Is quick commerce making hyperlocal delivery the norm rather than an add-on?
Updated: Aug 26, 2022
Particularly since the pandemic, the Indian hyperlocal market is on steroids. Hyperlocal business models made life easier for the majority of people, especially in urban areas, because it was necessary to preserve isolation and go contactless. The Covid issue had a profound effect on people's lives all throughout the world, forcing us to rearrange our daily routines. Customers found comfort in hyperlocal delivery models in the face of several lockdowns, restricted movement, border restrictions, etc. Companies quickly turned their attention to digitalization after recognizing this window of opportunity.
It has now become imperative that we incorporate a digitalized hyperlocal model into our daily lives and the epidemic has only sparked a massive transformation in the hyper-local tech industry unlike anything that has ever happened before. India has a vast playing field for businesses to grow and experiment in the hyperlocal vertical due to its distinctive composition of people and sectors, and for this reason hyperlocal delivery got a new add-on in the covid era named ‘Quick Commerce’.
What is Quick Commerce?
As the name suggests, it is all about the time and speed. Consumers can typically anticipate delivery within an hour after placing an order because of quick commerce.
According to a Deloitte survey, during the pandemic, 50% of consumers may have paid more to comfortably purchase what they required. They paid extra for features like buy online, pick up in-store (BOPIS), and on-demand fulfillment.
Quick delivery commerce has become increasingly popular over the past few years .The roughly $45 billion TAM pie that is at stake represents a sizable portion of the potential growing market. This industry is expanding quickly thanks to rising online website traffic and consumers' preference for online purchasing over traditional brick-and-mortar stores.
According to a recent Redseer analysis, the Q-Commerce sector in India is expected to increase by 10-15x to reach over $5.5 billion by 2025. The possibility is significant given that nearly one-third of India's USD 1 trillion annual retail expenditure is made up of food and daily essentials. Startups are counting on the ideal compatibility of the Q-commerce model with these areas to help them succeed. With a 13 % Q-Commerce penetration as a percentage of online grocery, India is reportedly already outpacing other global economies in terms of fast commerce adoption. Europe has a 3 % share compared to China's 7 %. There is significant space for growth, as evidenced by the Total Addressable Market (TAM) of USD 45 billion.
But do we really need Quick Commerce?
There are, of course, gaps, and the one between last-mile delivery and the delivery partner network is one that Q-commerce players cannot afford to ignore. The drivers performing these deliveries face personal dangers as a result of the pressure to do them in less time. Chennai police recorded 978 traffic offenses committed by delivery personnel who worked jointly for Swiggy, Dunzo, and Zomato in March 2022.
In retrospect, this is nothing new. It has long been used in the food delivery industry. It was just a matter of time before customers could obtain other things delivered directly to their doorstep thanks to eCommerce firms' continued reductions in delivery times. We were already adapted with this idea and now when it is actually happening we are moving towards the way of quick commerce as it is convenient, saves our time of in-store shopping and speedy doorstep delivery. More availability and rider safety can be achieved by multiplying the dark network stores to spread them to both urban and rural areas.
As Pranay Jain, Director at Avendus Capital, quoted - “ Do customers need something in under 15 minutes? Not really. But it is available, should the need arise.”
Outlook on India’s Quick Commerce
The following players are set for success, listed from highest to the lowest:
Zomato and Swiggy, two companies that deliver groceries and food, both boast of sizable fleets with high usage rates. To retain the clients they already have, they provide membership advantages.
BigBasket and Blinkit (the former Grofers): BigBasket and Grofers got their warehouse expansion off to a quick start. Some of them have the ability to transform into mother hubs that connect to the dark store network. Although they carry a wider selection of home essentials than Swiggy and Zomato, their rider fleet is significantly less than that of those two services.
Zepto, Dunzo: A survey by AI-platform Bobble claims that Zepto has the highest user growth ( 946 percent within 90 days). Dunzo outperformed Zepto and all the other q-commerce competitors in terms of time spent on the app.
With the following factors in play, the future of quick commerce will continue to favor this growth graph:
SaaS developments: The commercial sector is encouraged to adapt to hyperlocal by developments in technologies like AI, blockchain, and big data. Deliveries will keep getting quicker and easier, adding more and better options to the buying experience. Hyperlocal will succeed in large part because of intelligent SaaS platforms that perfectly coordinate multipoint pickups and delivery locations while nailing end-to-end visibility.
Robotics and drone deliveries: The next "IT" thing in logistics and delivery is robotics. Many businesses are already experimenting with drone delivery, thus the technology is expected to progress hyperlocal delivery as well, especially for quick deliveries without endangering the lives of the riders. In addition, supply chain management's backend procedures and first- and last-mile logistics delivery
Investment influx in the supply chain management and logistics industry- The logistics process is the foundation of hyperlocal. The industry will continue to experience a surge in investment, particularly for the creation of infrastructure such as dark shops, multi-user sorting facilities, collecting hubs, etc. to make the chain more efficient. Hyperlocal deliveries will continue to rise due to the need to quickly adjust to changing customer behavior, mobility limits, demand and supply dynamics, and the need to create resilient businesses.
New markets and evolving consumer habits - Border controls, lockdowns, supply chain disruptions, and other factors brought on by the pandemic and living in the post-crisis era reduced global connectedness and forced both retailers and consumers to rely on locally accessible goods and resources.
New offerings-The quantity of products that are in demand will increase along with the expansion of quick commerce services. Currently, many quick commerce services only deliver groceries, but this is expected to change to include other FMCG products as well as other goods in the future. Key categories that are already developing include beauty, health, and medical. This is probably also applicable to luxury goods, entertainment, office supplies, and books.
Example : Spanish quick commerce service Glovo has already expanded its service by quickly completing orders for furniture, medicine, and technology. Almost everything from the biggest shopping center in your city can be delivered right to your house in a matter of minutes.
In Conclusion - Although the usage of quick commerce has increased, it was already on the rise before the pandemic. And after the pandemic these recently acquired habits won't be changed anytime soon. The demands of today's digital natives for quick gratification in their internet buying will not change. And more and more eCommerce businesses will start to provide delivery in minutes now that the technology is available.
There are countless opportunities in this industry. Due to its industry-agnostic character, the sector offers limitless potential and opportunities and will fundamentally alter how we now understand e-commerce. The nation has set the stage for a market that is well-positioned for quick commerce.