eCommerce: Quick Commerce in the U.S.

Quick Commerce in the U.S.: Traditional Retail Stores Are Dominating in the U.S.

Walmart, Amazon, and Costco lead the way for customers buying groceries on the internet. With quick commerce increasingly becoming a tough battleground, what stands out most to shoppers?

Article by Cihan Uzunoglu | May 23, 2024


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Quick Commerce in the U.S.: Key Insights

  • Leading Providers: Walmart, Amazon, and Costco lead in U.S. quick commerce, with Walmart being the top choice for over half of the consumers for fast grocery deliveries.

  • Consumer Priorities: Consumers prioritize convenience, valuing time-saving and round-the-clock availability above all in their shopping experiences.

  • Market Complexities: Challenges for quick commerce include high delivery fees and questions about product quality, suggesting areas for improvement to enhance customer satisfaction.

Lower prices, lack of time, convenience: We all have our reasons to order something online. While most people consider "online shopping" as buying a shirt on Amazon, a considerable number of people also buy their groceries without leaving the house. This aspect of eCommerce is already established and flourishing in the United States.

What Is Quick Commerce or qCommerce?

qCommerce (or quick commerce) is a type of online shopping that focuses on delivering everyday items like groceries, household products, and meals to your doorstep – often within an hour or even less. Unlike traditional eCommerce, where you might wait days for your order to arrive, qcommerce aims to fulfill your need for instant gratification and convenience by leveraging local warehouses and speedy delivery networks. It's designed to cater to those urgent moments when you need something quickly but don't have the time or desire to go to the store.

Captain Obvious: Quick commerce gained significant traction during the pandemic, driven by the heightened demand for instant grocery delivery. But even post-pandemic, the market saw the emergence of several new players, which shows that the market isn't saturated yet. According to Statista the U.S. giant Walmart leads the pack, with 53% of U.S. users having purchased groceries online from them in the past year, followed by Amazon at 42%, and Costco at 26%. Walmart's extensive logistics network enables it to offer rapid delivery services effectively. Amazon and Costco have adapted by enhancing their warehouse systems and delivery capabilities. Despite the rise of these large retailers, the quick commerce landscape remains competitive, with both established companies and startups vying to meet consumer demand for convenience and fast service.

Top Quick Commerce Companies in the U.S.

Quick commerce proliferated during the pandemic, when the need for instant grocery delivery was most acute. In the years that followed, a variety of players emerged to offer super-fast delivery of everyday items.  

Below is a ranking of the top 10 qcommerce players that U.S. online shoppers have ordered products from in the past year.

Top 10 Providers U.S. Online Shoppers Have Ordered Groceries, Beverages or Meal Kits From, 2023

The Statista Consumer Insights results show that established retailers, i.e., Walmart, Amazon, and Costco, are most frequently used by U.S. consumers to order groceries on short notice.

1. Walmart

Walmart leads the quick commerce market in the U.S., with 53% of users purchasing groceries, beverages, or ready-made meal kits online from them in the past year. Walmart has leveraged its extensive logistics network and high number of physical locations to offer rapid delivery services. According to Forbes, Walmart can reach 90% of the U.S. population within ten minutes, giving it a significant advantage. The company has successfully integrated its brick-and-mortar presence with its online offerings, using its vast resources and infrastructure to dominate the qcommerce sector.

2. Amazon

Amazon ranks second in the quick commerce market, with 42% of users purchasing groceries online from them in the past year. To cater to the demand for instant delivery, Amazon has adapted its warehouse system by implementing "same-day sites." These are micro-fulfillment centers with a smaller product assortment, located close to populated areas, allowing for faster distribution without relying on traditional postal services. This strategy enables Amazon to meet consumer expectations for speed and convenience effectively.

3. Costco

Costco, ranking third with 26% of users purchasing groceries online from them in the past year, operates similarly to Walmart by combining its brick-and-mortar stores with an enhanced online offering. Costco has responded to the rise of quick commerce by offering same-day delivery, adapting to changing consumer preferences post-Covid. Like Walmart, Costco leverages its extensive physical store network and online presence to provide rapid delivery services, ensuring it remains competitive in the qcommerce market.

Who Is the Largest Quick Commerce Player?

Walmart ranks first, with 53% of U.S. users saying they have purchased groceries, beverages, or ready-made meal kits online in the past year. Amazon ranks second with 42%, followed by Costco with 26%.  

At 21% both, Aldi and Instacart follow the top 3. While Blue Apron is at 15%, Burpy, HelloFresh, Deliv and EveryPlate round out the list with 11% each.

Walmart Leverages Extensive Infrastructure to Grow With the Trend

Walmart did not sit back and watch the emergence of ultra-fast delivery idly. Instead, the retail giant has leveraged its vast logistics network to offer its own qcommerce model to customers. Walmart’s advantage over its competitors lies in its high number of locations in the U.S., which, according to Forbes, can reach 90% of the population within ten minutes.  

As an established brick-and-mortar retailer with an extensive product assortment, Walmart has the reputation and, most importantly, financial resources to make the move to ultra-fast delivery happen. Because Walmart’s portfolio is primarily based on physical retail locations, the company’s survival is not dependent on the success of the qcomm model, which can be viewed as an additional revenue stream.  

With more than half (53%) of U.S. consumers using the service, Walmart remains well ahead of second and third place, which have their own strategies.

Amazon and Costco Have Adjusted Their Strategies

The three most popular online grocery retailers in the U.S. are companies with a strong retail presence, including beyond Walmart also Amazon and Costco.  

That Amazon has an extensive logistics network is nothing new. But to ensure instant delivery, the online behemoth had to adapt its warehouse system. The company found the solution in so-called “same-day sites”, which are micro fulfillment centers with a smaller product assortment that can distribute orders more quickly. These same-day sites are in immediate proximity to populated areas, bypassing the need for postal services to deliver packages, as is the case with Amazon’s larger warehouses.  

Costco operates similarly to Walmart in that both are brick-and-mortar stores with an additional online offering. Costco also offers same-day delivery, responding to changing consumer preferences post-Covid and the subsequent rise of qcommerce providers.  

The success of these large businesses shows that they have a competitive advantage, ensuring faster delivery and boasting a larger network than smaller startups just getting into the game can profitably offer. And customers seem to be taking notice.  

But what exactly do U.S. consumers value about quick commerce? The following subsection explores the benefits of this model.

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U.S. Consumers Value Convenience Above All Else

In a 2022 McKinsey survey of U.S. consumers’ reasons for ordering groceries online, 29% cited saving time as the primary reason. Covid was the second most cited reason at 26%, highlighting the lasting impact of the pandemic on consumption patterns.  

In third place, 23% valued the round-the-clock availability characteristic of quick commerce. 

Top Reasons for U.S. Consumers to Buy Groceries Online, 2022

The fact that online grocers deliver orders to consumers is a benefit that 19% of users acknowledge, and similarly, 18% explicitly cite convenience as an added benefit. Close behind are 17% of users who say it is easier to compare products online.  

Notably, 13% preferred online shopping in general, believed online prices were more economical, or found it easier to locate items.  

Another 12% feel that online stores have consistent inventory, better promotions, and superior product quality than physical stores.  

Overall, convenience and product availability are top motivators for consumers to purchase groceries, beverages and meal kits online. However, reasons why some may resist the trend toward quick commerce challenge these findings.

Nearly One-Third of U.S. Users Traditional Retail Settings

Recent developments involving quick commerce players have shown that not all is well with this hyper-convenient form of eCommerce. As some qcomm companies merge and others exit the market, customers are noticing problems from their own perspective.  

The McKinsey survey cited above asked U.S. consumers about the problems they perceive when ordering groceries online. The chart below illustrates these issues.

Top Factors That Prevent U.S. Consumers From Buying Groceries Online More Frequently, 2022

Nearly one-third of users say they miss the personal interaction inherent in in-store shopping, an experience exacerbated after the pandemic when social interactions were limited.

Ambiguous Views on QCommerce Performance

High delivery fees discouraged 25% from ordering online, while 21% questioned the quality of products - a sentiment that contradicts the above argument praising the quality of online products.

Other contradictions to consumers' stated benefits include 17% who said the products were too expensive, 13% who said they had difficulty finding products, and finally 10% who thought the product range was too small and delivery times were unsuitable.  

These ambiguous views underscore the diversity of experiences with quick commerce and how the quality of service can vary significantly from one provider to the next. Inconsistencies such as high minimum order values (14%), damaged goods (10%) or missing items (10%) can discourage repeat online purchases and, in the long run, damage the quick commerce landscape.

Possible Solutions to the Conundrum

Having established the downsides of quick commerce, what is it that providers can do to make their service more appealing to consumers? McKinsey’s study renders the following results.

Top Factors That Would Make Online Grocery Shopping More Attractive to Online Shoppers in the U.S., 2022

First and foremost, lowering delivery costs is the most preferred measure, cited by 47% of respondents. More promotions persuade 42% of users, followed by lower minimum order values (32%), covering two pricing aspects.  

Faster delivery is important to 28% of users, ahead of precise delivery windows (20%) and delivery at off-peak times (15%). Finally, 14% would like to be able to receive orders via drop-off, without having to be present when the delivery arrives.  

It is clear that some changes need to be made for U.S. consumers to more fully and sustainably embrace quick commerce. Based on the available data and recent market developments, what will the qcommerce landscape look like in the future?

Market Outlook – What Will Happen to the U.S. QCommerce Space?

In nature as in newly emerging markets, one principle prevails: Eat or be eaten. And just as in nature, it is usually the more adapted animal that survives. Applying this metaphor to the qcommerce sector, larger retailers have a better starting position due to better financing, extensive infrastructure, customer loyalty and omnichannel capabilities.

A Consolidated Position in the Market is Essential for Survival

Running a successful quick commerce business is an expensive proposition, and even more so is catering to customers with low to no shipping fees or minimum order requirements, as well as express delivery and technology services.  

Quick commerce startups around the world have learned this lesson the hard way. Recent acquisitions and market exits show how difficult it is for new players to complement customer satisfaction with a profitable business model.  

And incumbents are not about to let these new entrants erode their consolidated market position, so they are adding conveniences like instant delivery to their service offerings. What is more, retailers like Walmart, Amazon, and Costco can do this while remaining profitable because they have the human resources, technological capabilities, and financial means to entice customers with free delivery and low product prices.

QComm App on Smartphone

Most Will Exit the Market While the Most Adjusted Prevail

Does this mean that startups like Getir, Gorillas, Gopuff and others will go under? Not necessarily. However, it is expected that most of the startups will sell their business or cease operations altogether, while a few select ones will remain and grow along the way.  

If the qcommerce trend has accomplished anything, it has reminded larger players of consumer preferences for convenience, low cost, and instant delivery. With the advent of robotics, automation, and drone services, it is only to be expected that the quick commerce segment has not reached its end. The market will simply adapt to the most viable strategies and eliminate those that cannot compete, just as nature does.

Sources: Charged Retail - Data Impact – Forbes: 1 2 - McKinsey 

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FAQ: Quick Commerce

Why Is Quick Commerce on the Rise?

QCommerce, or Quick Commerce, emerged as a modern approach to grocery shopping. The allure of convenience, especially in urban settings, greatly influences consumer buying behaviors. Additionally, increased social isolation has led many to prefer home deliveries. Recognizing these shifts in consumer habits, eCommerce companies have been motivated to adopt rapid delivery business models.

What Are Dark Stores?

Dark stores are specialized warehouse systems designed for efficient order fulfillment, particularly for eCommerce. They focus on tasks such as accurate goods placement, stock replenishment, packaging items based on orders, and rapid dispatching for delivery. Ideally, orders in dark stores are prepared in under 5 minutes, ensuring swift deliveries to customers. The implementation of a streamlined process system is vital to maximize efficiency, eliminating unnecessary movement or item searches by operators. This concept emphasizes precision and speed in every phase of order processing.

How Are Dark Stores Changing Delivery Systems?

Dark stores are revolutionizing eCommerce delivery. Exclusively catering to online orders, they optimize order processing, enabling faster and more efficient deliveries. Their strategic urban locations reduce delivery distances, ensuring quicker dispatch to customers. By focusing solely on fulfillment without in-store foot traffic, they enhance storage, picking operations, and overall inventory management, leading to quicker, more accurate deliveries. In essence, dark stores streamline the eCommerce supply chain, meeting the demand for rapid order turnaround.