Why quick commerce is banned and on-demand is not?
The city of Amsterdam has recently announced that it will ban all “quick commerce” companies to locate in the residential areas. The decision is a result of the frustration of the inhabitants in the areas. The city directs companies such as Getir, Gorillas, Flint or Zapp to locate in industrial areas on the outskirts of the cities.
This is disastrous to the companies that rely on efficient deliveries from locations close to customers.
In many ways the frustration of the inhabitants and municipal authorities is understandable. The constant stream of mopeds and bicycles is disturbing for the residential streets. However, the frustration towards only one type of retailer is not logical.
Why only quick commerce?
Quick commerce serves the exact same need as the traditional convenience stores. The only difference is that quick commerce companies deliver the orders with bikes and mopeds, whereas customers often come by foot.
Thus, the quick commerce category increases the amount of non-pedestrian traffic in the region creating more noise and disturbance.
The biggest inconsistency relates to the on-demand restaurant delivery companies such as Uber, Deliveroo or Just Eat. They offer nearly the same service, but from existing restaurants.
The on-demand model does not seem as disruptive to the inhabitants as the delivery drivers are not wearing branded clothing. They are not as easily identified as on-demand couriers. This way the scale of on-demand deliveries remains somewhat obscure for the people living in the residential area.
The integrated model of quick commerce players is more efficient
The quick commerce and on-demand players both offer fast delivery to groceries and restaurants.
“You can deliver a lot more on a per-hour basis than you can anywhere else, because they have a central pickup point. So you need a lot less drivers to do a lot more deliveries.”
The biggest difference arises from the fact that the quick commerce players create more efficient processes by locating in dark stores that are designed for efficient picking and delivery. Additionally the drivers are not gig workers, but salaried employees or the drivers can select whether they want to be gig workers or salaried drivers (with GoPuff for example).
The dark stores (just like dark kitchens for restaurants) are the next and more efficient iteration of the fast delivery model initiated by the on-demand players.
From the perspective of the deliveries, the dark stores offer the drivers one point from where to pick up orders and where to get back. In the on-demand model the driver may need to wonder around a shopping center to find the right restaurant to pick up the order. That alone can take 5-10 minutes. This is the time the quick commerce model has to be able to fulfil the entire order to the customer’s door.
The efficiency problems of the on-demand model have been outsourced to the gig workers. Therefore, it would be strange to restrict a more efficient model of operations just because it is new and makes the problem more visible.
Grocery stores also create a lot of car traffic
The quick commerce business model has been criticised for generating too much traffic in the residential streets. It serves the same purpose for the customer as the traditional convenience stores where customers from the same residential area. However, for convenience stores customers often come by foot.
Another form of grocery retailing that generates large amounts of car traffic is the supermarket (and especially the hypermarket). Majority of the supermarket customers come by car, but they come from rather small radius (3-5 km) around the store.
For some reason the supermarkets are not seen as problematic for the residential area traffic.
In some ways the dark stores could be seen as a more effective to organise grocery retailing.
In stead of forcing the quick commerce players to locate to areas, where they can’t operate, the authorities should try to find locations, which disturb the lives of the ordinary people, but also enable the quick commerce players to offer new kinds of grocery services for those same residential areas.
The companies offering fast deliveries should try to find secondary locations in the residential areas. They don’t need to locate on the prime places on the high streets, but they close by. For the consumer who comes by foot the precise location of the store is very important. For a delivery driver who travels by bike, few hundred meters here or there is not that important in terms of the micro location.
Additionally the companies should put much more effort in integrating into the community surrounding them. This way the quick commerce category can survive the tidal wave of problems they are facing currently.
Increasing the conveniency of the online grocery delivery will be one of the most important drivers of the business in the future.
Therefore, it is fundamental for companies and the public sector to find ways to make the businesses more sustainable in the long run. This requires new kinds of business processes as well as new kinds of locations.