The Quick commerce (Q-commerce) sector has already come to be the next evolution of the e-commerce sector that promises quicker delivery (in as less as 10 minutes).
If you are someone who wants your daily grocery needs to be met in time you definitely must have heard of the start-ups like Blinkit, Swiggy Instamart, Dunzo, Zepto, OlaDash among others. These new-age start-ups cater to an estimated addressable market size of $50 billion.
Q-commerce, also sometimes termed as ‘rapid delivery’ refers to the companies that provide goods (typically essentials like groceries) in under an hour or as quickly as in 10 minutes. In the post-pandemic era, consumers have been looking for services that can meet their daily needs within a fraction of the time that these brands used to take earlier to deliver products. This has led to the rise of this niche segment. The Q-commerce sector is estimated at $0.3 billion in CY2021 and is expected to grow 10-15x in the next 5 years, to become $5 billion by 2025, according to a Redseer report.
“At Blinkit, our sole focus would be on expanding the 10-minute delivery experience to all our customers in the existing cities as well as enabling the same magical experience across multiple cities pan India,” said Blinkit spokesperson. “We re-branded ourselves as Blinkit (earlier Grofers), and shut down any form of business that was not giving an instant commerce experience to the consumer.”
“Our Quick Commerce service is an essential part of our connect with customers as they rely on technology and online service to fulfill their daily needs. Over the next few months, we will be expanding our reach and presence to more cities and customers,” said Anshul Khandelwal, Chief Marketing Officer, Ola resonating the same thoughts.
How is it Different from E-commerce?
The e-commerce marketplaces have a wider service area and can at best provide 2-3 days delivery service whereas for the Q-commerce players the speed of the delivery is the defining matter. Secondly, Q-commerce allows for real-time tracking of a product whereas e-commerce order updates are generally given on a day-to-day basis.
In fact, Q-commerce combines the benefits of traditional e-commerce with superior last-mile delivery. Change in the consumer profile accelerated by the pandemic is the cause behind the boom in the sector. The sector is thus a subsector of the e-commerce sector, which holds a fraction of the retail sector, about 4-5 percent. In the future, with better technologies, the sector is only going to grow from here on.
“The expectation of the customer in the digitized world is changing and any e-commerce site which is giving the shortest delivery is preferred by the customer,” said Vijeta Soni, Co-founder, and CEO, Sciative Solutions.
Use of Micro-Warehouses/ Dark Stores
Another major point that distinguishes Q-commerce from traditional e-commerce is the size and nature of the warehouses. Unlike working with mega-warehouses located outside the city for e-commerce, Q-commerce has local 'dark stores' that facilitate faster deliveries.
“We are at a run rate of > 4 million orders every month and serve those orders through a network of 300 darks stores in 14 cities,” shared Blinkit Spokesperson.Zepto, Grofers, and Swiggy - all set up dark stores to decrease the turnaround time on the delivery of goods.
Is it Only for Startups?
Despite being an attractive scope for the retail market, we only have seen new-age start-ups interested in exploring this particular line of business. So, the question arises - is this only a start-up phenomenon, or even traditional e-commerce businesses and retailers can take part in this?
“I am very sure large organizations would be willing to get into the Q-commerce segment in terms of faster delivery. It is not just a start-up phenomenon; even large organizations realize this is a pain-point and put in all their effort to make this happen,” Soni further stated.
In fact, Reliance Retail is working with its Jio App by integrating local business listing platform Just Dial, which it had recently acquired, and turning it into ‘SuperApp’. Similarly, Tata Group business venture, announced its e-commerce platform Tata CLiQ to venture into the e-commerce space. The challenge of faster delivery won’t go unnoticed by these big mammoths.
Investor Support for the Start-ups
The start-ups in Q-commerce have been getting major attention from investors. Zepto had recently raised a sum of $60 million. On the other hand, Grofers recently became a unicorn after raising over $120 million from food aggregator Zomato Ltd. and existing investors. Dunzo has raised $240 million in its latest round of funding which was led by Reliance Retail Ventures Limited. The scale of the funds raised entails the potential the sector holds in the times ahead.
Kabeer Biswas, CEO, and Co-Founder, Dunzo, said about the investment raised, “Since our inception, we have been razor-focused on providing an unmatched customer experience and this funding round is a resounding validation of our approach. I am proud of the team for tirelessly building this category over the past three years and grateful to our investors for their continued support. With this investment from Reliance Retail, we will have a long-term partner with whom we can accelerate growth and redefine how Indians shop for their daily and weekly essentials.”
In the final analysis, despite the spike in Q-commerce, the sector is at a very nascent stage with very few players. As such, the supply clearly is not in proportion to the demand. Given the obvious need and preference for faster deliveries, the sector is likely to see a large number of players getting into the segment, and major organizations in retail working to match the speed of these start-ups.