Ecommerce, Quick Commerce & The Flood Of Choices

A few decades ago, some names created what was termed globally as 'Ecommerce'. It now appears to be more than just about marketplaces. Ecommerce is also broadening and turning into digital commerce. Many of us must be noticing that now this means selling anything and everything online. From electronics to fashion, beauty and fragrances to unbranded products, accessories, OTT subscriptions and travel, to insurance, and even personal loans and insurance.

As data consumption and broadband increased, more and more people got on to the online bandwagon. Then came the huge popularity of smartphones which became an extension of our bodies. Then along came Covid and this changed the global ecommerce scenario for good.

I was one of those sceptics who believed that the quick commerce model would not be able to sustain itself for long. Some of the key factors being kept in mind were - due to an incremental increase in traffic congestion on roads, increased fuel consumption, probable increase in accidents, small delays in the quick commerce model leading to customer dissatisfaction, more difficult working conditions for the last mile delivery agents and above all, the model itself going against the grain of the idea of a sustainable planet.

As things stand today, the qcommerce model is thriving and looks like it is here to stay. However, in the West, the proposition of quick commerce has been relatively weak because that part of the world already has had a good shopping experience in place. Also, costs of labour are higher as compared to regions like South Asia and the Middle East where there is an easier and greater supply of cheap labour. Fast delivery or quick commerce seems to be better suited operationally to densely populated countries and cities.

Fast-delivery firms operate small warehouses in certain neighbourhoods. These so-called dark stores ensure that armies of motorbike-delivery workers will pick up orders from a site no more than 2-3 km from a customer's location. We will see significant growth in the next couple of years, but it could possibly taper thereafter. 

As fast-delivery startups launch into new ventures like fashion, electronics or beauty products and fragrances, a pitched battle with the regular ecommerce players is inevitable. But fast-delivery startups also have their limitations. Small warehouses limit their ability to stock up, which translates into a long queue of brands waiting to be listed and a limited choice for buyers. The fight for shelf space is only going to intensify as they move into newer categories.

So what is likely to be the situation going forward? The larger, traditional ecommerce players are looking to get into the quick-commerce space by either building up their capabilities or by acquiring some of the newer and smaller fast-delivery startups.

The biggest challenges in quick-commerce are warehousing, logistics and manpower. All three generate pretty high costs, while the average customer is not willing to spend more on online purchases than in a shop – nor to pay a premium for faster delivery. This means that compared to conventional online grocery and food delivery, the margins in quick commerce are likely to remain rather low.

This then brings us to the final part of this article – the flood of choices. Humongous options in every product category, possibly leading to decision fatigue and in some cases, dissatisfaction with the eventual choice.

There can be two primary types of decision makers. 

• Category A are the type who take their time, look at a wide range of choices, sometimes even every possible choice, before making the final decision. Category A are the people who want what they feel is the very best.
• Category B quickly prefer to choose the option that fills the bare minimum criteria. Category B want what is good enough.

The paradox of choices. As an online ecommerce player grows more and more in terms of the categories and choices it offers, the problem that begins to arise is that it does not lack what we want. The site begins to offer infinite permutations of quality which could be unknown or doubted. There is one extremely reputed online fashion player who at one stage had 7 million stock units of fashion-related products. And a choice of 400,000 in beauty and personal care. As consumers, are we being drowned in a multitude of prices, designs and brands?

Here is where probably the beauty of quick commerce players will come in. They may never become 'everything stores'. However they may still be able to convince customers to be okay with lesser or limited choices. For now, sceptics like me have been proved wrong. The quick commerce model is surely growing for now. 

Niranjan Gidwani

Guest Author Former CEO of Eros Group