Thursday, February 06, 2025 | Sha'ban 6, 1446 H
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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Quick Commerce: The third generation of commerce

Quick commerce, q-commerce, or on-demand delivery refers to sales made exclusively online at ultra-fast delivery of products and services in less than 10 minutes.
Dr Mythili Kolluru
Dr Mythili Kolluru
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Evolution is the game's name; and businesses have transitioned disruptively over the years. In the mid-90s, the world witnessed a monumental shift to e-commerce, which made history in the retail industry. During that time, Netscape launched its browser, facilitating online browsing and shopping. Moving forward to the 21st century, a new third generation of commerce is creating ripples in the retail industry.


Quick commerce, q-commerce, or on-demand delivery refers to sales made exclusively online at ultra-fast delivery of products and services in less than 10 minutes. The products include groceries, household items, personal care products, small electronics, office supplies and over-the-counter medicines. Q-commerce also includes services like laundry pickup and delivery, last-minute gifts, and food delivery.


An American company, Grofers (Blinkit), started using the 90-minute delivery model in 2013. In 2013, another company, Gopuff, focused explicitly on quick commerce. Soon, many companies adopted the model, and there was rapid growth and development. Q-commerce revolutionized the face of shopping and the retail sector.


Around 2017, many top motor-brick companies like JCPenney and RadioShack declared bankruptcy due to competition from online retailers. Many traditional retailers shifted to the Omni channel approach that combined online and offline shopping. It is constantly evolving and offers a unique blend of trusted, fast payment and speedy shopping.


There was a rapid and simultaneous increase in q-commerce across regions. And q-commerce leapfrogged shifting consumer behavior with the advent of the Covid-19 Pandemic. The pandemic led to the expansion of q-commerce beyond food and other products and services. Consumer behavior, younger demographics, disposable income, smartphone penetration, and internet accessibility are driving q-commerce growth to new heights.


The global q-commerce market was $35.87 billion in 2023. It is expected to grow at a compounded growth rate (CAGR) of 34.1% from 2023 to 2030. North America dominates the market, with key players like Dollar Dash and Instacart.


In Europe, usage is witnessed in major cities, with key players like Zapp, Getir, and Gorillas. The fastest-growing market is Asia Pacific, with China and India leading the way among other countries. In the MENA region, UAE and Saudi Arabia are experiencing increased q-commerce growth.


Latin America is also gaining traction, with Brazil and Mexico in leading positions. Africa is in its early stages, with increased activity in q-commerce in a few countries, including Nigeria and South Africa.


E-commerce and q-commerce seem similar, but yet they are different. In e-commerce, the delivery time is days; with q-commerce, it is minutes. To cut costs, e-commerce operations involve a central warehouse outside the city. Still, with q-commerce, the warehouses called dark stores are de-centralized, small, and distributed at several strategic locations in the city that are close to the customers.


The e-commerce scope is broader, with a range of products, but in the case of q-commerce, they have a selection of curated high-demand products. Interestingly, even the modes of transport are different. E-commerce relies heavily on delivery trucks and commercial parcel services, whereas q-commerce relies on motorbikes, bicycles, and more maneuverable transport options; otherwise, the retailer will not be able to address the issue of traffic congestion.


With cutthroat competition and razor-thin profit margins, companies are tunnel-visioned to optimize their business. The average profit margin for the retail sector is around 0.5% to 3.5%, leaving companies with no option but to explore and leverage the q-commerce business models by partnering with third-party retailers like Dood Dash and Uber Eats or becoming a vertically integrated operator.


Despite the high maintenance cost of dark stores, intense competition, and the possibility of market saturation, the q-commerce market looks attractive with growth potential. The growth is based on the shifting customer preferences and perceptions of retail experiences about speed and convenience.


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