The Fast and Furious World of Q-Commerce in Retail
Consumer demand for faster fulfillment continues
Much like how Dom leverages multiple drivers and leans on others to handle needs such as communications and technology in the “Fast and Furious” movies, today’s fulfillment world is evolving to cast a wider net for resources. As more brands and retailers are looking to different channels to meet their customer needs, they have to move with urgency.
The increasing shift from brick-and-mortar outlets to online retail, driven by the pandemic’s effect on changing consumer habits and the ubiquity of smartphones and apps, has given rise to a new flavor of retail: the quick commerce (Q-commerce) market. Almost overnight, last-mile delivery has become standard operating procedure in the food and groceries segment; a recent study estimates the one-time niche market will top $72 billion in revenue by 2025, up from $25 billion in 2020.
But as they move beyond established segments like groceries and pharmaceuticals, it’s vital that brands forge the same type of long-lasting, meaningful relationships with Q-commerce customers that they would with shoppers in retail outlets. Just as in “Fast and Furious,” it’s all about creating family—and winning the race for the last mile.
CPG companies embracing Q-commerce
Q-commerce is quickly expanding into the consumer packaged goods (CPG) segment, and it’s not hard to see why: Last-mile delivery can reduce overhead by giving firms direct control over their distribution and shipping, enhancing opportunities for customization, and improving the customer experience.
But they also must contend with the “last-mile problem”—the conundrum wherein customers want deliveries to be free and fast, despite the fact that actually getting the product to them is the most expensive and time-consuming step in the supply chain process. In fact, the last mile accounts for 53% of the total cost of shipping, and every additional inefficiency adds up.
To shift course, many CPG brands are seeking to expand their direct-to-consumer (D2C) channels, via their web stores or apps. Building D2C capabilities allow companies to interact directly with consumers, collecting mountains of unfiltered data and crafting brand strategy accordingly. At a time when personalization is highly valued, these insights can help CPG firms understand their consumers, leading to a better customer experience and facilitating their long-term commitment.
Brands like Dollar Shave Club, Chewy, and Boxed have been the forerunners in this new approach for CPGs, but for many firms, it requires confronting the historic limitations posed by their supply chains, which are used to dealing with the brick-and-mortar model. As initial steps, CPG brand managers should focus on fostering omnichannel partnerships, crafting clear strategies for different channels, developing new marketing capabilities, and streamlining their supply chains. Indeed, in the digital era, direct-to-consumer supply chain management is crucial to gaining a competitive advantage.
Adopting a holistic approach
As brands employ more and more resources to rev up their Q-commerce fulfillment strategies, it’s vital that they take a holistic, flexible approach. This means firms need to leverage data, technology, and physical assets within their network to respond to consumers’ ever-growing (and increasingly nuanced) expectations.
The right software—flexible enough to scale and upgrade—can help manage every step of the Q-commerce process, from loading inventory to overseeing micro-fulfillment centers to delivering the product to the customer. Similarly, automation can improve systems that handle stock management and replenishment, order and delivery information, and customer returns and refunds.
Because accurately forecasting demand and conducting revenue-management analysis is so important for last-mile delivery services, data and analytics play a critical role. There are a lot of data providers out there using constantly evolving metrics; the trick is casting a wide net to capture a variety of data sources, so you can create an up-to-date picture of the industry and competitive dynamics.
Real-time monitoring across different channels will also help firms ensure they’re staying current as prices fluctuate in this still-evolving economy. Many firms are exploring new crowdsourcing platforms, as well, allowing customers to have more flexibility to get their online orders wherever and whenever they want.
And as automation continues to proliferate, it’s not hard to envision a world where delivery robots, drones, or self-driving cars help firms overcome the last-mile problem.
Understanding your customers
Retailers looking to become a player in the fast-moving world of Q-commerce face complex challenges, and the struggles of delivery startups in New York City demonstrate that it’s still a very bumpy road. But as hockey legend Wayne Gretzky famously said, “You miss 100% of the shots you don’t take.”
The key to succeeding in the Q-commerce market is to develop a deep understanding of your customers. Are they shopping for baby diapers in the middle of the night, are they frantically looking for a last-minute holiday gift, or are they just too busy to run day-to-day errands?
Researchers have found that four demographic factors typically drive people’s desire for speed and convenience: busy lifestyles that don’t leave much time for shopping; smaller households that purchase reduced quantities of more specific products; higher levels of urbanization, which enhance the opportunities for last-minute purchases; and aging populations, which have increasingly come to rely on home delivery services.
And this is where D2C platforms and data analysis can integrate seamlessly. The number of data brands can generate via a customer’s cookies or browsing history can help them tailor their shopping experience, marketing campaigns, and product customization efforts to a target audience. Conducting research on consumer sentiment, search trends, and social media feedback can supplement these data sources.
In other words, firms need to follow Dom’s example to keep pace in the fast-moving world of last-mile delivery—by weighing the strengths and weaknesses of their team members and thinking long and hard about how to deploy different resources to get the most out of your assets. Then, just like Dom and his crew, they can drive off into the sunset.