge investment in infrastructure and logistics. Companies like Blinkit, Zepto, and GoPuff are the best examples of this model.
It is more like a connection between retailers, merchants, and customers, in which ordering and delivery take place. This model doesn't require enormous investment because, most of the time, the retailers or merchants move the way forward for the businesses.
However, with this model, companies wouldn't be able to take control of the delivery speeds and customer experience. Companies like DoorDash, Instacart, and Swiggy Instamart are prime examples of marketplace models.
Beyond these models, many models are continuing to evolve and trying to become the most innovative models that serve on-demand delivery and convenience to their potential customers.
Quick commerce companies:
In 2011, companies like Postmates started the wave of quick commerce, which gained more traction around 2017 as companies like Delivery Hero and Meituan entered the domain of quick commerce. Due to the COVID pandemic, the demand for quick commerce companies has skyrocketed.
Here are some companies that contribute to the next generation of the quick commerce industry:
- Blinkit (formerly known as Grofers)
- Dunzo Daily, and many more.
It seems like shortly we will discover many other companies with some unique features that will revolutionize the quick commerce industry for sure.
Quick Commerce vs. E-Commerce:
Delivery time, delivery mode, target customers, customer preferences, and the presence of stores are the main differentiators between quick commerce and e-commerce. Here is the breakdown of these differentiators:
The delivery time of Quick Commerce since 2019 has been 20 minutes, courtesy of local warehouse concepts, which has been far better than the initial delivery time of about 60 minutes.
E-commerce generally delivers orders within 3–4 days, although it varies according to the seller's location, shipping method, shipping options, item size, and stuff like that.
Two-wheeler vehicles are preferred when it comes to delivery mode for quick commerce so that it becomes easier for delivery partners to collect orders from local warehouses and deliver them to the customer within a few minutes. Big trucks are used in the e-commerce shipment of the ordered item, which is usually delivered to the customer within a few days.
Single-person households are a perfect fit for leveraging the services of quick commerce; on the other hand, households with three or more people are a perfect match for utilizing e-commerce services.
For quick commerce shopping, customers often prefer to prioritize delivery time over price sensitivity and discounts. On the contrary, in e-commerce shopping, customers are often price-driven rather than just focusing on instant delivery.
Presence of warehouses:
Quick Commerce develops local warehouses or dark stores that are located in the locality of the customer, which helps with last-mile delivery. E-commerce has a wide variety of products that require mega warehouses to store them, and it also aligns with the delivery time of e-commerce.
Challenges and their solutions in the implementation of quick commerce:
Companies in the quick commerce domain face multiple types of challenges, from storing items to completing a last-mile delivery.
Here are some challenges for the implementation of the quick commerce business:
- Small volumes of product in the local warehouse
- Having multiple delivery addresses
- Instant delivery and frequent resupplies
- Management of vehicle load optimization
- High initial investments
- Sustainability and profitability.
Possible solutions for these challenges:
- Gentle consideration of mobile warehouses
- Using collection points and lockers
- Enabling Route Optimization Software
- Establishing micro fulfillment centers
Remember, these solutions are not one-size-fits-all; the best solutions for the quick commerce business depend on various factors such as specific business models, resources, and operating environments.
How sustainable is the quick commerce business?
The sustainability of quick commerce businesses depends on three significant pillars, which are economic, social, and environmental.
The economic sustainability of quick commerce focuses on businesses that prioritize growth over profitability. It's about long-term financial exploration, such as considering market factors and conducting an in-depth analysis of the industry.
Social sustainability underlines the consequences of quick commerce business on factors like the company’s employees, and industry-related people. It also covers the safety of the company's employees and other social activities that demonstrate the ethical conduct of this sector.
It includes factors like how much the company affects the environment through emissions, pollution, and ecological degradation.
So before considering anything else, think about these important sustainability factors. This is the era of quick commerce but always move with the right strategy for the sustainability of quick commerce businesses.
What's the way forward for quick commerce?
The future of quick commerce depends on how it works with the deployment of modern technologies like artificial intelligence, machine learning, and robotics as well.
Quick Commerce inevitably goes with AI and robotics, which would create a more personalized experience in real-time and bring drastic changes to operations.
Regulations and governance are also important for its future, as wherever the data of people involved, there is always some space for considering things like regulations and proper governance.
Quick commerce is expanding in a very rapid way. Providing features like instant delivery and convenience. It's all possible due to the pandemic and significant changes in consumer behavior.
It also has some challenges that need to be addressed as soon as possible, but despite this, it holds something special, and it will surprise us with its innovative business models that serve mankind.