Q-Commerce is becoming an important channel for brands

A recent article in the Economic Times in India highlights the fact that quick commerce has become the fastest-growing sales channel for consumer goods companies. And Suresh Narayanan, chairperson of Nestle, said that more than half the growth from e-commerce came from quick commerce platforms.

The article quotes executives from marquee legacy brands saying that sales through some of the quick commerce platforms are growing faster than traditional e-commerce platforms.

Another article by Indian Retailer quotes a study by RedSeer: India’s Quick Commerce sector is expected to grow by 10–15 times and is expected to become a $5 billion industry by 2025.

The study also found that in India currently 20 million households can be addressed by the Quick Commerce delivery model which is around 7 percent of the overall market and expected to grow at the rate of 12–13 percent by 2025. Around 50 percent of this growth will come from the high-income households of metro and Tier-I cities.

It is not difficult to understand why q-commerce is a hit with consumers. The convenience that it offers is a huge factor. But for brands, it can be a threat or an opportunity — depending on what your current position is.

Boon for new/emerging brands: If you area new/emerging brand that is trying to get a foothold into the Indian FMCG market, quick commerce is a boon because these platforms are democratising market access by offering distribution as a shared service. It opens up markets in a manner that was just not possible for new brands in the traditional brick & mortar distribution model. Q-commerce platforms also enable new brands to be selective about the geographies and localities that they would like to service. And, like any other digital platform, q-commerce platforms also democratise marketing opportunities for brands by enabling them to be discovered by consumers.

Threat for legacy players… but one that can be converted into an opportunity if you adapt: Unlike traditional brick & mortar stores, where shelf space is limited and on-ground field force strength helped brands dominate retail markets, digital platforms create equal opportunity for new/smaller brands to compete on equal terms.

So while these channels are soon becoming important in corporate strategy, to become mainstream and for corporates to leverage the opportunities created by omni-channel and q-commerce, traditional brands will need to reconfigure and redesign their supply chains.

This is because their existing supply chains and distribution networks are not designed for the omni-channel world. Traditional supply chains and distribution models do not have the nimbleness that is required for efficiently servicing a combination of offline and online channels.

Technology and digitisation of the entire supply chain operations is super critical in making the transition to omni-channel wherein the number of stakeholders increases multifold and synchronisation between different stakeholders becomes critical.

Here’s a link to an article about why the supply chain, warehousing and logistics for omni-channel retail have to be different. The article also highlights how some of the startups in our Supply Chain Labs fund portfolio startups are helping companies leverage omni-channel opportunities.

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Prajakt Raut — Managing Partner Supply Chain Labs — A Venture Capital Fund investing in startups disrupting supply chain.