What’s Quick Commerce?
The habits and needs of consumers are in full transformation. These changes are directly affecting the type of services offered by brands.
As we explain in detail in this post, one of the great eCommerce trends for 2022 is the rise of Quick Commerce. That is, the ability of a seller to deliver an order in the shortest possible time. In less than an hour. In less than half an hour. Or, if possible, in even less time.
Quick Commerce is not something completely new. Restaurants and take away food stores have been operating in these reduced time frames for years. Consumers are used to ordering their food online and receiving it (almost) immediately.
But increasingly, this service is being extended to other sectors and types of products. There are several reasons behind this shift.
First, new lifestyles in cities are shaping the needs of their inhabitants. Today many people hardly have time to physically go to the grocery store. Work and family obligations do not leave them time for other activities. That is why they value efficiency and speed above all else when they want to receive a purchased product.
The pandemic increased this trend. The lockdowns showed that it is possible to have all kinds of products delivered to your home. Once the toughest restrictions have passed, habits such as remote work and some social distance measures still remain. A context in which many consumers are still reluctant to go to brick and mortar stores.
In this context, Quick Commerce has taken on a new meaning. This is shown by the proliferation of companies that offer this service, especially for third-party brands. Companies such as Gorillas, Cajoo, Getir, Dija, Glovo or Flink, to mention just a few, have gained a lot of notoriety in the last two years.
The fact that a majority of these companies are of European origin is noteworthy. Investors are paying a lot of attention to this market – in the first half of 2021 Quick Commerce companies raised $1.56 billion – and several European countries are now the epicentre in this new form of eCommerce.
Western Europe has a consumption level in grocery retailers very similar to Asia Pacific and North America. And online purchases of these products have experienced a great rise in 2021, with a 55% growth in the region. The high rate of urban population and the high purchasing power of a big part of its population also favour the expansion of Quick Commerce.
In general, this eCommerce trend is used to receive small orders. A classic example is to acquire one or several products that are needed immediately, to finish cooking a recipe or to complete the children's meal for the next day.
But the FMCG brands have realised that there is still a long way to go and a lot of unexplored potential in this service. For example, some sellers are making an effort to offer some of their most profitable products through their Quick Commerce apps. Because if delivery is fast and efficient, consumers are willing to pay more.
Quick Commerce: the need for speed
Consumer behaviour changes demanding Quick Commerce
Quick Commerce is a natural evolution of eCommerce. Which is directly related to consumer behaviour changes.
In Europe, the number of single-person households is increasing. In addition, the high rates of urban population concentrate buyers and sellers in a relatively small area, which facilitates the logistics of this service.
Until recently, the typical consumer in the grocery market was a family of several members who went to a big supermarket to do their weekly shopping. But this profile is changing towards that of a single person or a couple without children who prefer to make small purchases without leaving their home.
How does fulfilment work in Quick Commerce?
From an organisational point of view, a basic principle of Quick Commerce is to be located close to the consumers you want to deliver to. For this reason, companies have local warehouses distributed in the cities. These small stores (or dark stores) are not open to the public and store a reduced stock of products, which are offered through online channels.
Once the online order has been processed and located in the dark store, the riders run at full speed to deliver it to the buyer in the shortest possible time. This is another important part of quick commerce logistics: companies have a community of couriers who go on two-wheeled vehicles to move quickly around the city and avoid traffic congestion.
One option that some Quick Commerce companies are already exploring, and that will surely increase in the future, is to establish alliances with niche retailers of certain products. This allows them to reduce their logistics costs - they do not need to have local warehouses - and increase their profitability.
For brands it is also a magnificent opportunity: they can increase the speed and efficiency of their deliveries through a third party, taking advantage of the flexibility and experience of their couriers. A recent example of this type of alliance is the one signed by Uber Eats and the Estée Lauder Companies for the distribution of cosmetic products.
Is Quick Commerce for CPG Brands?
Another benefit for CPG brands is the possibility of offering a value proposition compared to their competitors. There are still few companies in the sector that stand out for their ultra-fast delivery service. Despite the fact that, as we said before, more and more buyers are willing to pay for it.
Fast and efficient delivery can especially attract high-net-worth customers. New buyers are open to paying a higher price for this service. And brands can then build their loyalty through another value proposition of the company.
How does the Digital Shelf look on Quick Commerce?
The efficiency and speed values that characterise Quick Commerce are also applicable to the Digital Shelf on their apps. First, the brands that sell through these model must have an accurate stock management tool. This will allow them to perform fast and error-free operations on their online distribution strategy. Another important issue is to also highlight online the products available for Quick Commerce.
Brands have to carefully select the most outstanding and profitable products for ultra-fast delivery. Remember that it is a value proposition for which consumers will be willing to pay more.
All in all, it is very likely that in the coming months we will see how new types of products are offered within this category. So being innovative can have prize. Some retailers are already testing the use of drones to carry out these deliveries, which would reduce the logistics and personnel costs associated.
The brands that are committed to this delivery option must ensure that their digital shelf is in perfect condition. Buyers have to easily find the product they are looking for. And the purchase process must be as fluid as possible: you have to optimise your product content and the prices to the maximum. In Quick Commerce this is also a fundamental step to boost your eCommerce sales.
One of the most demanded features in Quick Commerce is direct and agile customer service with the delivery company. This is an element that can later determine the rating given to a product purchased online. Some companies, like Getir, are prioritising this service. The Turkish based company’s app incorporates a chat to automatically answer the questions and incidents of its users.
One of the challenges of this new form of Commerce is to easily manage the digital shelf. Surely in the coming months we will continue to see innovative proposals from retailers and companies that seek to retain their users.
At Shalion we can help you through our eCometry tools to measure all the parameters you need to know so that Quick Commerce also works for you. As simple as that.
Quick Commerce is moving very fast. The new consumer behaviours are here to stay. And efficiency and speed in eCommerce is becoming one of the basic principles to grow in the sector.
This type of commerce still has many challenges. Especially in relation to logistics and the profitability rates for brands and retailers that want to offer this service. But the proliferation of new players in the sector shows that the market is on the up. And that brands have an opportunity here to make a difference