Historically, the needs and preferences have been always changing (in an upward trajectory only). This has happened because of the progress that we have made in the technology/engineering side – both in hardware and software (better software for information dissipation and cheaper devices like smartphones and laptops). Today’s market is no longer a seller’s market where a seller controls the upper hand. It is now a complete buyer’s dominated market. The buyer dictates the terms. And one of the terms is the demand and innovation needed in the eCommerce and delivery space. Of course, Covid is also one of the major factors that are leading to innovation requirements apart from technology advancements.
What is Q-commerce
Q-Commerce or Quick Commerce is the latest innovation in thought process and doing business methodology in the eCommerce space. As the name suggests Q-commerce is a “quick” or “faster” delivery model of the existing eCommerce. To understand better what Q-commerce – let us first understand the evolution of “commerce” and changes in consumer behavior.
|Traditional Commerce||eCommerce||Quick Commerce (Q-Commerce)|
|Nomenclature||Also known as 1st Generation commerce||Also known as 2nd Generation commerce||Also known as 3rd Generation commerce|
|Product Assortment||Wide Product Assortment. Generally Everything available||Main Products available||Limited product assortment. A relatively smaller set|
|Delivery Timelines||Self Service||Delivery in 1-3 days||Generally delivered in under 2 hours|
|Delivery Method||Consumer comes to the physical store in their vehicle||Delivery is done by delivery agents in their small trucks/vans||Delivery is faster and hence generally done on 2-wheeler type vehicles|
|Store Front||Physical Store||Warehouses/Regional warehouses/Mother warehouses||Local Warehouses/Micro Fulfilment Centres/Physical Stores|
|Trigger Factor||Assortment/Touch and Feel||Discounts, Ease and comfort||Speed|
|Caters to||A household or individual||Generally, a household||More towards individual|
|Environment||Human, Face to Face||Virtual||Virtual|
|Ticket Size||Small to big||Generally Bigger||Generally smaller|
The above comparison table shows us how we have evolved from the traditional commerce days to eCommerce to q-commerce. Initially, trade happened as barter. Then we came to the coinage system, and the concept of money was implemented to be used (traditional brick and mortar were set up to trade). Then came the era of never thought of “supermarkets” (the early 1960s- by Sam Walton – Walmart Stores). Followed by the breakthrough of the Internet in 1991(companies offering their products and services via a virtual environment)- the commerce industry has evolved and gone through a lot of changes. Consumers are now looking for speed and effortless ordering.
How does Q-commerce work?
Quick Commerce working methodology can be explained in the below steps:
• Customer searches the product on the web interface or mobile application
• Post selecting the product, the customer places an order
• The Order is received at the Store or the Micro Fulfilment Centre or the Local Warehouse
• Local Delivery boy or executive comes to collect the order
• The Order is delivered to the customer in agreed-upon minimum timelines
There are certain terms like Hyperlocal deliveries or micro fulfilment centres, or mid-mile deliveries. All these new concepts are related to Quick commerce only. The always-changing consumer behaviour and the evolving capabilities and models of logistical capabilities are the reasons for the growth of Q-commerce. Quick commerce can be summarised as the fusion of technology and logistics—the two key pillars of short commerce delivery models.
What is the Quick commerce market size?
For the Middle East currently, the quick commerce market doubled from 5 billion dollars in 2019 to 9 billion dollars in 2020. It is expected to grow to be a 20 billion dollars industry by 2024. A massive 122% growth. The reason for this voluminous growth is – consumers shifting towards the convenience of weekly and smaller ticket size purchases, unplanned ordering behaviour ( that is why not stocking well in advance), growing penetration of the internet and the affinity towards it, and lastly greatly influenced by Covid.
The increasing demand for quick commerce is visible to us. Very soon, the traditional brick and mortar stores are going to have to find ways to diversify their core channel of business to survive. Just like the e-commerce business had to find ways like “Just-In-Time shipping”, “Drop Shipping”, “Remote Fulfilment” to get of stagnancy, traditional brick, and mortar stores will have to find means like “discounted section”, “check-out-counters”, “self-service”, “upgrading the tech to be state of the art”, “Internet of things”, etc. Soon – quick commerce would also need further innovation. Digitisation would be the answer to that. Delivery of goods by drones may be the next step for quick commerce. Many companies have already started exploring these options as well.
What is a Fulfilment center and how can traditional brick and mortar stores leverage quick commerce?
- Say you are a large-format store company spread across a city. The store points can also now be used as fulfillment centers for online orders. This is a win-win for all. The customers are aware of these brand store chains, and hence trust is easily won. For these retailers they can cater to customers online via offline storefronts thus, protecting their investment made in the physical stores. The same-store is now doing offline and online business; hence revenue per square foot has increased, and cost has not increased at all. These stores are nowadays implementing the concept of a micro fulfilment centre. Here they are dedicating a specific space within the store or outside, say in the parking area, to cater to online orders (coupled with the use of Artificial intelligence and robots) to pick and pack goods. This is an absolute breakthrough in the grocery delivery module of business. Grocery delivery was never able to scale up due to the need for delivery in a short time as it is an essential commodity. It is only because of this hyperlocal concept or use of local stores that a quick commerce business is feasible.
- Or the like of service of Dunzo, where traditional brick and mortar stores can register themselves to be a part of the seller community to gain business share
- Most companies – for example, Amazon and Flipkart – have also started using fulfilment centres – to cater to grocery needs under sub 2 hours delivery time.
Reasons for Quick commerce growth
- Growing digital economy,
- Extreme consumerism,
- Rapidly changing consumer habits
- need for speed and convenience,
- busy lifestyles,
- ageing population,
- smaller households,
- Pandemic adding fuel to the customer not going out,
are the reasons for the growth of quick commerce from the consumer end.
Benefits/Advantages of Quick Commerce
- Competitive advantage or unique selling proposition: having the ability to deliver in a short span – can be your differentiating factor from your competitors,
- Better margins: the last-mile deliveries to the consumer are generally the lion’s share of operational cost, which eats up the margins and profitability. Since the geography of delivery is minimised to a small diameter, the costs are minimized greatly (in fact, if a further evolvement of BOPIS buy online and pick up ins store is used – delivery costs can be completely removed)
- Customer Experience: it is a sheer customer delight that you can deliver to their needs in such a minimum time. These kinds of consumer experiences are the reasons for customer affinity and brand love.
Hence summarising quick commerce – service operated within the limited scope of geography, where orders are catered to from local warehouses or stores having micro fulfillment centers – all providing online orders delivery via a quick transport medium like a two-wheeler within a specified small-time (like under 2 hours) is quick commerce.
If you are planning to open a marketplace for quick commerce, you can see that quick commerce requires a lot of technical expertise and can be challenging. Hence it is best to use the advice of an expert like Your Retail Coach. Your Retail Coach excels in providing retail consultancy in both offline and online domains of business. Your Retail Coach has expertise in various fields and sectors like Grocery, Fashion, Gifting, Pharmaceuticals, Education, Jewellery, Food, Automobile, Healthcare, Electronics, etc. Your Retail Coach specializes in designing standard operating procedures (SOPs), franchise development, business model & strategy, omnichannel retail, eCommerce, and market research and business plan. Designing a quick commerce system and model is like defining a process or a standard operating procedure of workflow, in which Your Retail Coach is a champion. They are exceptional process consultants and SOP Consultants. Especially when you start a new online business, taking assistance to make a strong system backend that can help you scale business in the future is crucial to protect the investment and gain maximum business advantage. Your Retail Coach has best-in-class management consultants who you can bank on to get these various services and blossom your business.