The pandemic has brought about several changes in how businesses operate. First, it has caused tremendous disruption in the supply chain, causing the birth of a new sub-vertical of eCommerce named “Q-Commerce,” or quick commerce is the unique selling point (USP) of lightning-fast deliveries, providing convenience and instant gratification to customers. This is the beginning of a new era of time-starved, pandemic paranoid customers belonging to a generation who asks the critical question, “Why should anyone keep me waiting for me to get anything?” Several online eCommerce operations, especially those catering to daily needs and groceries, are entirely shifting towards launching a subsidiary app to take advantage of the q-Commerce boom. And the truth is, if online retailers do not deliver fast, they risk losing their customers faster.
How does Q-Commerce work?
Delivery in less than an hour sounds almost impossible. However, traditional eCommerce operates with warehouses generally located in the outskirts of major cities, are well-stocked with a wide variety of products, and have ample floor space.
The secret ingredient of q-Commerce is “dark stores.” It is a micro-warehouse setup closer to the place of delivery. It is generally located near where the app receives the bulk of its orders and has a restricted stock of the most ordered/high demand items with smaller floor space. The stock in these dark stores is replenished regularly.
Apart from “dark stores,”’ Q-Commerce models also bring into the network a key player, your neighborhood grocer, to cater all those items that aren’t available in the closest micro-warehouse.
Does the future of Q-Commerce look bright?
Convenience is a valuable asset that Q-Commerce promises to deliver on by providing on-demand, time-poor consumers, albeit at premium prices. A study by a famous consulting firm estimates the current value of q-Commerce to be $300M and expects it to reach $5B by 2025 in India. However, the same firm estimates that only 20 million households in India are addressable by current q-Commerce operators. India has about 250 million households. The robust networking of neighborhood stores will bridge the gap.
A leading food-tech platform has recently announced a $700MM investment into its q-Commerce venture. Tech giants, brands producing CPG brands, and traditional retailers are jumping onto the q-Commerce bandwagon and investing billions of dollars worldwide. Online purchases in the US alone have soared by $63B in 2019 and 2020. Estimates are that more than 55% of consumers in the US would have tried ordering groceries online by the end of 2024. An Oracle report suggests an 18% growth in online grocery consumers in the pandemic era, with 75% choosing delivery over the pickup. The overhead for Q-Commerce is comparatively less than traditional eCommerce. This translates to a business opportunity for small and medium-sized operators. Local businesses will also benefit from the influx of Q-Commerce as they will be integral to the overall success.
Technology that Drives Q-Commerce
eCommerce and Q-Commerce players must have technologically robust applications to satisfy modern customers’ expectations. Every process, from the loading of stock to micro-fulfillment centers to the step where products reach the customer’s hands, should be managed diligently through software. Order and delivery management systems, inventory management, replenishment, customer notifications, return/replacement, and the refund should be automated. Since Q-Commerce thrives on competitive pricing, an intelligent subscription management logic is also recommended. Ideally, the software used for Q-Commerce should have scope for scalability and be flexible for upgrades so that it’s always current with consumer trends.
Technology that helps semi-skilled personnel identify the right product from the warehouse in the quickest possible time also goes a long way in making the deliveries faster, such as that provided by warehouse management applications. All products in a warehouse should be barcoded and located with a simple scan of the barcode, which should identify whether it matches the ordered product or not and where a particular product is located.
Why is Data Analytics a Natural Ally of Q-Commerce?
What does a customer need? When (the time of day, week, and month) does he usually need a particular product? If recommended, what are some of the products that he could buy in the future?
Those are critical customer buying patterns that every Q-Commerce operator should ask and try to get relevant “first-party” consumer data by implementing intelligent data gathering and analytics solutions. In addition, rapid turnover, foundational to Q-Commerce’s success, makes it an even stronger case for the necessity of data insights.
The following are a few analytic best practices:
- Showcase the individual-level data regarding products viewed, wish-listed, added to cart, and purchased to the Q-Commerce operators. This helps Q-Commerce stores curate and customize in-app recommendations to each customer. These products have a higher chance of being purchased sooner if recommended than if they try to search for them themselves.
- Employ predictive analytics to foresee future purchases, timing, quantity, and locality, based on future events. For example, all-purpose flour during Christmas and New Year’s Eve is sure to be in high demand to prepare cakes. This can help optimize inventory management, plan and schedule deliveries, and make decisions regarding a permanent/part-time delivery workforce.
- Consumer Packaged Goods (CPG) make up most of the q-Commerce inventory. Hence valuable insights about CPG goods can help manufacturers be aware of changing customer tastes and fine-tune their products accordingly for better turnovers.
- Implement data analytics to gauge customer preferences and shopping behavior that influence third-party marketing and business decisions.
- Have analytics curate cross-sell and up-sell products and display them prominently to the customer at appropriate points during the purchase journey to entice them to stay on the app longer. By offering curated products and offers to consumers based on historical behaviors, q-Commerce businesses increase the probability of increasing purchase cart totals.
- Finally, since q-Commerce takes rapid delivery seriously, integrating Google maps would be critical to recommending the shortest and most traffic-free routes to delivery destinations.
By utilizing predictive recommendation engines powered by AI and machine learning algorithms, q-Commerce companies tap into Big Data’s promise by hyper-personalizing a consumer’s online shopping experience. How well q-Commerce start-ups and market participants efficiently utilize data will determine their chances of becoming profitable and emerging as market leaders.
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