Most traditional retail businesses, big and small, have struggled to navigate their journey of digital transformation. Due to the high costs associated with innovation, traditional businesses, not having access to high-risk capital, end up losing the battle with big-tech and end up getting disrupted.
One of the recent challenges faced by such businesses is the emergence of quick-commerce – a transaction taking 0 to 120 minutes from ordering to fulfillment. Quick-commerce, unlike e-commerce, is location-dependent. The location of the ordering customer is picked up and is connected to the nearest fulfillment center for immediate order preparation/picking and packing and delivery through a rider network.
More consumers than ever are interacting with their favorite brands and products online. The first step of this engagement was limited to having a presence on popular social media such as having a Facebook page or an Instagram profile for the brand. The second step in having a meaningful digital interaction with your customer is building the ability to acquire, transact and retain the customer through digital-only channels. For many consumers, the expectation of transactions is rapidly changing as well. The customer is now increasingly expecting their favorite consumer brand, supermarket, fashion brand to deliver goods quicker – in some cases immediately.
Most businesses, which have traditionally remained reliant on brick-and-mortar structures such as restaurants, supermarkets, and fashion brands, struggle with successfully transforming their business model that is catering to digital-first or mobile-first consumers.
In the last five years, if you are to ask any restaurant owner about their digital strategy, they would equate that to having a presence on an aggregator app. It was fine when delivery orders were a small percentage of total orders, and people preferred talking to the restaurant staff on phone for placing an order. However, with increasingly high delivery orders, due to COVID, and a very strong preference of younger customers to place an order with a few taps without any human interaction, restaurants are forced to either innovate or go out of business. Paying 30% or more commission on 10-20% of your total orders had a limited impact on the bottom line but with 30% commission now being applied to ~50% or more orders, most restaurants find their bottomline in red due to these commissions.
Similarly, supermarkets and grocery stores are being challenged by well-funded startups in the quick-commerce space. It’s evident that the current fundraises in the quick-commerce space globally (and even in markets like Pakistan), and the existing and growing muscle of Delivery Hero, in the form of Pandamart, will continue to eat the market share of local convenience stores and larger supermarkets. Grocery stores and supermarkets at least have to provide a convenient digital ordering and delivery service to their customers as a defense strategy – to ensure their customers do not move to other platforms. Or, the better ones, will take an offensive approach, and will expand into ordering and delivery in and outside of their vicinity providing a comparable experience.
These traditional businesses, such as supermarkets, restaurants, and fashion brands, already have an edge over new and upcoming startups, either in the form of having an existing relationship with the consumer or having a large inventory or in the form of an existing network of stores spread across different cities.
With the limited technology development experience of F&B brands and supermarkets, it is unfair to expect them to build world-class ordering and fulfillment systems that the customers are becoming accustomed to.
From our experience of building Blink, a SaaS-based technology platform for brands to enable them for quick-commerce, we have learned that only providing the ordering technology is not enough. There is a tremendous amount of opportunity in enabling these brands with an engagement platform that allows them to acquire and retain more customers.
A quick-commerce stack requires constant optimization of the ordering and fulfillment experience for the brands to bring it down to under 15 minutes within a 4 KM radius. For this, each second is crucial whether it is spent by the consumer on the app, or spent by the picker, or by the rider.
Beyond providing the quickest ordering experience, the technology has to allow brands to capture data and insights about their consumers. These platforms should work as a CRM for the brand, something not usually thought of for CPG brands and supermarkets. The insights gathered through the ordering process should not get limited to contact information, but their purchasing frequency, basket analysis, retention cohorts, trending items, and location-based insights. The data will then be able to drive the retail strategy as this kind of data was never available to the brands before, which are mostly selling through distributors or brick-and-mortar structures.
The wealth of this data has to be combined with an eco-system approach where there are live integrations available with hyper-local logistics companies which are excelling in instant deliveries, payment gateways, social media platform integrations for advertising, and remarketing.
The power of brands will be determined in the future by the relationships they have been able to build with their customers. The problem with marketplaces is that they do not let the brands nurture that relationship. With the amount of funding that is available to tech companies, they should be acknowledged as a reality, however, smarter and bolder brands will make the right investments in building innovative engagement mechanisms with their brand, which would allow them to drive more sales directly.
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