From micro collaborations and alternate revenue streams to improved unit economics, here’s looking closely at the trends of quick commerce through the expert lens
Given the current consumer and market context, building a sustainable Q-Com business will require work on the below discussed themes.
1. Focused micro-market play
Q-com players need to focus on expansion in metros and select top cities as they have a higher share of consumers willing to trade time for a higher price. Additionally, as the festive season is round the corner, many startups are also offering services till late at night in select cities, and are expected to add to their infrastructure, staff strength, and inventory to prepare for an expected 25-30% increase in demand.
2. Dynamic delivery lead times
There is a minimum set-up cost for every dark store and to sustain the cost, players are likely to settle for a 40–60-minute delivery time in the future for most orders. This clustering of orders will exponentially enhance operational efficiencies and reduce last-mile costs.
3. Improved unit economics
The current ticket sizes and margin profile results in delivery cost eating into two-thirds of the gross margins. Hence, they will need to work on product assortments and private brands and increase frequency through targeted offers. The latest trend we have seen is some of the e-commerce companies offering mobile phones and cosmetics in one hour. The average ticket size for a 20-minute delivery model is between Rs 400-450, while the average ticket size for a 40-minute delivery model is expected to be between Rs 700-800. The higher ticket price, coupled with the cluster delivery system, will augment the bottom line drastically.
4. Charging for deliveries
To sustain business models, Q-com companies might have to charge a delivery fee if the ticket size is below a particular threshold. As Indian consumers evolve, paying for shorter delivery times and small purchases could be accepted.
5. Micro collaborations and alternate revenue streams
A more collaborative experiment between Q-com and traditional players can now be seen. Organized Q-com players will actively look at developing alternate revenue streams, either in the form of advertisements or joint product development with FMCG brands.
6. ESG considerations
The minimum number of riders and trips for each dark store to be profitable might lead to each store contributing nearly 66 kilos of carbon dioxide per day (unless electric vehicles are used). There will also be increased consumption of plastic and paper bags. This merits some serious action steps by Q-com players to improve their environmental sustainability quotient. Top e-commerce players are gradually pledging to induct a fleet of electric vehicles for their delivery partners to achieve the electrification of last mile delivery. To ensure sustainable delivery of custom and smaller ticket-size models, it is imperative to add electric vehicles to the delivery fleet.
The Consumer Side of Q-Commerce Insights from the Grant Thornton Bharat Survey
Discounts and offers sway users
The push for consumer acquisition is currently driven by aggressive pricing. It is interesting to note that although the dependence on impulse buying and instant deliveries is high, consumers are not entirely evolved as their primary reason revolves around cost. 81% respondents highlighted discounts and
offers as the main reason to buy products using Q-Com.
Q-com baskets dominated by food items
This trend indicates that impulse or spontaneous buying among consumers has increased with convenience and choice. Snacks (82%) and fruits and vegetables (68%) are the top two products ordered on Q-com portals. As many as 56% Indians choose to buy personal care products using these services while only 54% purchase staples.
Shift on Consumer Dependency on kiranas
As many as 70% respondents noted a fall in dependence on traditional retailers. Only 23% still prefer a local convenience store for immediate order fulfillment. Around 30% of the respondents said they order every alternate day; 40% respondents prefer to order once a week.
Delivery time and Quality are major concerns
Delivery time and quality of the final product came out as the main concerns in the survey with 40% of respondents quoting non-adherence to the committed delivery time as their biggest pain point. And 33% respondents reported getting irked by the quality and freshness of products. This preference will put immense pressure on Q-com platforms to improvise their last-mile deliveries as well as efficiently manage their stock-keeping
units (SKUs).
The article is written by Naveen Malpani, Partner and Consumer Sector Leader, Grant Thornton Bharat, and Viswanath P, Partner, Grant Thornton Bharat. It first appeared in the Sept-Oct issue of the Phygital Magazine.
