Here’s Everything You Need To Know About Quick Commerce
Glossary

Here’s Everything You Need To Know About Quick Commerce

June 7, 2024 | By
Quick Commerce Price Battle Intensifies As Flipkart Enters Blinkit & Swiggy’s Lane

Quick commerce is a type of ecommerce that prioritises super-fast deliveries, typically getting goods to customers within an hour or less

Table of Contents

What Is Quick Commerce?

Quick commerce (or Q-commerce) is a type of ecommerce that prioritises super-fast deliveries, typically getting goods to customers within an hour or less. 

Quick commerce companies rely on local warehouses or strategically placed ‘dark stores’ within urban areas to achieve these rapid speeds. These facilities house products and enable quick picking, packing, and dispatch of orders. The process is straightforward: customers place orders through an app, the order is routed to the nearest local warehouse or dark store, items are picked and packed, and delivery drivers transport the order to the customer’s doorstep.

How Is Quick Commerce Different From Traditional Ecommerce?

Quick commerce and traditional ecommerce both involve buying and selling goods online, but they have several key differences:

Feature Quick Commerce Traditional Ecommerce
Delivery Speed Within an hour or less Several days or weeks
Product Range Smaller, on-demand purchases A wider range of products
Fulfilment Local warehouses or ‘dark stores’ Larger, centralised warehouses
Transportation Bicycles, motorcycles, or cars Vans or trucks
Target Audience Customers who prioritise convenience and speed Broader audience with varying needs

How Can Brands Assess The Viability Of Quick Commerce For Target Audience And Market?

Brands can assess the viability of quick commerce for their target audience and market by considering the following factors:

Target Audience Analysis

  • Demographics: Age, income, location, and lifestyle of the target audience. Are they tech-savvy and accustomed to online shopping? Do they value convenience and speed enough to pay a premium for quick commerce?
  • Needs & Preferences: What do they frequently purchase on demand? Are they looking for immediate solutions for everyday needs or specific occasions?
  • Shopping Habits: How often do they shop online? What are their preferred delivery methods and timelines?

Market Research

  • Competitor Analysis: Identify existing quick commerce players in the market. Analyse their strengths, weaknesses, pricing strategies, and customer reviews.
  • Demand Analysis: Research the demand for quick commerce in a specific region or city. Look for trends, growth projections, and surveys on quick delivery preferences.
  • Infrastructure Analysis: Evaluate the local infrastructure for quick commerce, including the availability of warehouses or dark stores, transportation networks, and delivery partners.

Financial Viability

  • Cost Analysis: Calculate the costs for implementing quick commerce, including warehouses, inventory management, delivery fees and marketing expenses.
  • Pricing Strategy: Determine the optimal pricing model to cover costs and ensure profitability while remaining competitive.
  • Return On Investment (ROI) Projection: Estimate the potential ROI based on market research, target audience analysis, and cost projections.

Pilot Testing

  • Limited Launch: Conduct a pilot test in a specific area or with a limited product range to gather real-world data on customer response, operational challenges, and profitability.
  • Feedback Collection: Gather feedback from customers and delivery partners to identify areas for improvement and optimise the quick commerce model.
  • Data Analysis: Analyse the pilot test data to validate assumptions, refine strategies, and make informed decisions about scaling the quick commerce operations.

How Can Brands Ensure A Smooth Integration Of Quick Commerce With Existing Fulfilment Processes?

Integrating quick commerce with existing fulfilment processes can be a complex task. Still, with careful planning and execution, brands can ensure a smooth transition and reap the benefits of both models:

Strategic Planning

  • Define Objectives: Clearly outline the goals of integrating quick commerce.
  • Identify Synergies: Analyse the existing fulfilment processes and identify areas where quick commerce can complement them.
  • Develop A Roadmap: Create a detailed roadmap outlining the steps involved in the integration process, including timelines, resource allocation and potential challenges.

Inventory Management

  • Real-Time Inventory Visibility: Implement a robust inventory management system that provides real-time visibility across all sales channels, including quick commerce.
  • Dedicated Inventory: Consider allocating a dedicated portion of the inventory for quick commerce orders to ensure quick replenishment and avoid delays.
  • Optimised Picking & Packing: Streamline the picking and packing processes for quick commerce orders to ensure fast turnaround times.

Technology Integration

  • Order Management System (OMS): Integrate the quick commerce platform with the existing OMS to ensure seamless order processing, inventory updates and customer communication.
  • Delivery Management System (DMS): Implement a DMS to optimise delivery routes, track deliveries in real-time, and provide customers with accurate ETAs.
  • Data Analytics: Leverage data analytics to gain insights into customer behaviour, order patterns, and operational efficiency.

Logistics & Delivery

  • Last-Mile Delivery: Partner with reliable delivery providers specialising in quick deliveries and have experience navigating urban environments.
  • Micro-Fulfilment Centers: Consider setting up strategic micro-fulfilment centres to reduce delivery times and improve efficiency.
  • Delivery Tracking: Provide customers with real-time tracking information and estimated delivery times to enhance transparency and improve customer experience.

What Are The Inventory Management Challenges Associated With Quick Commerce & How Can They Be Addressed?

Quick commerce (quick commerce) presents unique inventory management challenges due to its emphasis on rapid delivery and maintaining a diverse range of products in local warehouses or dark stores. The following table shows some key challenges and how to address them:

Challenge Description Solutions
Demand Forecasting & Optimisation Volatile demand due to time of day, weather, events, and promotions makes accurate forecasting difficult. Use advanced forecasting models with real-time data & machine learning. Regularly review and adjust inventory levels based on demand fluctuations.
Inventory Visibility & Replenishment Maintaining real-time visibility across multiple locations can lead to delays in replenishment and missed sales. Invest in integrated inventory management systems with real-time visibility. Implement automated replenishment based on stock levels and demand forecasts.
Perishable Goods Management Short shelf-life items require careful planning and quick turnaround to prevent spoilage and waste. Implement FIFO rotation, temperature-controlled storage & transportation, and offer discounts on nearing-expiry products.
Warehouse Space & Efficiency Limited and expensive warehouse space requires optimisation for maximum efficiency and cost reduction. Design efficient warehouse layout, implement WMS to optimise processes, and use vertical storage solutions.
Reverse Logistics & Returns Higher rate of returns due to impulse purchases and perishable goods. Establish clear return policies, streamline the returns process, and resell or donate returned items whenever possible.

Is Quick Commerce A Sustainable Business Model?

The sustainability of quick commerce is a complex issue with varying outlooks globally and in specific markets like India. While the demand for convenience and speedy delivery is undeniable, the economic, environmental, and social costs pose significant challenges.

Globally, quick commerce companies like Getir, Gorillas, and Gopuff have faced an uphill battle towards profitability. The high costs of operating dark stores, last-mile delivery, and competitive labour markets have led to financial struggles and even the closure of some businesses. While some companies are exploring greener alternatives like electric vehicles and bicycles, the overall sustainability of the model is still under scrutiny.

In India, the landscape is unique. Quick commerce has found a foothold despite a price-sensitive market and logistical challenges like traffic congestion and limited warehouse space. Startups like Dunzo, Zepto, Blinkit and Swiggy Instamart have tapped into the rising demand for convenience, especially in densely populated urban areas. They have even innovated by partnering with local retail stores for hyperlocal deliveries, aligning with India’s existing retail ecosystem. However, concerns about worker rights and regulatory uncertainties remain.

Financially speaking, quick commerce companies in India have yet to post sustainable numbers. For instance, Dunzo posted a loss of INR 1,801 Cr in FY23, while Zepto saw its loss hit INR 1,272 Cr for the same period. Listed foodtech giant Zomato’s subsidiary Blinkit posted an adjusted EBITDA loss of INR 37 Cr during Q4 FY24.

Quick commerce success in India may rely on finding the right balance between affordability and convenience while leveraging partnerships and supporting the existing retail infrastructure.

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