What is behind the rise of quick commerce? | Explained Premium

Quick commerce revolutionizes shopping in urban India with rapid delivery, data-driven customization, and potential anti-competitive practices.

The story so far: Quick commerce’s initial utility was presented to under-lockdown customers during the COVID-19 pandemic. However, the youngest avenue of digital shopping, having outlived its initial utility, stayed on to alter how people shop — particularly in urban India.

As a subclass of e-commerce, quick commerce (Q-commerce) entails rapid delivery, typically in 10 to 20 minutes, of products to the customer’s doorstep. This is facilitated by an elaborate network of dark stores and/or distribution centres. Dark stores refer to warehouses used by the platforms solely to fulfil online orders, with no in-person shopping. The idea is to be in close proximity to the consumer to facilitate faster deliveries.

Additionally, unlike a traditional retail store or modern retail (super or hyper markets), quick commerce based around a mobile app benefits from customer data to create a feedback loop. This helps them provide a customised shopping experience in addition to planning their inventory and responding better to the demand of a product (and categories). An example could be estimating when to stock up a certain product that has a seasonal demand or an abrupt demographic influence, among others.

According to a paper by the Centre for Transportation and Logistics of IIM Ahmedabad, quick commerce is beneficial to retailers owing to the prospect of enhanced brand awareness among consumers citing their proliferation. Angshuman Bhattacharya, Partner and National Leader for Consumer Product and Retail Sector at EY-Parthenon, observed that the availability of low-cost employable manpower, of a certain age and economic profile, has been among the crucial factors for the uptick and efficiency of quick commerce in India. The other aspect is about abundant choice. Scale also enables supply side advantages to quick commerce platforms. “If an individual company has to distribute a frozen or chilled product, they could be required to place a freezer in a Kirana store which is very expensive,” he noted.

According to a survey by consultancy firm NeilsenIQ, 41% of urban consumers prefer modern trade, general trade 25%, e-commerce 22% and quick commerce 12%. Further, according to another consultancy firm Deloitte, large FMCG brands reported a two-fold increase in share of quick commerce within their total e-commerce sales. This represented about 35% of their online sales.

A separate Deloitte consumer survey (2024) also observed consumers’ preference for quick commerce over traditional e-commerce for purchasing food and beverages. It held this was because these were often “impulse purchases or immediate needs”. In contrast, the survey illustrated, e-commerce was preferred for home, beauty and personal care products which are generally more planned purchases. Modern trade however retained a consistent higher preference across all categories of products for consumers’ liking for the availability of large pack sizes for monthly groceries, better prices and discounts.

The other determining aspect relates to the minimum cart value for availing free deliveries. According to Mr. Bhattacharya, so long as the convenience fee is not excessive, customers would not mind. “Retail shops usually close around 8 p.m. Now, should a customer require something at 10 p.m., quick commerce is the only option. Else, there lies an unaddressed demand,” he said. The EY-Parthenon partner explained that that platforms’ path towards profitability would be led by the right mix of merchandise and brands, premiumisation and own labels rather than penalising low-cart sizes. “Driving efficiency in terms of manpower and vehicle productivity would be another crucial factor,” he held.