Quick commerce is a new online business trend where sellers deliver orders to users almost instantly. This type of delivery, which saw strong growth during the Covid-19 pandemic, seeks to fulfil the most impatient consumers’ needs. Quick commerce outlets with greater logistical capacity can even manage to guarantee the delivery of products within 10 to 30 minutes. Some examples are Glovo, Gorillas, Uber Eats, or Amazon’s immediate dispatch service. Despite the advantages, quick commerce, also known as q-commerce, requires strict pricing control and a series of key factors to work optimally. We explain below.
What do you need to implement quick-commerce in your business?
The first thing to consider is that quick-commerce tends to apply to consumer staples retailers, selling consumables or household products. These are products that the user needs almost immediately, like food delivery services. Then, to fulfil consumer’s needs, you need to have a solid logistical process which includes:
- distribution centres: These should be located as close as possible to the stipulated delivery area. Businesses should have:
- their own converted premises as distribution centres or dark stores.
- strategic links with local companies that will supply the business. In these cases, the business acts as a delivery service, as it sells third-party products.
- a fleet of delivery drivers or riders: A delivery team, internal or sub-contracted by a business dedicated to them exclusively, as is the case with Deliveroo.
Regular coordination between the distribution centre and riders is critical to meet the customer’s agreed delivery times, usually within 2 hours. In addition, tight inventory control is essential, using automated tools to facilitate online demand management.
Advice for setting prices in quick-commerce businesses
Profitability can be challenging for q-commerces if they do not follow an appropriate pricing strategy. The main difficulty is that consumers buy few products and only sporadically. On the positive side, businesses find that as consumers prioritise the speed of delivery over other factors, they are less sensitive to the prices of products. According to the Annual e-commerce study by IAB (Interactive Advertising Bureau) Spain, 2020, delivery time frames are almost as important as the price for these users. Their primary concern is to receive products within the estimated time frame.
As long as you are offering a positive buying experience, it is possible to set high prices. Once production and logistics costs are covered, the profit margin contributes to the brand or retailer’s growth. In addition to having local businesses as suppliers, you can add a small commission for delivery management to try to protect that profit margin.
To ensure your prices are consistently competitive, you can use pricing tools to monitor your own and competitors’ prices. In this way, you can adapt to changes in supply and demand and stay one step ahead of competitors’ moves. This is essential with this online shopping trend where speed equates to success.