by The Booming Trend of US Quick E-Commerce Market
One of the growing trends in the e-commerce space over the past couple of years has been the rise of quick delivery or quick commerce services. These services, popularly known as quick commerce, promise delivery of goods within an hour or sometimes even less. Major tech startups as well as large e-commerce giants are rushing to enter this high-growth market by launching their own quick delivery services.
The Advantages of US Quick E-Commerce Market
The most obvious advantage of Quick E-Commerce is the convenience it provides to customers. In this fast-paced world, people have less time and want everything delivered right to their doorstep as quickly as possible. Quick delivery services eliminate the need to plan grocery shopping or other errands ahead or wait for 1-2 days for delivery.Customers can order even last-minute items and have them delivered within an hour.
This high level of convenience and immediacy has made quick commerce extremely popular among urban populations. Its success is largely driven by customers living in densely populated cities who prefer on-demand delivery over visiting stores. Quick delivery is also appealing for unexpected needs that arise and for replenishing daily or weekly essential items.
Expanding Product Categories
Initially, quick commerce focused only on delivering groceries and convenience store items. However, as the market expanded, services began offering a much wider range of products. Today customers can order almost anything through quick delivery – from cosmetics, personal care items and electronics to home accessories, stationery, toys and much more.
Some key categories driving growth include prepared meals/food, over-the-counter medication, pet supplies etc. Product selection has become an important factor of competition among services.
Penetrating Major Cities
Major quick commerce players like Jokr, Gorillas, Buyk and GoPuff have aggressively expanded operations across major US cities like New York, Washington DC, Chicago, Boston, Philadelphia, Houston, Dallas, Denver and Seattle. They aim to achieve the maximum possible coverage in these dense urban areas for faster deliveries.
New York City alone represents a huge potential market with over 8 million residents living in a small area. Services here enjoy high order volumes and frequency. Other cities like Los Angeles, San Francisco, Miami also see significant demand for quick deliveries. This has led to several new firms entering these markets and competing on delivery time, selection and prices.
Challenges of Quick Scaling
While quick commerce promises high growth, scaling operations poses several logistical and operational challenges. Maintaining delivery fulfillment within the tight timelines of 30-60 minutes requires huge investment in developing specialized last-mile infrastructure – large local warehouses, fleets of personal delivery vehicles and staff.
Having sufficient inventory across locations to meet demand is also difficult. Services need to accurately forecast sales to maintain the right mix and volumes of products. They must constantly replenish goods to avoid out of stock situations. Hiring and retaining qualified delivery personnel is another major issue, especially with the extremely demanding nature of the work.
Ensuring the quality, safety and integrity of perishable products during storage and quick transportation adds to the complexities. Last-mile delivery is the crucial yet most expensive part of operations. High rentals in urban areas drive up real estate costs for micro-fulfillment centers. Managing a smooth workflow and keeping customers satisfied with the experience is also critical to retention and growth.
Competition Heating Up
With the sizable opportunity in quick commerce, competition is intense. Apart from independent startups, deep-pocketed players have jumped into the fray, increasing competitive pressures. Grocery giants like Instacart, Walmart and Amazon have rolled out their own quick delivery services, leveraging existing distribution infrastructure and customer loyalty.
E-commerce majors like GoPuff, Shipt and DoorDash have dedicated substantial resources towards competing aggressively on delivery speeds, prices and product assortment. Traditional food delivery platforms like Uber Eats have also started quick commerce deliveries. This competitive environment forces participants to constantly evolve offerings,beef up fulfillment capabilities and explore new revenue streams to gain an edge.
Funding Pouring In
Backed by strong growth projections, quick commerce has seen huge flows of funding from investors betting on the immense potential of the business model. In 2021 alone, global quick commerce startups raised over $5.5 billion. Major funds were raised by market leaders such as Gorillas ($1 billion round), Jokr ($290 million) and Getir ($768 million).
In Summary, the pandemic has certainly accelerated demand and given quick commerce the push to go mainstream. This has made investors even more confident about the viability and scale of businesses adopting the model. With large pools of capital funding their expansions, startups have been able to rollout operations in multiple cities rapidly, fueling further growth. More funding rounds are expected in 2022 as well with new players emerging to take on existing giants.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
