The promise of Quick Commerce is the delivery of essential items within 10 to 90 minutes of order placement
There has been a lot of talk around Quick Commerce or Q-commerce lately with startups such as Zepto, being able to attract investment and even existing home delivery apps such as Dunzo, Swiggy and Grofers reworking their models. As per the reports of Redseer, the segment is expected to grow 10-15 fold in the next five years to become a $5-billion opportunity by 2025. The increasing penetration of digital access accelerated by the pandemic has expanded the customer base that is available to be tapped by quick commerce players.
The promise of Quick Commerce is the delivery of essential items within 10 to 90 minutes of order placement thus creating a hyper local opportunity to disrupt the existing customer servicing models. The current e-commerce model dominated by players such as Amazon, FlipKart, Big Basket and others has focused upon building large warehouses on the outskirts of cities in various locations to cater to the customers across the country from their closest proximity. The delivery time is typically few hours to few days. In the case of Q-commerce, typically companies create ‘dark stores’ which stock around 2000 essential items covering groceries, over the counter medicines and other daily necessities servicing the customers concentrated in the top 15-20 cities.
For most residents of large cities such as Mumbai or Delhi, such an experience is nothing new as kirana stores in their locality have been offering quick turnaround service from their well-stocked convenience stores in the proximity of their customers. Kirana stores do have existing relationships with their customers and even without AI or analytics applications, they have fine-tuned insights on customer buying patterns and even offer credit often times for the purchases. In the early days of e-commerce, it was seen as a threat to the existence of kirana stores; however, most of them survived and managed to protect their territories and retain their customer base due to personalisation of service.
With Q-commerce, once again the question of survival of kirana stores is being raised. With the help of digital platform and smart AI tools, economies of scale and micro personalisation would be feasible. However this model would work selectively in locations with high concentration of people who are also willing to pay for the service for urgent and critical last minute unplanned needs. There may be room for a few players to build successful business models. It is unlikely to displace either the kirana stores in their niche micro business or the established e-commerce player. Interesting partnerships are likely to evolve between kirana stores and Q commerce players. There is also an opportunity to offer reliable services such as plumbing, electrical repairs and others through the Q-commerce platform and kirana stores keen to reinvent themselves may also have the chance to participate in it.
India, which has disrupted the restaurant business through the pioneering models such as Swiggy or Zomato, has the significant advantage of large population required for the business case of Q-commerce. Hence, would India once again lead the way by perfecting the Q-commerce model and on the strength of deep insights of customer buying patterns, along the way also create significant job opportunities in the delivery ecosystem? Apart from deep pockets, continuous enhancement of technology capabilities and the ability to adapt speedily on the strength of deep insights to customer behaviour would be the key to the success for Quick Commerce.
Originally appeared in Financial Express