The way consumers shop for groceries and everyday essentials is undergoing a dramatic shift in Europe. With people busier than ever and demanding instant gratification, a new online shopping model known as "quick commerce" or "q-commerce" is taking off. Quick commerce refers to delivering goods to customers within one hour or less of ordering. Pioneered by startups, this fast delivery model promises to change how Europeans get their daily supplies.
The Quick Commerce Boom
Quick commerce enterprises have proliferated across major European cities over the past two years. Companies like Gorillas, Getir and Flink promise delivery of groceries, alcohol, medicine and household products within 10-30 minutes of placing an order via their mobile apps. Backed by billions in venture capital, these startups are rapidly expanding their fleets of personal shoppers and warehouses (known as 'dark stores') located strategically in dense urban neighborhoods.
While grocery delivery itself is not new, what differentiates quick commerce from traditional online grocery services is the emphasis on hyperlocal warehouses and speed. Traditional grocery delivery relies on centralized fulfillment centers that cater to wider geographical areas but take longer - usually next day - to deliver. In contrast, quick commerce startups promise delivery comparable to taking an impromptu run to the corner store.
Consumers have embraced this unprecedented convenience. In 2021, venture capital funding in European quick commerce startups surged to over $1.5 billion as major markets like the UK, Germany and France saw uptake. Among those, Gorillas reached a $3 billion valuation less than a year after launching. With grocery spending making up over 10% of household budgets in Europe, quick commerce poses a viable threat to corner shops and large supermarket chains that dominate the offline market but cannot match on-demand delivery speeds.
Challenges and Growing Pains
However, Europe Quick E-Commerce (Quick Commerce) also faces unique operational challenges that traditional e-grocers do not. Maintaining inventory across dozens of micro-fulfillment centers (dark stores) within dense urban centers requires precision logistics. High delivery volumes put pressure on reducing costs per order while ensuring on-time delivery promises. Lack of standardized processes and data consolidation also hampers efforts to scale operations profitably.
Labor issues have also emerged due to the capital-intensive nature and fast pace of quick commerce. Personal shoppers who pick and deliver orders work long hours under tight deadlines for low pay. Strikes and protests have occurred in some markets to demand better wages and working conditions. Regulators are beginning to scrutinize employment practices of quick commerce giants, many of whom rely heavily on contractors and gig workers over full-time staff.
Competition is also intensifying as pioneers face copycats. New entrants with their own venture funding seek to replicate successful models, hoping scale and first-mover advantages will offset current lack of profitability industry-wide. Startups have even emerged specializing purely in software tools or fulfillment centers which other services can leverage. Customer acquisition costs also remain high, leading to unsustainable subsidies on product prices and delivery fees in the battle for market share.
Looking Ahead
Despite initial struggles, industry observers believe quick commerce is still in its infancy and poses a long-term disruption of physical and traditional online grocery retail. Strategic moves are already taking place. Gorillas raised another $1 billion in 2022 to finance international expansion beyond its strongholds in Germany and UK into new markets like Italy, Belgium, Netherlands and US. Getir merged with a Turkish rival to gain scale and fend off local competition, hinting at a global consolidation phase.
Supermarkets too are responding, teaming up with quick commerce startups as partners or launching their own hyperlocal services. Carrefour partnered with Glovo while Sainsbury's acquired a fledgling UK startup called Chopchop. Many predict the future of online grocery will be hybrid models through strategic partnerships between legacy retailers and on-demand specialists - leveraging existing supply chains, private label products and customer bases with new delivery technologies.
Whether through proprietary growth or tie-ups, the quick commerce juggernaut shows no signs of slowing down in Europe. With young consumers increasingly comfortable with ultra-convenience across industries like food delivery and ride-hailing, their grocery habits may undergo a similar shift towards immediacy and on-demand fulfillment. And this could make a lasting impact on how people get their everyday supplies for years to come.
Get more insights on Europe Quick E-Commerce (Quick Commerce)
