Eating better vs receiving groceries faster : Are quick commerce players meeting the change in consumer needs or creating new habits ?

Urbanites' supermarket experiences have transformed in recent years. People used to travel to the suburbs to access a hypermarket, but today they may find auto drive, pedestrian drive, click-and-collect, and "at home" delivery options near to home. Consumption patterns also changed. People are health- and eco-conscious. On one hand, the industry's value chain has evolved, depending increasingly on technology and sophisticated logistics models. On the other, the act of buying is becoming consistent with customers' beliefs and vision of society.

Even though it has been around for a while, "quick commerce" (also called "q-commerce") grew by leaps and bounds during the pandemic. By 2030, sales are expected to reach nearly $448 billion. As the 2010s went on, online companies kept cutting down on delivery times, making them 24 hours, the next day, or the same day. And now, because people's needs are always growing, you can get groceries in 10 minutes!

And due to rising demand and the expansion of the online economy, the requirement to provide rapid, reliable last-mile delivery has never been greater..

I – Any need can create a market

It was formerly unheard of, although sometimes possible, to have items delivered in as short as two days. However, the modern day necessitates lightning-fast delivery of daily necessities. Time-starved millennials have adopted the "fast and furious" philosophy popularized by the film. We need and really value the availability of everything in an immediate format, from coffee to noodles to social media information.

In the movie, pursuit of happiness, will smith was struggling to sell a machine to many doctors and no one wanted it because it didn't add any value to their work and was expensive. No one needed that product. We have also seen Netflix having a stellar growth, because there was a need: at a global scale people have always been looking for a "unique platform" were centralizing quality movies and series. Netflix answered that need and they made it a market. When the clients are acquired by Netflix and they have started paying for a subscription, a new battle starts: retention. Netflix needs to be attractive enough, to keep those customers paying by keeping answering their need of quality movies and they do it by acquiring rights of diffusion every day and producing movies and series.

Looking at it this way, Quick Commerce players have demonstrated that there was a market looking at their quick implementation in several countries, high volume of orders and clients. This indicates a need for a service that can deliver food to metropolitan regions in as little as 15 minutes.

But, does this rapid acquisition of consumers is answering to a need of rapid delivery of groceries? or is this just giving a solution to the pain of going to the supermarket? In the second option, people would use the QC apps only because there is almost nothing between the 10 minutes delivery and the 4-hours afternoons in the supermarket. I believe in the second option.

In the traditional grocery retail market, we have players with a traditional distribution model that includes supermarkets, hypermarkets and sometimes city markets. They are mainly not digitalized and they differentiate between each other’s in terms of pricing (hard discount to premium), promotions and accessibility (who is the closest?). They have been created in the 60's or 70's and they were the first to answer the "one stop shop" need for groceries that the baby boomers used to have. But the boomer got old, internet arrived, Steve job launched the iPhone and 5G has come within our cities. Do those models perfectly answer to baby boomer's kids and grandkids? Does that answer the needs of a person that is today 25 and grew up with a digitalized environment? I believe not. At least some of them have expressed the contrary. The new generations get bored while doing their weekly groceries, they don't want to stand in line to pay, don't want to spend hours with a cart going through shelfs choosing between spaghetti or penne. This evolution can justify the quick accession of the urban inhabitants to the quick commerce solutions.

II – The importance of matching consumer's deep needs

Do the QC consumers have a unique or several needs? Among those needs, what is the level of importance of each one? Is there a need, that if we answer to, we can have a larger addressable market?

In 2020, a McKinney survey, had pointed the strong sense of purpose of customers and the need for healthy products. Those needs are very deep and are linked to the way consumers are redefining their vision of consumption, life and healthiness. Those are reshaping the industry progressively and becoming the most important reasons people will use a service or buy a product. Of course, there is a need for a quick delivery and saving time, but there is a superior need, which is living a healthier life and having a better impact on the planet.

If we look at the products offered by QC apps, it is mainly similar to what we find in supermarkets and the level of fruits & vegetables, organic and local products is very low. Although they offer a quick service, they are not going in the right direction and meeting the deepest needs of consumers.

Consumers won’t go and spend 5 hours to be able to purchase healthy products, because it doesn’t fit with the current level of technological evolution. They won’t use neither an app, that brings them unhealthy hyper processed products, only because they are delivered in 10 minutes. A great service would be something in between. Healthy products delivered in a reasonable amount of time giving.

In conclusion, the main strength of QC apps is their logistics and organization. They are capable to deploy a product offer all around the world and making it accessible to anyone in urban areas within few days or weeks. But the main weakness of those apps is the mismatch between the deepest consumer needs in terms of healthy and local products and the hyper processes products proposed. To be used by everyone in the urban areas, QC apps will have to improve their product offers and display products that can sustain a healthy life.