The big Q-commerce race

There are few more dynamic spaces than #Qcommerce (Q=quick) or #lastmiledelivery. Whilst the business case for #takeaway food delivery is clear the business case for #groceries is more complex. So what does the future hold for this rapidly expanding business model?

 Consumer view: One thing that never fails to surprise me is how much consumers value convenience. If we can save a car ride, a walk or even a click, we will do it. There are distinct forms of laziness. One is physical (avoiding moving) and another, is mental (avoiding thinking). As a result of our constant pursuit to remove friction, new behaviours can become habitual.

On a personal note, a recent COVID infection left my family and I housebound for a fortnight and pretty run down for the following weeks. The #Glovo service offered in Barcelona was invaluable and I must confess, since then we have been completely addicted.

 Employee (or not) view: Something I am sure we all think about is who is paying for our convenience? Look around any city and you will see hard-working delivery drivers moving brightly coloured boxes. Recent industrial action has bought workers pay and conditions into the spotlight. As these business grow from start-up to permanent occupations, surely it is an imperative to ensure fair working conditions for the drivers who are sweating for our convenience. There is a of course another trend that the future is automation. Our streets will no longer be filled with cyclists and moped drivers but autonomous vehicles delivering to our doors.

Competitor Landscape: Source Kantar

 There has been so much investor activity in this space I have lost count of recent start-ups and IPO's. The above map shows many players but there are already several more. Competition is good and will drive innovation in this space. However, my prediction is their will be considerable consolidation in this space with larger cites covered by a handful of operators. Consolidation will bring scale and a path to profitability….which takes me to my next point. 

Path to profitability: One of the things I like to do in my free time is geek-out and day dream about business models and paths to profitability. During lockdown I tried to engage my family but they are not interested. My nine year old smiles sometimes, but its only when I talk about burgers or Sushi. Lockdown does these things to us!

Thankfully @SimonMayhew from #IGD has modelled it and below is a snip from an interesting article he wrote last year:

Whilst underlying profitability varies by route to market the picture for Groceries is quite ugly. Today, it's hard to see a path to profitability but I'll resist the temptation to sound like a dinosaur. It's worth remembering, that’s what the industry stalwarts said about Amazon 20 years ago and that Jeff Bezos guy did pretty good!

 Brands Perspective: With the all of the technological advances and new business models its reassuring to know that some fundamentals don’t change. Brands need to be where the consumers are and today consumers are flocking to the Q-commerce for the speed and convenience offered by the channel. The current and future growth of this space is undeniable. The challenge for Brands is where an how to engage. The first questions is which categories and brands have most potential? Second, how do you engage from a route to market point of view? Do you engage directly, or do you leverage wholesalers to handle complex distribution networks with low volume? For providers that are picking from store how do you influence and support growth of your brand? Given the varied routes to market how do you engage at the point of purchase?

 In summary Q-commerce is moving incredibly, err, quickly. In the short term there is a race to gain scale and market share. In the longer term there is much more work to do to build a sustainable business model. In any eventuality it seems this channel is here to say and will play a bigger and bigger role in our lives.