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Quick Commerce: The answer to elusive customer retention in grocery and retail?

Skillful inventory management, last-mile logistics planning, and tight execution are key to pull off the seemingly impossible.

 

You might have noticed advertisements all over your city or web browsers claiming to deliver your groceries and daily needs in 10 minutes.

 

“Sounds too good to be true”, you might think.

 

Perhaps you decided to give it a try after your friends arrived to watch a game and had no snacks to munch on. Or maybe when you were hosting a dinner party and forgot to buy some ingredients for your main dish. Or you had satisfy an irresistible craving for your favorite ice cream.

 

And they weren’t joking. You’re delighted and mildly surprised to have a smiling delivery person with your order at your doorstep within 10 minutes!

 

Terming these needs as “unplanned”, “impulse”, “top-up” and even “emergency” purchases, an entire set of savvy businesses have locked in on this opportunity in the form of quick commerce.

What is quick commerce and why does it matter?

 

Quick commerce, or q-commerce, refers to the delivery of groceries and daily essentials within 30, 15, even 10 minutes or less. And recent reports have shown that it is becoming an increasingly popular choice among consumers.

 

According to research, India’s quick commerce market is projected to have a 10-15X growth by 2025, reaching a market size of close to $5.5 billion. The country is also expected to outpace other leading markets (including China) in terms of adoption. And tier-I cities, with the most share of customers with higher disposable incomes, expected to drive 50% of this adoption.

 

Clearly, there is a massive opportunity up for grabs. But how is it possible, you might ask? A combination of skillful inventory management, last-mile logistics planning, and tight execution. 

 

Running a tight ship

For the model to work, it is essential to be as close to your q-commerce customers as possible. This is where dark stores come into the picture. These stores are strategically placed in a 1.5-2.0 km radius of high-density customer areas, which keeps delivery times to a minimum. 

 

They are also smaller in size (anywhere between 1,500-2,500 sq.ft) as compared to traditional warehouses or distribution centers. This is often because of a conscious decision to maintain a smaller inventory of highly popular, and instantly recognizable stock keeping units (SKUs). Fewer SKUs also means they are quicker to find and parcel. 

 

What powers this quick delivery business model is a robust technology working in the backend to speed up the entire order-to-delivery cycle with accurate order dispatching, rider allocation, route planning and real-time tracking.

 

When a q-commerce customer orders something on the app, these backend solutions automatically assign the closest possible dark store to source from and a delivery partner to pick up the order. 

 

Routing engines, which run on powerful algorithms, find the quickest route to the customer after accounting for several real-life constraints like traffic, travel distance, roadblocks etc.

On the other end, customers can keep a track of their orders, estimated time of arrivals (ETAs), time elapsed and also coordinate with the assigned delivery agents through the app’s order tracking feature. 

 

The best bet for customer retention?

 

Customer expectations are at their peak today. If they do not find their preferred products, or do not get timely deliveries, they will not hesitate to download a competitor app.

 

By focusing on the sale of items that need to be replenished periodically, and offering customers speed and convenience of an unprecedented level, quick commerce players are hoping to redefine consumer spending patterns to build customer loyalty.

The Redseer reports seems to corroborate this idea. It found a higher Net Promoter Score (NPS) as compared to e-grocery incumbents, which suggests that customers are more likely to recommend them to a friend. 

 

Who wouldn’t want their groceries to be delivered in 10 minutes or less at the push of a button? And it all comes together thanks to sophisticated last-mile logistics technology, planning and execution.

Authored by Nishith Rastogi, Founder and CEO, Locus.sh. He is also associated with Stellaris as a key Founder Network member.
The article was originally published by TOIBlogs

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