Business & Innovation- April 29, 2020
Quick commerce: pioneering the next generation of delivery
Delivery Hero is many things all at once: a global business, a local player, a family of Heroes, an employer, a tech innovator… but across the 40+ countries that we operate in with more than 22,000 employees, there is one thing that unites us: we want to deliver an amazing experience – fast, easy, and to our customers’ doors.
We have approached the challenge of continuously improving our service in many ways, from partnering with more restaurants and expanding the choice on our platforms to launching our own delivery kitchen concepts.
But at Delivery Hero, we like to think big. And that mindset has brought us to where we are today: ready to step into the era of quick commerce.
What is quick commerce?
Quick commerce (or q-commerce) is the next-generation of e-commerce, and as the name suggests, it is all about being fast.
Traditional e-commerce revolutionized the delivery landscape through online ordering, but even today delivery times average between 3-5 business days and larger orders are encouraged (for example through free delivery incentives etc.)
Q-commerce brings small quantities of goods to customers almost instantly, whenever and wherever they need them. Delivery Hero already delivers household goods to customers’ doors in less than half an hour, and in many cases much faster. Rather than replacing a weekly food shop, q-commerce is there to complement when you need a particular set of items, conveniently and fast.
Our CEO and Co-founder, Niklas Östberg, said: “We have now entered the era of quick commerce. This category offers tremendous opportunity that has gone largely untapped. l believe we can drive global leadership in this emerging segment, and I am excited to play a part in shaping the future of delivery here.”
With years of logistic and technology expertise, Delivery Hero is in a prime position to drive the q-commerce category forward. We already operate over 100 Dmarts (delivery-only local warehouses, or cloud stores), as their infrastructure offers the most effective way of sorting and delivering goods, and plan to have over 400 by the end of 2020.
As consumer behavior is changing and the demand for delivery of other products is expanding, we are happy to grow our services together with our customers.Niklas Östberg, Co-founder and CEO
At the same time, we partner with over 15,000 local businesses such as corner stores, cafes, supermarkets, pharmacies and flower shops to give our customers the best choice of products within their closest proximity.
Delivery Hero saw the potential of q-commerce early on, according to Niklas: “We started looking into delivering groceries about two years ago, and in the second half of 2019 we decided to really drive it forward.
“Launching quick commerce has been a natural extension of what we’ve been doing for many years. Food has always been our strength, but as consumer behavior is changing and the demand for delivery of other products is expanding, we are happy to grow our services together with our customers.”
How quick is quick commerce?
With the rise of urbanization, the number of small or single-person households is rapidly growing. This has led to a rising demand for delivery of products in small quantities rather than purchasing many items in large quantities at a cheaper price (which is how traditional commerce and e-commerce works).
Catering to an urbanised population, we swapped the traditional brick and mortar and e-commerce warehouses far outside the city center with centrally located Dmarts (cloud stores). This geographical advantage allows us to reach more customers faster, with less friction, and deliver goods from their favourite local stores.
With a vast choice of products, including own Delivery Hero brands and exclusive items, delivery is available 24/7. Our teams work hard on keeping this process running perfectly with real-time inventory management, and we are continuously improving affordability through data and technology-driven pricing.
Thanks to our fantastic rider community, innovative logistics technology, and the broad choice on our platform, we are able to optimize the delivery radius which in turn shortens order times. The average delivery radius is 2.2 kilometres, and with Dmarts in the city center, we can get to customers ultra-fast.
Combined with using two-wheel delivery fleets (in other words: bicycles or motorcycles instead of trucks or vans), we’re able to guarantee delivery within half an hour, although some of our markets are already delivering at around 15-20 minutes.
A change in customer behavior
Q-commerce is the natural evolution of e-commerce. All around the globe, lifestyles are changing and so too is customer behavior. Speed and convenience is becoming more important than ever before.
But quick commerce has also proved to be a valuable ally when it comes to providing instant support to communities in need. Amidst the COVID-19 pandemic Delivery Hero teams around the world have responded to rising demand for delivery as people are encouraged to stay home. Bound with the convenience of speed and effortless ordering, this is likely to affect customer behavior in the long term.
All around the globe, lifestyles are changing and so too is customer behavior. Speed and convenience is becoming more important than ever before
“In some ways, the launch of quick commerce was a well-timed decision, as it allowed us to respond quickly and efficiently to heightened demand for delivery due to COVID-19 and at the same time support social distancing recommendations,” Niklas said.
We’ve already taken some big steps into the world of quick commerce, but there is still a tremendous opportunity for expanding our offering and even further improving our service. Quick commerce offers significant potential for the growth of Delivery Hero worldwide, as the expected market opportunity for q-commerce within Delivery Hero markets of EUR 56 billion by 2030 and EUR 448 billion globally.
We will continue to include even more products on our platforms, moving from delivering food to deliver practically anything. We are working closely with our local partners to make sure we offer a service that is tailored to each region. But most of all, we’re excited to explore this opportunity together with our teams around the world, to keep delivering an amazing experience to our customers.