How “Instant Gratification” is Shaping Consumer Goods Business (and How to Overcome Last-Mile Delivery Challenges)

E-commerce has continued to outperform itself and even shock the world on many counts. What once took over a week to get delivered to our doorsteps can now soon be in our hands within 30 minutes or less of making a purchase. For a consumer base that thrives on immediacy, retailers are playing catch-up by reallocating resources, and even restructuring their whole business to align with the new ‘instant gratification’ model. Amazon’s same day delivery expectations have now been reset by 10-min deliveries by Binkit , food delivery companies are increasingly diversifying into consumables , and investors are throwing their weight behind tech startups that are focused on bridging all existing delivery gaps.?

But the path to today’s fast and furious commerce is laden with perils: yesterday’s peak season is now the new normal , that is posed to overwhelm current support systems (read: crowdsourced fleets, local warehouses, mobility drivers) in a world that is already fragmented by middlemen, lack of standardization, incompatible data systems, and much more. While fast delivery may seem to be the ideal short-term advantage to stay ahead of competition, without a resilient support structure, the speed cookie is bound to crumble sooner than later.

How Last-Mile Delivery Works, and How It Benefits Quick Commerce Advocates

The modern consumer has moved beyond product availability, cost-effectiveness, and convenience to speed, thus raising the stakes for all retailers. But there’s also good reason for them to adopt quick commerce: a new value proposition offers competitive USP, fosters brand loyalty, and drives greater margins on premium delivery. From food delivery to online shopping, the sooner a customer is satisfied, the more likely that they will stick with you in the long-run, and even tell their friends about it—and brands that embrace the speed culture early stand to become the biggest beneficiaries of q-commerce. Here’s how it works:

1. Evolution of “Dark Stores”: From product availability, packaging, pick-up to rapid delivery, quick commerce companies are able to do it all with the help of ‘Dark Stores’—an assortment of small local warehouses, where they stock up inventory that helps them not just deliver in record time, but also exercise control over pricing. As demand goes up, companies need to acquire more physical space, develop more dark stores, and bring down the delivery radius. Likewise, Ola’s new brand rejig includes setting up 500 dark stores across 20 Indian cities within the next 6 months .
2. Adoption of a Hyperlocal Strategy: Unlike the cashburn characteristic of dark stores, the hyperlocal model is comparatively asset-light. It includes local stock keeping units that have a generic assortment of products ready, from where riders purchase products and deliver straight to the customer. This strategy is rapidly gaining popularity with Reliance Industries investing $200 million for a near 26% stake in Google-backed Dunzo , a hyperlocal delivery startup.

While both models have their own pros and cons to be considered, short-term success will be a marriage of returns per dark store and GMV per rider. With quick commerce already expected to grow into a $5 billion industry by 2025, the limitations of this marriage will eventually be questioned, and finding early solutions to the following roadblocks might be the perfect antidote for tomorrow’s ecommerce woes.

The Three Key Roadblocks to Last-Mile Delivery Efficiency

While the audience for last-mile delivery is still under 15 million monthly transacting users , dwelling mostly in urban locations and fostered by the modern fast-pace life, the shift in consumer preferences is most likely to push overall delivery expectations down to under 30 minutes in the near future. Clearly, the quick commerce industry still has a lot of ground to cover, essentially three key roadblocks to overcome:

1. Restructuring Inventory: Future demand will drive the need for efficient restructuring of inventory, in both dark stores and hyperlocal units, with the additional empowerment of delivery partners to increase coverage, and add new fulfillment locations on a needs basis. Further, as demand expands from solely urban locations, a new economies of scale challenge will threaten the wide-scale functioning of the quick commerce ecosystem.
2. Automating Technology: Speed deliveries don’t offer the luxury of manual dispatch, route planning or delayed data sharing. Instead, it relies on fully digitized systems where data is fully synced between vendors, suppliers and customers. In addition to multiple delivery selection options, the future successors of quick commerce will boast the provision of real-time data and order notifications to end consumers.
3. Increasing Visibility: Most retailers are still engaged with third-party carriers and delivery fleets that are ill equipped for real-time tracking, making it harder for quick commerce aspirants to relay crucial information to its customers, and stakeholders. Real-time inventory management systems need to be developed, and delivery agents need to be trained in, to facilitate both speed and efficiency in all order deliveries.

As quick commerce continues to grow and expand into newer demographics, aspirants must take care to focus on both the short-term and long-term needs: make present systems sustainable to manage newer peaks, establish norms based on peer best practices, and engage in competitive intelligence study to help develop a robust business model. And when cracks start to show, efficient inventory management, coupled with the latest in logistical technology, and data systems can help thwart potential business disruptions.

For understanding and tracking best practices across the quick commerce value chain (procurement, partnerships, terms of trade, pricing intelligence, consumer offers, and more), reach out to Benori’s Consumer Strategy Desk at [email protected] .