Market Challenges And Opportunities

Global Quick E-Commerce (Quick Commerce) Market Drivers:

Busy Lifestyles and Growing Time Poverty: The busy modern lifestyles and rising time poverty, especially among urban professionals is a key driver of the quick commerce market. Long working hours coupled with commuting times leaves consumers with little time to shop for groceries and daily essentials. The quick commerce model solves this challenge by delivering products within 10-30 minutes. Working parents, students, and other time-strapped consumers embrace quick commerce for its sheer convenience and time-saving. For example, research shows that 40% of quick commerce users in London, U.K. stated lack of time for shopping as the main reason for using such services.
Safety and Convenience During the Pandemic: The COVID-19 pandemic has fueled the demand for quick commerce globally, as homebound consumers sought to limit shopping visits and exposure risks. On-demand delivery of groceries and household items addressed safety concerns and provided convenience to vulnerable groups like the elderly. Even as lockdowns ease, consumers continue using quick commerce, indicating a permanent shift towards home deliveries. For instance, Instacart saw a 400% growth in customer demand during the pandemic. Quick commerce operators like Getir and Gorillas also saw a massive surge in orders.
Growing Smartphone and Internet Penetration: Widespread smartphone ownership and rising internet penetration rates are powering the adoption of quick commerce globally. Consumers are now accustomed to seamless mobile commerce experiences. Quick commerce apps make on-demand ordering and payment frictionless. Developing markets are leading internet and smartphone adoption. For example, India will have 1 billion smartphone users by 2026. High mobile penetration enlarges the addressable market for quick commerce players.
Younger Demographics and On-demand Culture: Gen Z and millennial consumers highly value convenience, flexibility, and instant gratification. Quick commerce resonates with their preference for on-demand services. Young demographics in urban cities have been quick to embrace quick grocery delivery. Moreover, on-demand culture has risen via services like Uber, Netflix, and Amazon Prime, making ultra-fast delivery an expectation. Quick commerce operators rely on young early adopters to gain market share in new locations.

Global Quick E-Commerce (Quick Commerce) Market Opportunities:

New Geographic Expansion: Quick commerce firms have substantial scope for expansion into new geographies and cities. Major players like Gopuff and Getir have already embarked on large-scale global growth. Emerging markets in Latin America, Southeast Asia and Africa offer untapped potential thanks to rising mobile users and sparse traditional retail. As infrastructure improves in developing countries, quick commerce will fill gaps in distribution and shopping access. Globalization enables quick commerce companies to rapidly enter new markets by acquiring local startups.
Strategic Brick-and-Mortar Partnerships: Quick commerce operators can forge innovative partnerships with brick-and-mortar chains to enhance competitive advantage. Dark stores can be opened adjacent to grocery chains, convenience stores, big box retailers, etc. This provides synergies like easier inventory and fulfillment. Brick-and-mortar partners also benefit via access to new revenue streams from delivery orders. For instance, Foxtrot partnered with Gorillas to power quick commerce from its stores. Such creative tie-ups are a win-win.
Leveraging Advances in Logistics Technology: Emerging logistics technologies, such as automated warehouses, delivery robots, and drone delivery, can transform quick commerce operations. Automation can significantly lower picking and delivery costs. Robots and drones can also expand quick commerce to new locations and optimize last mile fulfillment. Companies will invest heavily in R&D around warehouse and delivery automation as they scale up volumes. Spain’s Glovo is already piloting delivery via robots and autonomous vehicles.
Serving Business Customers: Quick commerce firms have an opportunity to serve business customers with their ultra-fast delivery capabilities. B2B quick commerce means supplying offices and businesses with perishable goods, stationery, equipment, etc. within 30-60 minutes. Busy startups and small businesses will be willing to pay a premium for urgent same-day delivery. Logistics platforms like Jumbotail and NinjaCart are disrupting B2B supply chains in India via quick commerce.

However, high fulfilment costs due to requirement of dense distribution network and efficient supply chains could restrain market expansion initially. Establishing warehouses close to customer locations within cities involve huge capital investments. Maintaining real-time inventory levels across such distributed networks also adds operational complexities for players.

Europe and North America currently lead the quick commerce adoption owing to high disposable incomes and busyness of consumers. But Asian regions like India and Southeast Asia offer largest opportunities considering their massive population bases and rapid technology adoption among young demographics. Within Asia, dense urban environments of tier 1 and 2 cities make them ideal testing grounds for last-mile quick delivery models.

Overall, while scaling challenges exist, innovations in predictive analytics, autonomous vehicles and drones could help alleviate costs in the future. Partnerships between retailers, restaurants and logistics players will also help players increase selection and offer hybrid delivery options. Those able to achieve high operating efficiency while meeting customer expectations for delivery speed should benefit the most from this emerging space.

Global Quick E-Commerce (Quick Commerce) Market Restraints:

Low Margins and Lack of Profitability: The quick commerce model intrinsically has slim profit margins due to high operating and delivery costs. Many firms acquire customers through promotions and discounts, delaying path to profitability. While order volumes are surging, losses are mounting as companies prioritize expansion over economics. Labor, real estate, and logistics costs also weigh heavily. Unless efficiencies improve, low margins will hamper long term viability and squeeze investor funding.
Intense Competition Risks: Frenzied competition is an overhang in this nascent market. Dozens of quick commerce startups are vying for dominance in top cities from New York and London to Istanbul and Manila. Ad blitzes and cash burns are being used to lure customers. Promiscuous users easily shift between apps to chase discounts. Consolidation will be inevitable as the market matures. Weaker firms will fold up or get acquired. Survivors will be those with the deepest pockets and sustainable economics.
Execution Challenges in New Markets: Quick commerce companies struggle with execution as they move into new geographies and lower-tier cities. Sprawl and congestion make fast delivery difficult. Mapping streets and finding optimal dark store locations is problematic. Sourcing quality inventory at low cost is also a hurdle. Consumer tech literacy can be a barrier in developing countries. Firms may lack familiarity with local context and regulations. Thus, expanding beyond core urban strongholds remains challenging.

Global Quick E-Commerce (Quick Commerce) Market Report Snapshots