Is quick commerce a sustainable business model?

The entire delivery model got a big push during the pandemic and it was the only way to get the daily supplies of groceries as the major cities across the world were under lockdown.

The need to get your ordered items within 30 minutes or even lesser gave birth to Q-commerce or Quick commerce.

My newsletter is going to talk about the feasibility of this model and how q-commerce operators could bring some kind of profits into the business.

Most VCs (venture capitalists) have learned that they need to identify the startup ideas quite early, experiment, and if not working then close it.

Gone are the days when they pumped in the capital just to prove their point that the concept or idea would survive the test of time.

Now, with markets opening up and people flocking back to retail stores, the need for getting deliveries within 30 mins or lesser is facing demand slow-down challenges.

To learn about the business model of food delivery apps,?click here.

So, what is the best way for quick commerce companies to survive in the current climate?

Dark stores/ warehousing costs to be reduced

Normally to ensure delivery within 30 mins, the q-commerce companies operate dark shops or warehouses within the city, which becomes a costly affair.

Instead, they need to tie up with hypermarkets or retailers within the vicinity of the residential areas for easy access to the merchandise.

Renting spaces within the existing retailer is more affordable than managing several warehouses.

Identifying loss-making Postal codes or Pin codes.

No point in servicing areas that are crowded and full of traffic in which the rider/ biker gets stuck and expenses on these deliveries increases.

It's better to appoint a Point of sales (key retailer) by diverting the orders to them and letting them service these crowded areas

Reduce manpower costs.

The biggest cost head for q-commerce is their bikers and riders.

Many quick-commerce players use gig economy riders (part-timers) to save on costs.

Q-commerce premise

The premise of Q-commerce is that people expect faster deliveries within 10-30 mins from the time they place an order.

Personally speaking, I don’t think consumers would mind getting their toothpaste or vegetables in 3-4 hours’ time rather than 10-20 mins. So a reality check needs to be done.

“Ticket size” is what Q-commerce operators need to monitor.

?They need to bundle the products in one single basket with high-margin products so that the whole transaction becomes feasible for the business.

Summary:

To sum up, whether the sector will still be facing the same problems in the next 12 months or so is unclear, however, what is clear to see is that there will be fewer players on the scene dealing with them. I foresee, correction in terms of Q-commerce players in the market, Only a few will survive.

Any retailer or Business owner, who needs a helping hand to scale their business or relook their business from fresh perspectives may reach out to me at?[email protected]

Business is all about understanding human psychology and behavior, all successful retailers and brands are always striving to LEARN this complex aspect of the customers.

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