How warehouse software is enabling the growth of q-commerce

Fast food has been in demand since Roman times, as the recent discovery of a fantastically preserved, frescoed thermopolium in early 2020has highlighted. People are always busy and so much so nowadays, that the global market for ‘quick eats’ is expected to reach US$931.7 billion by 2027. This represents a CAGR (compound annual growth rate) of 4.6% from 2020 to 2027 – according to a new report by ResearchandMarkets.com.

Just as demand for fast food is rising, it is being mirrored by a desire (expectation even) for fast e-commerce. It is known as q-commerce (quick commerce). Given our 24/7, on demand society, why wouldn’t it become a phenomenon? In the past, we would have popped down to the shops and got what we needed, but Covid-19 and the various lockdowns have put a stop to that.

Nowadays we’re more inclined to pop onto our screens – if we’re not glued to them already – and order what we’re after from the internet. Ever since Amazon launched its Prime membership promising two-day delivery back in 2005, the expectation of getting items from the computer screen to the home has only increased. It’s so convenient, but waiting for the order to come can be a drag and that’s where q-commerce comes in. Importantly, q-commerce is not just about ordering a few last-minute groceries, there is a very serious side to it too. As the delivery specialists Delivery Hero have highlighted, quick commerce has also proved to be a valuable method of providing instant support to communities in need and unable to leave the house during the Covid-19 pandemic. Once life returns to what we consider ‘normality’, the convenience of speed and effortless ordering offered through q-commerce is likely to permanently affect customer behaviour.

This is because it represents a natural beneficial evolution. 1st generation commerce was about self-service, availability of all products, personal transport and superstores. 2nd generation e-commerce focused on 2-3 day delivery, availability of main products, delivery trucks and mega warehouses. 3rd generation q-commerce is built on under 1 hour delivery, availability of a smaller product selection, two wheeled vehicles and local stores or warehouses.

Q-commerce puts warehouses at the centre of sales operations

From a logistics and distribution perspective q-commerce is really interesting, because as the name suggests it is all about being fast, or rather, the fastest. The typical q-commerce ordering and delivery cycle is hyper local and completed in under one hour. Whereas in the past, the online winners were the companies that offered the best prices, now the success factors for generating maximum sales have changed. It is the business capable of delivering the quickest – without compromising on quality and pricing – that will win. The entire transaction depends on the speed of delivery, which brings the warehouse and logistics operation right into the centre stage. Without the right processes and automation technology in place to support each transaction, q-commerce is not only impossible from a time perspective, it also becomes commercially unviable in the long term.

To be successful in the q-commerce sector, warehouses need to be highly technology and data driven.

A WMS can drive q-commerce success

To be successful in the q-commerce sector, warehouses need to be highly technology and data driven. They need highly efficient operational processes to maximise cost efficiencies, like voice directed picking and putaway. They need real-time inventory management to be sure they can deliver against incoming orders and tightly integrated fulfilment and dispatching. These are core features offered by best of breed warehouse management system (WMS) software.

Investing in a WMS has been proven to completely transform warehouse operations and typically delivers a full return on investment in under a year. This is because a WMS will help to optimise your warehouse operations and improve efficiency – by improving stock accuracy and On Time In Full (OTIF) performance, streamlining the returns process and generally ensuring much greater agility to respond to changing customer demands.

Q-commerce players

Who is doing q-commerce currently? There are big names such as Amazon with its Prime Now service, an ultra-fast, a q-commerce style offering which plans to bring rapid grocery delivery to almost 40% of UK households by the end of the year. Deliveroo has Express Mart, which allows customers to order grocery deliveries via the app and then have the order are allocated to a Deliveroo rider, who delivers it in 20 minutes. Another provider Delivery Hero partners with local businesses to offer the best possible product choice within the customers’ proximity, this company saw its q-commerce orders grow by 98% to 10.5 million in the second quarter of 2020.

Venture capital funding is starting to flood the q-commerce market, another good sign that this is the next big thing. Jokr – founded by German entrepreneur Ralf Wenzel has launched a new global rapid delivery platform aimed at delivering a range of products within 15 minutes of the order being placed through its app and will distribute products through networks of small local warehouses, often occupying retail space that fell out of use due to the Covid-19 pandemic. Glovo, a Spanish startup offering a super fast, home delivery service recently secured US$530 million in funding, marking the largest fundraising figure in history for a startup in the country. Berlin-based on-demand grocery delivery startup Gorillas raised US$290 million in March, bringing its valuation to U$1 billion only nine months after launching. In the UK convenience delivery app startup Asap delivers cravings, essentials, and occasions at home in minutes.

Supply chain experts are highlighting that although it is convenient for the customer, q-commerce creates higher costs and logistical challenges for operators. Real-time inventory management, clear data insights and WMS driven warehouses will help to increase operating efficiencies and keep the extra costs to a minimum, whilst also meeting customer expectations.

Author: Eric Carter is a supply chain expert and solutions architect at indigo Software, where he helps e-commerce companies streamline their warehouse processes with technology.

www.indigo.co.uk

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