In the era of instant gratification, the rapid rise of quick commerce (Q-commerce) is no surprise since its business model is defined by deliveries made within 10 to 15 minutes. Q-commerce is emerging as a rage among working professionals and other consumers, especially Gen Z and millennials, who have busy lifestyles and prefer superfast home deliveries rather than having to step out.
Daily essentials and other items are supplied such as groceries, OTC medications, stationery, lifestyle products, etc. And as many items in the grocery segment such as frozen foods, fresh fruits and vegetables are perishable, 10 to 20-minute deliveries make sense both for consumers and sellers.
Accordingly, ingenious, and speedy last-mile deliveries are the segment’s USP. Together with evolving consumer habits, the recent quantum leap in e-commerce transactions has also benefitted Q-commerce – which is a subset of traditional online commerce.
Q-commerce Zooms Ahead
Market analysts note that the Q-commerce market is growing nearly 25% faster in volume terms compared to the conventional model, which takes a few hours to deliver products. Though the overall bill or ticket size is small on faster deliveries, the monthly volumes are rising speedily each month compared to the overnight delivery platforms. The instant delivery model is also boosted by consumers’ unplanned, impulse buying, particularly in categories such as staples. For instance, Gen Z consumers have a strong inclination for top-up and indulgence buying, which is driving consumables spending.
Q-commerce is based on three pillars – a main or mother hub; distribution centres; and dark stores, commonly called last-mile delivery stores. Typically, dark stores are micro warehouses storing between 500 and 2000 items. To facilitate faster fulfilment of orders, these small warehouses are located closer to consumer centres. The moment a consumer places an order, quick coordination occurs between last-mile stores and distribution centres as also the delivery logistics and distribution centres. Additionally, companies partner with local grocery stores to service orders swiftly.
Several elements separate conventional e-commerce from Q-commerce. The major ones are delivery, warehousing, and pricing. First, for deliveries, where e-commerce needs large vehicles to ship orders, Q-commerce uses bicycles, scooters, or motorcycles. The use of 2-wheelers is crucial since it permits delivery personnel to negotiate chaotic traffic without much delay to ensure timely deliveries. Second, e-commerce companies operate central warehouses to stock most of their goods. Conversely, Q-commerce uses local dark stores to promote faster order fulfilment. Third, where e-commerce firms may have a single global price list, Q-commerce price lists can differ as per the points of sale, region, and availability of products.
Convenience and Other Demand Drivers
Although the operational costs of instant services are much higher and the discounts lower, the trend is gaining popularity among consumers given its sheer convenience. As a result, several Q-commerce companies have emerged in the Indian market, with some food aggregators also entering the domain. Consulting company RedSeer estimates that the Q-commerce market will reach $5 billion by 2025, rising from its present size of $0.3 billion.[1] In the process, the Indian market will surpass China in its speed of adopting Q-commerce.
RedSeer’s report also states that Q-commerce is currently capable of catering to 20 million Indian households, comprising barely 7% of the overall market, indicating its untapped potential. The sustained growth of online consumables across the country will give a fillip to the instant market’s expansion. Almost 50% of the growth is anticipated to arise from the metros and tier 1 regions.
With hyperlocal delivery becoming the norm instead of an add-on, it will boost the reach and market share of Q-commerce. Furthermore, rising internet penetration along with the democratisation of e-commerce platforms driven by the launch of the government’s ONDC (Open Network for Digital Commerce) project will aid Q-commerce entities in meeting millennials’ instant-delivery expectations.
Globally too, Q-commerce is transforming how people purchase groceries and other daily essentials. According to Statista, the grocery and food delivery segment is slated to touch 72.3 billion by 2025. Consequently, third-party logistics services will also benefit directly from this growth.
Meanwhile, in India companies are anticipating accelerated growth in e-commerce and, by extension, in Q-commerce, with the emergence of novel technologies such as electric vehicles, drones, dark-store automation, voice ordering and more.
Q-commerce and Kiranas – Symbiotic Partnerships
In this scenario, one question on the minds of market analysts concerns the impact of Q-commerce on Indian retailers, specifically small stores and kiranas. Any apprehensions on this count will be misplaced because Q-commerce needs the support of local kiranas to ensure swift deliveries since the latter are fully familiar with their neighbouring areas. Therefore, there will be symbiotic partnerships between local stores and Q-commerce companies.
As Q-commerce players prepare to ensure their operations become future-ready, deliveries through drones may just be a matter of time. Notwithstanding current constraints, Q-commerce is here to stay.
(This article is authored by Nitya Sharma, Co-founder, and CEO, Simpl)
