IGD on the future of the fast delivery market. What awaits q-commerce players?

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Since its inception, COVID-19 q-commece has been one of the fastest growing and innovative segments of the food and consumer goods industry, helped by significant financial investment in recent months.

There are already about 10 q-commerce players in Poland. Among them are: JOKR, Wolt, Bolt, Lisek, Swyft, Jush, Glovo. Gorillas also announced his entry to Poland.

According to IGD analysts, on the fast deliveries market we can expect: consolidation, subscription programs and increased investment in this market by retail chains.

What is q-Commece?

Quick commerce players deliver groceries and other items to customers in less than an hour. According to IGD experts, there are three subsections of fast trade: aggregators, pure plays and retailers (the breakdown concerns the British market).

Aggregators are third parties that offer on-demand fulfillment, including Deliveroo, Instacart, Gojek, and Glovo.

Pure plays include, for example,Gorillas, Gopuff (Dija) and getir. These are players at the beginning of their development, building an offer around fast delivery, often with delivery in less than 15 minutes from dark stores.

The third group consists of retailers who, in addition to cooperating with external entities, have also launched their own on-demand services. These include Sainsbury's Chop Chop and Ocado Zoom.

Translating the above division into the Polish market, one can mention among aggregators the companies Uber Eats, Wolt or Glovo. Pure plays are new players like Lisek, Swyft, JOKR. Żabka launched its own fast deliveries, offering delivery in a quarter of an hour via the Jush application.

According to Jacek Palec, president of the board of Frisco SA, there are already 11 q-commerce players in Poland. Some of them, such as Swyft, Lisek, Jokr, offer deliveries in several minutes only in Warsaw or other large cities. Others, such as Glovo in cooperation with Biedronka, operate throughout Poland.

IGD Retail Analysis analysts attempted to present forecasts for this market.

1. Consolidation will take place

The fast trade space is very crowded and there have been many new start-ups emerging in the last 12 months, so consolidation seems inevitable. For example, in France this year seven "pure plays" appeared.

These operators spend significant amounts of money on launching more dark stores and on marketing to attract and retain customers. In the UK, according to IGD, Getir offered a £ 15 discount on the first order, and the weezy platform offered a £ 10 discount on the customer's second and third orders. This money comes from large investments that some will run out of.

In Poland, dark stores' platforms focus on cheap delivery. Lisek offers a delivery for less than 3  (0,64 Eur) for purchases below 50 zł (10,65 Eur) above this amount, the delivery is free. Jokr offers free shipping on all orders.

"We are already seeing a consolidation and I expect it to lead to some dominant players in each market in the long run. For example, Gopuff has secured more than $ 1 billion. He will use this investment for expansion in North America as well as deeper expansion in the UK and Europe. It recently acquired Fancy in the UK and Dija, which means entry into France and Spain," - says Rachel Sibson, retail segment analyst at IGD.

2. Q-commerce players will focus on building loyalty

With an ever-growing list of competitors, high-speed traders will have to differentiate and offer additional services to increase loyalty, forecasts IGD.

One way operators can do this is through membership schemes. Subscription loyalty programs enable businesses to block loyalty and build subscription revenue.

"Buyers will order more often, increasing sales and thus attracting more partners, giving buyers more choice and increasing commission fees for the player. In Latin America, Cornershop's Pop Aggregator Service gives members free shipping upon spending a certain amount," - says Rachel Sibson.

Fast traders can also increase loyalty by developing super apps by combining multiple services into a single platform. This provides greater convenience, increases website or app traffic, and uses couriers more efficiently. It also allows q-commerce companies to permanently acquire buyers and block other companies.

For example, Rappi has developed an all-in-one application that allows users to access a wide variety of on-demand services from a single application. In doing so, it has created an ecosystem made up of buyers, distributors, stores and end customers.

3. How will retail chains react?

Retailers need to keep up with buyers' expectations for fast deliveries. There are many ways they can react to the expansion of fast trade.

These include, for example, integrating or investing in or taking over q-commerce businesses. A recent example of an integrative approach comes from Tesco in the UK. The company announced a pilot in collaboration with quick commerce pure play Gorillas, offering customers delivery within 10 minutes. Gorillas will set up micro-fulfillment sites in five major Tesco stores. Couriers will pick up, pack and deliver your orders. As a result, Tesco can compete in faster deliveries, use excess space in stores and generate incremental revenues.

Jason Tarry, CEO UK & ROI at Tesco said: “The idea that we can reach our customers in just ten minutes is really exciting. We are committed to being easily the most convenient choice for our customers, enabling them to shop whenever and however they want. This pilot with Gorillas will help customers get their products right away, supporting those looking to buy food for tonight or last minute forgotten items. We look forward to hearing what our customers think.”

 

Adrian Frenzel, COO at Gorillas said: “We’re incredibly excited to be announcing this pioneering commercial and real estate partnership with Tesco. At Gorillas, we have established ourselves as a fast-paced company at the forefront of the on demand grocery industry, whilst Tesco is the leading retailer in the UK and a trusted household name nationally. The co-location partnership enables both brands to bring their strengths to the table and establish a quicker, higher quality, grocery offering to UK consumers. Customers will not only be able to get the best of Tesco within minutes via Gorillas, but will be able to make the most of Tesco’s extraordinary quality range via the Gorillas app.”

 

Source: dlahandlu.pl << IGD o przyszłości rynku szybkich dostaw. Co czeka graczy q-commerce? >>

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