Can Quick Commerce Be the Next Game-changer For E-commerce Sector

Is Q-commerce only a start-up phenomenon or even traditional e-commerce businesses and retailers can take part in this?
Can Quick Commerce Be the Next Game-changer For E-commerce Sector

Quick commerce (Q-commerce), the natural evolution of e-commerce, is becoming the next major segment to become majorly competitive as companies realize the potential it holds. Recently, online grocery delivery firm Grofers revamped and rebranded itself as a Q-commerce company named ‘Blinkit’. The attention that the sector is getting is only likely to grow in the future.

What is Q-commerce?

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 used to take earlier. This has led to the rise of this niche segment. 

In India, Dunzo, Grofers, Swiggy Instamartk, Zepto, among others are some of the major players in the segment. These new-age start-ups, which have been getting reasonable funding this year cater to an estimated addressable market size of $50 billion.

The Q-commerce venture Zepto raised $60 million. Dunzo's most recent fundraising was in January when it garnered $40 million; till then, the startup founded in 2015 had raised $121 million in the capital. The biggest development is Grofers recently became a unicorn after raising over $120 million from food aggregator Zomato Ltd. and existing investors.
 

How it is Different from E-commerce?

The etailers can at best provide 2-3 days delivery whereas the Q-commerce players have claimed to provide as little as 10-minutes delivery. 

Secondly, Q-commerce allows for real-time tracking of the product whereas e-commerce order updates generally on a day-to-day basis. 

Quick commerce 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. 

Also, the Q-commerce market is a part of the e-commerce sector, which holds a fraction of the retail sector, about 4-5 percent, Q-commerce is also going to be backed by consumer demand. 

“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,” says Vijeta Soni, Co-founder and CEO, Sciative Solutions. Sciative Solutions has experience working with major e-commerce players in the market. 

Use of Micro-warehouses/ Black 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. 

Dark stores are fulfillment centers that can be located in densely populated areas closer to the point of delivery that enable quick turnaround times. 

Zepto, Grofers, and Swiggy have all set up dark stores to decrease the turnaround time on the delivery of goods. Seeing the development, India’s largest online grocery BigBasket is reportedly considering its 10-minute delivery service under the BBNow banner — a feature that will be made available on its parent Tata Group’s super-app Tata Neu. Social commerce firm Meesho is also looking at offering free home deliveries on food and grocery orders. 

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? 

Soni further says, “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.” 

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 their awaited 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. 

In the final analysis, 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. 

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