In the age of smartphones and tablets, our lives are becoming increasingly fast-paced and convenient. One trend that capitalizes on exactly this is Quick Commerce. Thanks to Quick Commerce, consumers can place an order in just a few minutes and often receive it in the same amount of time it takes you to finish reading this blog post. We at Mawave want to explore the concept of Quick Commerce, clarify how it has changed shopping behavior, explain why it is advantageous for e-commerce companies to sell their products through Quick Commerce providers, and discuss how this business model might evolve in the future.
Quick Commerce: What is it exactly?
The term Quick Commerce (or Q-commerce for short) refers to the speed at which products can be ordered and delivered. While online grocery shops like Rewe, Edeka, and others require two to three days of lead time to deliver goods, providers like Flink, Gorillas, Delivery Hero, and Getir are much faster! The big players in Q-commerce offer delivery of groceries, consumer goods, and household items within just a few minutes.
In addition to these providers, there are also Quick Commerce companies that specialize in niche products. While they may not be quite as fast—taking a few hours instead of a few minutes—they still offer same-day delivery. The delivery service Alpakas, for example, offers groceries and cosmetics without packaging, aiming to appeal to environmentally conscious consumers and contribute to the zero-waste movement. ARIVE specializes in premium products, offering not just groceries but also electronics, cosmetics, and fashion from high-end brands.
The relevance of Quick Commerce
By their business model, rapid delivery services combine two advantages: on one hand, they enable convenient online shopping from home, just like any other online shop. On the other hand, customers receive their products in a very short time, similar to shopping in a physical retail store. The Quick Commerce concept is therefore aimed at satisfying immediate needs and is ideal for spontaneous, time-sensitive, or emotional purchases. For example, when you are cooking and realize you are suddenly out of pasta sauce, or when you are having a movie night with friends and notice you have run out of chips.
This concept fits perfectly into our current times: our shopping behavior has changed drastically, especially due to the pandemic and the associated quarantine restrictions. During this period, Quick Commerce providers became true everyday heroes, as many people could not or did not want to leave their homes and therefore could not go shopping. A survey by the digital association Bitkom confirms that online grocery shopping has received a major boost as a result. The experts behind the study are certain that new business models like express grocery delivery in just a few minutes will ensure that more and more groceries are purchased online, even independently of COVID-19.
Quick Commerce also aligns with the convenience megatrend, as many people are looking for solutions that make life easier and more comfortable. For the convenience and speed that Q-commerce providers guarantee, customers are even willing to accept minimum order values, delivery fees, and extra costs. However, most consumers do not realize that Quick Commerce purchases are more expensive than shopping at a retail store. At least, a study by the management consultancy Oliver Wyman reaches this conclusion: 60 percent of respondents believe that Quick Commerce purchases cost the same as shopping in retail stores. Furthermore, 17 percent even estimated that Q-commerce providers were cheaper. For their study, the experts analyzed typical shopping baskets from Quick Commerce orders and supermarket purchases and found that costs at providers like Flink are up to 16 percent higher than in retail.
How does delivery within a few minutes work?
When choosing a provider, price and delivery speed are the most important factors for customers. It is very easy to compare which provider performs better, as the apps display in real-time with every order how long the delivery will take and how much it costs.
Competition among delivery services is fierce: according to the survey by the management consultancy Oliver Wyman, they cannot yet rely on customer loyalty, as customers decide based solely on performance. To trigger brand loyalty, providers like Gorillas try to sell exclusive products in their shops—such as a collection of t-shirts, hoodies, and merchandise like keychains that are only available there. Since there is no real customer loyalty yet, it is all the more important that providers deliver as quickly as possible. And that works thanks to the following points:
Local presence
Quick Commerce providers focus primarily on large cities or metropolitan areas. There are local warehouses, so-called "dark stores," where employees pack orders and deliver them from there. Since there are often several of these warehouses in larger cities, customers are usually always nearby. Routes are also planned to ensure the fastest delivery at all times, further reducing wait times.
Some providers, such as Flink, also work with Rewe and pick up products directly from the stores, which further shortens delivery times. The grocery chain also benefits from this collaboration, as it can offer Q-commerce in addition to standard online deliveries.
Limited product selection
Quick Commerce providers often limit themselves to a restricted product range that is frequently in demand in the respective region. Due to limited inventory, the warehouses remain more organized, which speeds up the processing and delivery of orders. Most providers also deliver by bicycle or e-bike, as traffic in large cities is often too slow. Given the limited cargo capacity on two-wheelers, it makes little sense to handle large orders like a TV or a washing machine—another reason why providers specialize in lightweight consumer goods and household items that are needed quickly.
Opportunities for E-Commerce Brands
More and more (online) brands are turning to Q-commerce to reach a wider audience with their products. In 2021, for example, Douglas used the Gorillas app to sell around 25 exclusive beauty and lifestyle products during the holiday season. The two companies even received the German Brand Award for this collaboration, as the jury felt they had created a new instant beauty shopping experience. The D2C brand SNOCKS has also successfully tested sales via quick commerce, generating 30,000 euros in revenue per month during peak times.
Competitive advantage
The major advantage of this business model for traditional online shops is that they can usually deliver their goods faster than via their own website or app. According to an EHI study, companies are primarily driven to offer fast delivery times by competitive pressure. Because quick commerce providers deliver products conveniently to customers' homes, they definitely have an advantage compared to shopping in brick-and-mortar stores. However, fast delivery also differentiates them from online competitors. A study by the management consultancy Horn & Company in collaboration with the research institute INNOFACT concludes that the limited range of products offered by quick commerce players hardly allows for multi-brand strategies. This means that if brands have managed to get their product listed with a quick commerce provider, they often beat the competition at the same time.
Same-day delivery also offers the advantage that customers are safely at home and can receive their order easily without having to pick it up at a parcel station or post office. This, in turn, increases the satisfaction associated with a product.
However, there are also companies that have deliberately introduced a counter-trend and are still successful: Galaxus, the largest online department store in Switzerland, for example, explicitly offers a "slower delivery" option to relieve its own logistics crew, especially on Mondays and in the evenings. According to the company, this option is very popular with customers and is selected for 17.6 percent of orders in Germany. In Switzerland, it is 14.5 percent, and in Austria, it is as high as 25.8 percent. This "snail mail" option allows Galaxus to meet stated delivery times and increase customer satisfaction.
Reach & visibility
Q-commerce also offers e-commerce companies the chance to increase their reach and reach new target groups. Many customers browse through the range when ordering to try something new or to reach the minimum order value. As a result, brands gain visibility and may end up in the shopping carts of consumers who would not have bought the products via the brand's online shop.
However, the decisive factor is whether the target group of the quick commerce provider matches the target group the e-commerce brand wants to address. Companies trying to reach a younger target group have the best chances. The user base of quick commerce is rather young: according to surveys by Innofact, 16- to 29-year-olds make up the largest age group, followed by 30- to 39-year-olds. Only about one in three quick delivery service customers is over 40.
Challenges that quick commerce brings for brands
Brands should keep in mind that the user experience when using Q-commerce platforms is crucial and that information must be presented in an appealing way for them to stand out from the crowd. However, this point is not in the hands of the brands. Neither is the service. If quick commerce services offer poor service, customers might associate negative emotions with a brand's product.
At the same time, this theory also works the other way around: if consumers receive their order quickly and everything goes well, it is more likely that they will become fans and even order directly via the brand's website – a good opportunity to win new customers, especially in times when customer acquisition costs are constantly rising.
The problem: Many quick commerce providers have a controversial image due to allegations that they do not treat their employees fairly and offer poor working conditions. The FairWork research project investigated working conditions at Q-delivery services in this context and found that there is certainly room for improvement at some providers. Gorillas, for example, could not guarantee that it would pay its employees a living wage in the 2021 study. Furthermore, according to the study, they do not offer sufficient protection against work-related risks.
One reason for the sometimes poor working conditions could be that quick commerce companies have high costs for marketing, personnel, and other expenses and therefore often operate in the red. Some providers are struggling with this in particular: Gorillas was acquired by Getir at the end of 2022, Flink filed for insolvency in Austria, and Knuspr is postponing its expansion to Hamburg indefinitely. Many competitors are therefore also cooperating with each other to reduce costs and enable more deliveries per hour. For example, the riders – the bicycle couriers – of Getir and Lieferando deliver groceries in the morning and restaurant food in the evening. However, this leaves the question of fair working conditions unanswered.
Conclusion
Despite the difficulties in being profitable, quick commerce will be one of the top trends in retail over the next few years. According to the Quick Commerce Report, the potential for the German market in 2030 in 40 cities with more than 200,000 inhabitants is a total of 33.6 billion euros. Since the concept can certainly be worthwhile for online shops, there could also be further developments in this regard. We at Mawave are excited to see where the quick commerce journey will lead.
