eCommerce vs.Quick Commerce: Market Insights

Quick commerce, also known as qcommerce or qcomm, refers to a specialized segment of eCommerce characterized by delivery times that typically take less than an hour.

The original business strategy relies on so-called dark stores from which qcommerce companies supply their customers, but some companies expand their product range by sourcing items from partner retailers. 

While the quick commerce business model has its advantages, it also has drawbacks. Both aspects are the focus of this insight, which draws on data from the U.S. market.

Which Are the Leading U.S. Quick Commerce Companies?

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.

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.

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 25%.  

Qcommerce-focused companies are not as widely used as these major U.S. retailers. Instacart is leading the way with a usage rate of 20%. Other qcommerce specialists include Blue Apron (15%), Hello Fresh (11%), Burpy (10%), Deliv (10%), EveryPlate (10%), and Stop&Shop (9%).

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 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.

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. 

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.

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.

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.

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.

QCommerce in the U.S. – Key Takeaways

Recent studies on the U.S. market indicate that while quick commerce (qcommerce) became popular during the pandemic, established retailers like Walmart, Amazon, and Costco dominate the space. Qcommerce startups face challenges, and many may exit or merge, while consumer preferences lean towards convenience and cost-effectiveness. 

Dominance of Established Retailers in QCommerce: Among the top three providers of U.S. quick commerce are the retail giants Walmart (53% of consumers have ordered groceries there), Amazon (42%), and Costco (25%). Walmart uses its vast logistics network to cater to the quick delivery trend, reaching 90% of the U.S. population within ten minutes. Amazon adapted its strategy by developing “same-day sites”, smaller fulfillment centers near populous areas, while Costco also provides same-day delivery of its expansive product range.

Consumer Preferences and Pain Points: According to a 2022 McKinsey survey, the top motivators for consumers to buy groceries online include saving time (29%), Covid-19 pandemic (26%), 24/7 availability (23%), and overall convenience (18%). On the flip side, nearly a third of consumers miss in-store personal interaction and would like lower delivery costs or a lower threshold to ordering products. Other aspects were ambiguous, both named as benefits and challenges, such as product quality, pricing, and inventory. The findings show that consumers have varying experiences with qcommerce providers, emphasizing the difficulty of meeting customer demand in a highly competitive field.

Market Dynamics and Future of QCommerce: The quick commerce landscape is challenging for startups due to high operational costs, competition from established retailers, and the need to align with consumer demands like low shipping fees, fast deliveries, and technological efficiencies. While many startups might exit the market or merge, a few could thrive. Major retailers, leveraging their vast resources, are likely to integrate express delivery and other qcommerce attributes into their model. Technological advancements, such as robotics and drones, will further evolve the qcomm segment.

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

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.