EUROPE QUICK E-COMMERCE (QUICK COMMERCE) MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

Market Challenges And Opportunities

• Low Order Values and High Last Mile Costs: A key challenge for quick commerce is achieving unit economics with low order values and high last mile delivery costs. The average order value is quite low at US$ 10 - 20, while ultrafast delivery costs remain high. Cutting down fulfillment and delivery costs is difficult without impacting the core value proposition of speed. This can put pressure on margins, especially amid rising inflation and driver shortage issues.
• Fierce Sector Competition: Intense competition in key European quick commerce hubs has sparked an unsustainable delivery time and price war. Too many players are chasing growth over profits by offering unrealistic 10-15 minute deliveries with heavy discounts. This has turned business metrics on their head - firms boast about the lowest delivery times and not the highest margins or cash flows. Consolidation is imminent as only 1-2 players per city will eventually survive.
• Regulatory Scrutiny: Quick commerce is drawing scrutiny from regulators and labor groups over potential issues like gig worker exploitation, lax rider screening, rode safety, and anti-trust concerns. Stricter regulations on operating dark stores in residential areas, grocer licensing norms or mandatory employment benefits for gig workers can negatively impact costs and services for some players. However, sensible long-term policies will benefit the ecosystem.

• Product Range Expansion: Quick commerce firms have an opportunity to drive growth by increasing their product selections beyond just grocery and food to items like electronics, pharmacy, and home essentials. Dark stores due to their limited inventory are currently restricted to a fast-moving selection of 2,000-3,000 SKUs. Expanding micro-fulfillment centers and utilizing big data analytics can enable customized hyperlocal assortments catering to specific neighborhood preferences.
• Newer Cities and Markets: While quick commerce is concentrated in major cities like London, Berlin, Paris, and Amsterdam, vast scope exists to expand into smaller, underpenetrated European cities. Firms will increasingly look at cities with populations between 200,000 and 1 million, which offers less congestion and operational complexities versus large cities. Central and Eastern Europe also presents an untapped opportunity where modern grocery retail is still evolving.
• Optimizing Operations: Quick commerce firms can substantially improve margins and growth by optimizing operational metrics like drop densities, delivery times, fulfillment costs, and inventory management. While the current model relies on expediting delivery at the cost of efficiency, companies have significant headroom to improve unit economics through operational streamlining and tech innovation without impacting consumer value propositions.
• Strategic Partnerships: Strategic tie-ups with complementary players can help quick commerce firms expand their reach, add offerings and achieve profitability faster. Partnerships with real estate firms can secure prime store locations; logistics firms can enable flexible last-mile delivery; CPG brands can improve supply chain efficiency through data sharing. Quick commerce firms can also potentially join forces with autonomous vehicle developers to reduce last-mile delivery costs.