Need for Speed: How can small retailers compete with quick commerce giants?

Today’s shoppers are becoming increasingly expectant of superfast, even same day shipping. Here’s how SMEs can feed this new consumer appetite.

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As ecommerce options become the new normal for shoppers, UK consumers are losing their patience.

In-depth analysis by Instant Delivery App (IDA) Getir recently found that 1 in 4 UK consumers now uses IDAs instead of weekly supermarket shops – and 19% say they use them at least once per week.

Large online retailers, like Amazon, have shoppers spoilt for choice with their express delivery services such as Amazon Prime. But the call for speedy shipping is more difficult for small businesses to answer.

We take a look at what small business owners can learn from the growing demand for quick commerce, and how you can optimise your delivery strategy for both speed and profitability.

Quick commerce boom: What is it and what’s behind it?

Quick commerce, also known as q-commerce, is the next generation of e-commerce. As the name suggests, it is all about being fast.

Quick commerce businesses have been steadily growing over the past decade. Consumers increasingly shop online to save time and order groceries and food deliveries from the comfort of their home.

But the real driver behind the rapid delivery boom has been COVID-19.

The pandemic and its subsequent lockdowns meant people were forced to isolate and unable to order food, broadening the success to all food services. This increased demand pushed the food and drink delivery resulted in performance years ahead of projections.

According to figures from marketing analytics platform Adjust, global installs of food delivery apps increased by 25% in 2020 compared to 2019, and went up a further 21% in 2021.

New players include Zapp, Gorillas, and Grocemania – all of which were founded in the past three years.

Berlin-based operator Gorillas is probably the most famous of these brands. Despite only being founded in 2020, the app has already reportedly received “close to” £1bn and passed a unicorn valuation in March 2021.

Is the quick commerce delivery model sustainable?

The figures associated with IDAs are undoubtedly impressive – but there are concerns about the sustainability of this popular delivery model.

Seb Robert is CEO and founder of Gophr, a same day courier service. Robert told us that the problem with rapid delivery models is it requires a lot of resources.

“To deliver on the promise of rapid delivery, you need the resources ready and waiting, yet there’s never a cast-iron guarantee of orders coming in. You need constant funding to pay for that kind of infrastructure.”

Given the large amount of funding these companies have had, capital is not much of an issue at the moment.

But in such a competitive landscape, most startups in the space are struggling to stand out. Many are hinging their USP on low prices.

This means that, despite having high share prices and funding figures, brands are struggling to build a loyal customer base.

As a consequence, the potential for long-term profitability looks increasingly suspect.

Linda Ellett is Head of Consumer Markets, Retail and Leisure, KPMG UK. Ellett told told us:

“Players are [using] introductory offers, promotions and discounts – which eats into profitability. Delivery charges in the UK are also currently lower than in other more-established rapid delivery markets.

“The road to profitability is likely to be a long one, with operators either selling up to larger grocery players or being one of a handful of larger operators that survive the inevitable consolidation.”

What can my small business learn from the growing demand for quick commerce?

Quick commerce makes it possible to deliver small quantities of goods to customers almost instantly, whenever and wherever they need them.

Its success tells us a lot about the current consumer market, which has gotten hungrier for instant deliveries since the emergence of express couriers like Amazon Prime.

Linda Ellett, Head of Consumer Markets, Retail and Leisure, KPMG UK, told us: “Whether it’s TV subscription services, taxis, or food – on-demand has become a prerequisite for many consumers.”

Quick commerce is therefore something that all SMEs will need to engage with as the online retail space gets more competitive.

But as we’ve highlighted, it’s also a risky space to enter in terms of profit.

If your company, or startup idea, needs to make use of courier services then you’re probably wondering how you can afford to offer super fast delivery options without losing money.

Did you know?

According to a 2021 survey conducted by Oberlo, 27.9% of consumers say next-day delivery is one of the main reasons they shop online.

Customers often underestimate the huge amount of resources required to get a package to their doorstep in 2 to 3 days. This can price out smaller, local retailers that cannot offer fast shipping on the scale of larger retailers.

So how can you adjust your shipping strategy to compete with other SMEs or even large ecommerce companies?

Global tech-giant Yandex launched its UK-based rapid grocery delivery service Yango Deli in 2021.

Maxim Avtukhov, head of international markets for Yango Deli, told us that, as the quick commerce market grows “now is the time for smaller businesses to focus on finding suitable delivery partners and tech solutions to adapt their operations.

“Small businesses have a better chance against large-scale competitors if they have this optimised.”

5 top tips to streamline your shipping strategy

1. Automate your fulfilment process

Automation is key for streamlining your business. Apps and third-party extensions can make it easier to deal with inventory management, creating an order, gathering all the shipping documents, and fulfilling your orders.

To aid with faster delivery, all these processes should be linked so that each step becomes simple and efficient. One of the easiest ways to do this is to integrate your existing website with a dropshipping supplier platform, such as Oberlo.

It will then act as your sales team to manage the purchase, packaging and shipping of your chosen products, so you won’t have to worry about overseeing these time-consuming processes yourself.

You could also outsource your fulfilment process to combine your packing and shipping processes into one seamless flow, using a fulfilment centre.

2. Keep it local

If you’re looking to offer same day services to customers then a low-cost way to do this is to focus your attention on localised customers.

This is also an absolute must if you’re a business that delivers a time-sensitive product, like Hackney Gelato.

Sam Newman is founder of Hackney Gelato, a gelato and sorbetto manufacturer. Newman told us about the particular challenge of trying to deliver a time-sensitive product to customers quickly.

“Other companies have attempted to deliver direct-to-homes in insulated boxes via couriers, but it’s very difficult to prevent the ice cream from melting.

“Joining forces with the right delivery service is crucial. Their set up and efficiencies allow smaller, independent brands like ours to get noticed and deliver at scale.”

Another small business that is effectively utilising this strategy is Oxwash. The top 100-ranked startup is an Oxford-based eco-friendly dry cleaning solution that’s putting a new spin on laundry. It uses bicycles to bring freshly-cleaned materials to their local service users in minutes.

3. Reduce your shipping options

While it might seem counterintuitive, when it comes to same-day or next-day shipping, having too many options can quickly become a pain for your business.

Fewer options mean that you have easy shipping solutions ready to go, ensuring your customers get their orders, fast. Preparing your orders for shipping also becomes a lot easier.

4. Prioritise customer service

One of the main factors that influences consumers to use small businesses is the added customer service they provide.

Large-scale companies are often less intimate and can make customer support an afterthought as they don’t tend to know who they are talking to or track existing relationships.

If you are unable to offer next day delivery, or if you are worried that your customers might experience delays, concentrate on providing a personalised service and your customers probably won’t mind waiting another day or two to get their package.

How can you improve customer service?

CRM (customer relationship management) software is a great way to keep on track of your customers and ensure you’re delivering top-quality service.

The best system depends on what's most important to your team – value, functionality, ease of use or the ability to scale as you grow. Read our guide to the top CRM systems for small businesses to learn more.

5. Focus on finding the right courier service

The best courier service is not necessarily the biggest player in the game. Local or industry-specialist couriers can often be the better choice if you’re trying to streamline your delivery.

Make sure you look at every aspect of the courier – including maximum parcel size, customer reviews, and extra perks, to see how these align with same day shipping.

If you sell big products that only half of a courier’s fleets can accommodate, then look elsewhere as this is likely to increase the risk of delays.

Cheaper rates don’t necessarily equal more efficiency. Your courier can offer competitive pricing. But if they regularly lose parcels or deliver them late then this will cost you dearly – both in lost custom and refunds.

Seb Robert, CEO of Gophr, said that when looking for a courier, quality is crucial.

“There is a perception that anyone with a car or a bike can be a courier, but that’s not the case and not who we work with. We constantly ask ourselves: what tools can we provide that reduce the admin for our couriers? How can we add rocket fuel to enable them to be successful?”

Communication is another key feature to look for in a courier service. You need to know whether your shipments and packages are getting to the right location at the right time, so make sure that the courier service is providing proof of delivery.

Vehicle tracking might also be useful if you are ever sending things with a courier that take several hours or several days. The best courier services will offer these as part of your partnership.

Finally, check that the courier you work with provides insurance. In the event your package or shipment doesn’t arrive, and you were shipping valuable goods or confidential information, this is immensely valuable.

Conclusion

Small businesses can learn a lot from the quick commerce boom. New technologies have made super-fast delivery not just an option, but an expectation for consumers.

But as questions arise over the long-term sustainability of the rapid delivery model, it is important for SMEs to engage with the trend carefully to ensure you do not prioritise punctuality over profit.

While express delivery services are undoubtedly attractive to customers, the most pressing requirement from SMEs is to do them well, rather than cheaply.

By properly streamlining your shipping strategy and partnering with a high-quality courier service, you can ensure you are prioritising efficient deliveries, over instant.

Maxim Avtukhov, head of international markets for Yango Deli, said: “[It] sounds like a subtle way to stand out, but in terms of longevity in a crowded marketplace, getting the job done well and offering a good product will always garner the best results.”

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Helena Young
Helena Young Senior Writer

Helena "Len" Young is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has also previously written for a popular fintech startup.

Included in her topics of interest and expertise are tax legislation, the levelling up agenda, and organisational software including CRM and project management systems. As well as this, she is a big fan of the films of Peter Jackson.

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