Fast delivery has long been a cornerstone of a successful retail customer experience,
but a new wave of businesses is making speed their USP.
Q-commerce, which stands for “quick commerce” and is sometimes known as
“on-demand” or “fast delivery,” refers to businesses that deliver products
(usually groceries) in less than an hour, or as soon as 10 minutes.
According to Global Data’s q-commerce study, the development of these
firms is being fueled by shifting customer behaviour
since the epidemic, as well as growing expectations.
There has also been a change (or, more accurately, a breaking) in client loyalty,
with customers more inclined to buy from a variety of online businesses.
Andrew Norman, Managing Director of Shipstation, spoke at this week’s
e-Commerce Expo event on how rapidly this change occurred.
“People grew more relaxed in the early days of the pandemic,” he added.
“The ‘instant gratification’ impact of Amazon was more loosened, and consumers were more prepared to wait.”
However, when consumers grew accustomed to purchasing online and retail rivalry rose,
the need for quick delivery increased once again.
So, who are the major companies in q-commerce,
and who will thrive in the face of increasing market competition?
Investment in q-commerce accelerates
Q-commerce is generally enabled by ‘dark shops,’ which are fulfillment
centers placed in highly populated regions to
allow vehicles to pick up and deliver the merchandise as quickly as possible.
Dark shops aren’t only a byproduct of the epidemic; large retail businesses
like Walmart and Whole Foods have been using the notion to enhance
fulfillment since before 2020, and Deliveroo’s
‘dark kitchens’ offer a comparable approach for eateries to send their meals to consumers quickly.
Glovo is far from the only example, with a slew of
new firms experiencing rapid growth and subsequent investment in the last 18 months.
According to PitchBook Data, the quick delivery grocery industry has produced over
$14 billion in the capital since the outbreak began,
with more investment occurring in the first three
months of 2021 than in the whole year of 2020.
At the top of the list is Gorilla, a British business that
the fastest unicorn brand earlier this year after raising €245 million in
investment and increasing its worth to $1 billion just nine months after its inception.
Other firms like Dija, Weezy, and Jiffy have attracted investment
(and provide a similar service to Gorilla), making the European q-commerce industry competitive.
Is it profitable?
Of course, the question is whether Q-Commerce is a successful long-term venture.
Overall, the on-demand delivery business is usually seen as having low-profit margins,
with the last mile typically being the most costly element of shipping.
Similarly, the average order value of consumers is modest – after all,
the whole point is that it is the polar opposite of the “big store.”
However, this does not exclude our profitability,
especially with delivery fees and larger options such as retail partnerships and advertising.
So, despite worries about the hype, many people feel that the ultra-fast business model
has a lot of promise, especially for firms who own both supermarket inventory and delivery operations.
This implies that businesses do not rely on retail partners and instead
handle both picking and delivery themselves.
According to JP Morgan analysts, the development of the q-commerce
industry might potentially upset supermarkets’
online operations and compete with their convenience formats.
Of course, overall consumer demand is important, and with super-fast
delivery currently mainly restricted to heavily populated areas
Not to mention customer behaviour that is still somewhat in flux following the epidemic.
It may be a long before a genuine front-runner emerges.
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