Is QCommerce Groceries Unwanted in the UK?
During the pandemic, we saw a surge in online shopping, leading to a boom in start-up on-demand delivery apps. However, as the situation has settled down, we’ve seen a shift in this trend. Getir, for instance, has recently decided to move away from the UK and the wider European market to focus on their home country of Türkiye. This raises the question: Is there a demand for on-demand groceries?
As a business owner within ecommerce and the founder of StoreGrab, a company currently in pre-launch that offers quick commerce options with a core focus on next-day delivery nationwide, I have a keen interest in this industry. However, I am sceptical about the viability of quick groceries — receiving shopping within 60 minutes. Groceries are a completely different game than hot food. So, does the UK want and even need groceries delivered this quickly?
Personally, I don’t think so. I honestly do not feel there’s a big enough need or want for QCommerce in the grocery sector, which is why companies like Getir have struggled to grasp the concept in the UK. The cost of running a QCommerce delivery in groceries, coupled with the promises of “within 10 minutes” delivery, is a concept that drains company coffers. A more sustainable option might be to offer a convenient shopping experience with multiple delivery options and have a QCommerce delivery as a premium service — similar to what I am exploring with StoreGrab, which aims to connect the local retailer to a national consumer base.
But why has Q-Commerce within grocery failed? The ‘why’ is an interesting question as the UK is a convenience-oriented consumer market. We are the biggest users in Europe for ecommerce orders, yet QCommerce has not strictly taken hold and likely never will with current formats.
Several factors have contributed to these challenges:
- Consumer Behaviour: The pandemic created a temporary surge in demand for on-demand grocery delivery. However, as safety measures improved and people could go out safely, the need for on-demand grocery receded.
- Profit Margins: The profit margins on food are too low for companies to ever turn a profit. These companies are charging £2 to £3 per delivery, which usually takes 30 minutes to and from the warehouse. But the riders are earning £12 an hour — so that time equals about £6. The difference between the wholesale cost of the products and the sale price does not make up for that shortfall. Most grocery products only have 1–5% margins.
- Delivery Discounts: On-demand grocery app downloads and app usage have plummeted since companies have stopped offering so many delivery discounts
- Employment Model: Rapid grocery delivery companies are preparing to move hundreds of couriers paid by the hour onto insecure gig-economy contracts as the threat of tougher regulations has receded
- Inflation and Supermarket Rivalry: Inflation and competition from supermarkets have also put pressure on these companies.
These factors have led to some companies reducing their workforce, closing warehouses, and even withdrawing from certain cities and towns.
As we look to the future, it’s clear that the QCommerce model needs to evolve to become a viable solution in the UK market. One promising avenue is the incorporation of newer technologies, such as drone deliveries.
Drone technology has the potential to revolutionise the delivery industry. By reducing travel time, drones can make deliveries quicker and more efficient. They also reduce the risk associated with limited drivers and can significantly cut operational costs.
In fact, drones are already being used in various parts of the world for delivery services. For instance, Amazon has announced plans to start using drones to deliver parcels in the UK in under an hour. The online retail giant said the service would start in one location, which is yet to be revealed, at the end of 2024. Amazon already offers drone deliveries in two US states for goods weighing no more than 5 lbs (2.2kg).
Moreover, Royal Mail in the UK has carried out trials of postal deliveries using drones, with plans to deploy 200 drones to deliver mail across the UK over the next three years.
In terms of operational costs, drones can potentially become as cost-effective for package delivery as traditional transport modes. Under certain conditions, such as the highlands in Scotland or when pooling deliveries does not make sense, drones may already be the most cost-effective mode of delivery.
However, it’s important to note that the successful integration of drone technology into the QCommerce model will require careful planning and regulation. Companies will need to work closely with regulators to ensure safety and efficiency.
In conclusion, while the QCommerce model has faced challenges in the UK market, the incorporation of new technologies like drone deliveries presents a promising path forward. By embracing these technologies, we can create a QCommerce model that is not only viable but also efficient, cost-effective, and aligned with the needs of the UK market. The future of QCommerce, therefore, is not just about speed, but also about innovation and adaptability.
