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The Emerging Quick commerce, Explained

The pandemic has undoubtedly transformed the operating model of most businesses and industries. Whether it is entertainment or medical services, to avoid face-to-face interaction that is prone to virus transmission, video calls and domestic streaming as service formats are in dominance and have crossed over to other industries as well. Quick commerce is no exception and mostly fed off of the well-established, strong technology and logistics infrastructure, for it to be able to excel in the market. Having said that operating models have evolved to be highly domestic-centric, quick commerce facilitates the unlocking of potential opportunities for such businesses by supporting the subsequent on-demand orders with speed and technological capability.

Customer Behavior redefined by the Pandemic

Statistics and studies have shown that the pandemic catalyzed a series of changes in customer behavior which apparently will not be reverting to that of pre-COVID years. For instance, more than 85% of survey respondents of PwC global consumer survey expressed that they will choose to continue shopping online even if social distancing policies are lifted [1] . As pointed out by another academic study on the change of buying behavior, the fear of witnessing stores being out-of-stock has led to higher frequency of unplanned purchases and justified impulse buying [2] . It is evident that the majority of the population has undergone a thorough adaptation in consuming behavior. This new phenomenon lays a strong foundation for the quick commerce market and industry to stay and continue to thrive in the future.

[1] PwC, “Global Consumer Insights Survey 2020”

[2] Anas, M., Khan, M.N., Rahman, O. and Uddin, S.M.F. (2022), “Why consumers behaved impulsively during COVID-19 pandemic?”

“Speed” as differentiator in highly competitive e-commerce market

The market size is evidently expanding as e-commerce alone contributed 18% of total global retail sales among all other sectors in 2020 [3] , occupying almost one-fifth of total market shares. Nonetheless, demand fulfillment is below satisfactory, especially in Southeast Asia countries where time for delivery takes up to nearly 6 days [4] . This explained why e-commerce market leaders now fight for speed as their newly discovered battle arena. The delivery standard has since then been arguably reset by the e-commerce giant Amazon. When the company first launched the same-day and next-day delivery offers, they were said to be going above and beyond expectations. Customers then began to expect from other retailers. With more large marketplaces and retailers hopping on the trend to offer next-day or even faster delivery, like Shopee24 and Walmart Express delivery, it has become the norm for many industries, even for small retailers, to struggle to figure out ways to meet the delivery options expected by customers.

[3] eMarketer, Insider Intelligence, “Global Ecommerce Forecast 2021”

[4] Google, Temasek and Bain & Company, “e-Conomy SEA 2020 report”

Yet, is Quick Commerce all about superfast delivery?

The booming quick commerce market during the pandemic, plus the “Amazon effect”, has transformed customers’ habits to the extent that they now expect this type of hyper convenience at their fingertips. Companies are competing to get the goods delivered to customers’ doors in record time. However, is quick commerce all about superfast delivery? When speed becomes another essential, how should we enable this quick commerce transformation not as a temporary heatwave but as a sustainably growing ecosystem made to better allocate resources and fulfilling the fast-changing customers’ desires at the same time?

“What Zeek pursues is a Sustainable Quick Commerce Ecosystem that values the needs of PRESENT without compromising the needs of the FUTURE”

Customers’ desires will never reach to an end, therefore quick commerce is not just about the speed of last-mile delivery, but more so offering customers seamless experience and convenience, being highly scalable in bringing values to their changing needs and maintaining the high quality service offering to achieve sustainable growth. As part of the quick commerce ecosystem, Zeek values sustainability and relentlessly focuses on utilizing technology to achieve ultra-fast delivery services, as well as, enhancing merchants’ internal optimization and management system with its SaaS offerings, shaping the next generation of quick commerce strategies:

1. Strengthening merchants’ customer-centric capabilities to pin-point customer preference: Unlike traditional e-commerce that offers a wide product assortment, the “shelves” of quick commerce is narrowed down to targeted and selective assortment that can facilitate a shorter pick-and-pack time yet cover the most that customers desire. With a variety of options available online, a web page has only 2-3 seconds to impress visitors. Thus, catching customers to stick with one’s web page is a key in winning the first step. Customer database ownership is thus important for a better understanding and analyzing their preferences, shaping better product positioning strategy and avoiding over-stocking. By knowing which product is attracted to the most clicks, or which promotion tools have the highest conversion rate, merchants could make a better decision in choosing which products to “recommend” in order to catch the eyeballs of potential customers.
2. Smart geofencing for optimal fulfillment: Quick commerce merchants shall no longer deliver from a single mega warehouse. Geofencing allows merchants to get a hold of where most of the demand is from and select the right locations for dark stores or mini-warehouses. Therefore it is important to match the customer catchment and maximize the online to offline(O2O) conversion with intelligent technology support such as heatmap analysis. An ideal location is where the maximum number of physical visitors could be covered and at the same time provides an optimal proximity for quick delivery and pickup. The closer the pickup point is to the O2O demand concentration area, the higher density of short distance orders could be achieved. Together with advanced multi-stores assignment algorithms to map delivery destinations with the best pickup point, a large portion of delivery cost could be saved and at the same time saving at least 66% carbon dioxide emission per trip.
3. Maximizing resources utilization in town with intelligent cross courier assignment algorithms: With the emerging demand, using in-house delivery fleets solely would limit one’s bottleneck. By maximizing order fulfillment capabilities with a third-party logistics(3PL) aggregator, multiple courier resources could be leveraged. With a wider pool of cyclists and walkers, together with the advanced order assignment logic to prioritize green fleet for shorter distance and higher loading capacity vehicles for larger size of orders, more and better utilization of multiple courier types especially on eco-friendly fleets could be achieved. Quick commerce businesses are intrigued by efficient real-time order management and resources matching systems that could enhance fulfillment and maximize sales. Leading F&B conglomerate in Thailand with over 1,700 outlets and over 7,000 in-house couriers has recently underwent system optimisation with Zeek’s order management and courier management system. With the advance dispatch algorithm, efficient courier mobilization tools and end-to-end logistic solutions for instant orders and unexpected order surge, not only the delivery time has substantially be shorten, order completion rate has also drastically improved from less than 70% to over 90% and over 99% orders can be delivered within 30minutes, compared to less than 60% before the system optimisation and order overflow support.
4. Maximizing per-trip efficiency and saving cost with multiple order pairing and dynamic routing: With a lower cost burden, more small but frequent and impulsive purchasing habits could be catered with high fleet utilization under best route recommendations, saving at least 50% CO2e per trip. Customers can purchase when necessary to avoid bulk purchase of unnecessary goods, minimizing the chance of home-stock expiry goods and thus reducing food waste.
5. Streamlining operation process with agile plug-in options: Scalability in integrating with POS/CRM/application/mini-program enables merchants to have full ownership of O2O-connected membership data. Better insights on membership campaigns and insights collection would enable merchants to understand their customers better and enhance customer stickiness. Removing unnecessary and redundant communication or wastage due to departmental silos, one-stop in-store service with easy store-front operation and multi-stakeholders order status synchronization would be achieved, while providing customers with ultra-convenience and seamless experience.
6. Achieving just-in-time delivery with big data analysis and high visibility journey across stakeholders: With dynamic big-data quote time estimation and real-time order tracking, higher accuracy and higher transparency could ensure the order is readily available once the fleet arrives and reduce the chance of re-delivery.

Why Businesses Should Embrace Sustainability

As is well known, a sustainable approach can help reduce the operating cost by achieving efficiency in the supply chain. To do this, the distribution of goods and transport activities – which are part of the chain’s last stage – face challenges directly related to the speed demanded by today’s customers and to the impact of carbon emissions from vehicles.

People nowadays are more educated about the impact of climate change which is a large part of the conversation today, and they have come to expect alignment between brand values and their own. Companies from all sectors are increasingly developing an environmental awareness that they put into practice in their operations, which they also demand from their customers.

Both aspects require a focus on sustainability that considers a logistics system that promotes the optimal route design and shorter travel distance within and between trips to lower the emissions that pollute the environment. By demonstrating genuine commitment in environmental protection through products and services, companies are able to experience greater customer loyalty.

Bio

Mr. Vincent Fan currently holds the positions of Co-founder & Chief Strategy Officer of Zeek, responsible for the business strategy, market and product positioning, and operations management. Over the years, Vincent has been leading and advising large conglomerates across Southeast Asia on Quick Commerce transformation with the smart logistics and system enablement of Zeek.

Prior to that, Vincent was a management consultant and corporate strategist. He has extensive strategy consulting and corporate transformation experience across Greater China and APAC. He has previously taken up various consultancy positions in EY’s in-house global advisory, IBM GBS’ Strategy & Transformation and GBI Consultancy, with focus on business and operational strategy, organizational design and efficiency improvement.

Vincent was also a programme lead and part-time lecturer in The Chinese University of Hong Kong. He holds Bachelor Degree in Systems Engineering, Master Degree in eBusiness Management and MBA Degree (Dean’s List) in The Chinese University of Hong Kong.