Revolutionizing the world of shopping with Quick Commerce and paying via Buy Now Pay Later 

A new trend is shaking up the world of shopping: quick commerce (qCommerce) meets consumers’ needs for convenient order, flexible payment, and delivery processes – and as quickly as possible. But does this have the potential to shape how we consume in the future? And how can online retailers adapt and meet the needs for flexibility by offering flexible payment solutions? We asked these questions and more – and our expert Sebastian Ehrke, Director for Ecosystem Growth, gives all the answers.  

Why do we see a strong trend towards qCommerce right now?  
The pandemic has transformed the way we shop. More and more people shop online – one in every seven euros in retail is now spent over the Internet*. Among online shoppers, however, there is also a growing number of people who want delivery as fast as possible. After all, services such as Amazon Prime have changed what we expect in terms of delivery times. By combining a radically shorter customer journey with maximum customer focus, qCommerce precisely reflects this spirit of the times. Convenience is also a principal factor without question – such as ordering meals or even just a coke for delivery in almost an instant. 

What exactly is going on with consumers? 
People have gradually got used to the idea that waiting 3-4 workdays for a delivery is no longer acceptable. With premium delivery, consumers have come to expect that products ordered today should arrive at their doorstep tomorrow. They have grown accustomed to quick delivery – including from other retailers too. Same-day delivery set an absolute milestone. For daily essentials ordered via app, this now takes just a matter of minutes in major cities. And this phenomenon is now also spreading to other segments.  

Where else is qCommerce advancing? 
Current examples include beauty and technology products. For instance, in Hamburg, the cosmetic chain Douglas is trialling cooperation with the express delivery service Gorillas for its beauty products. In Singapore and Thailand, users of Foodpanda, an online delivery platform, can have devices and accessories from the smartphone manufacturer Xiaomi delivered within 30 minutes. The food delivery service Wolt (now operating in 23 European countries) also brings pharmacy products quickly to consumers’ doors in Munich. Orders are possible around the clock and are processed between 9 am and 6:30 pm. Deliveries are made within 30-45 minutes. 

Quick deliveries are in demand, then. Which providers are succeeding here in qCommerce – delivering within 10-60 minutes?  
These are primarily start-ups backed by venture capital in the eFood sector. For example, Gorillas, which was able to raise around 270 million euros when it entered the market in 2020. Flink is another example – a provider that entered the market one year later and most recently received about 705 million euros in new capital in December for further expansion. And there is the Turkish grocery delivery service Getir, which has been active in eight different European countries (and in the US) for the last few years and is having to prove itself.  

What about the established supermarket chains and discounters? Do they not also want to enter this market? 
Although well-known supermarkets already offer delivery services, these tend to be for weekly grocery shopping. It is not easy for them to enter qCommerce. After all, for them it is important that this service is profitable. The situation is different for the start-ups. Like all Internet-based business models, they primarily focus on rapid growth after launch. Grabbing market share is far more important than the profit margin. This makes it difficult for traditional players to get involved. But large discounters could completely change the competitive situation if they were to enter qCommerce with low-priced products. Market potential certainly exists. Globally, this is predicted to reach 448 billion euros by 2030**.

What factors are key to succeed in this market? 
A broad product range, well-coordinated logistics, warehousing, and deliveries, as well as frictionless financial processes. Ultimately, the best business model will only pay off with the right inflow of cash. That is why retailers should take a closer look at the payment options they offer. Are consumers able to choose their favourite and most flexible payment method – like “buy now, pay later”? What costs are incurred with each payment method? Are some payments cheaper to process than others? And what solution is there for micropayments typical of qCommerce that can be costly to process? 

What other fine adjustments can merchants make to improve payment processing in the background? 
When it comes to orders with low billing amounts, the profitability of payments is a central issue. This is also the case in qCommerce, where the costs for payment processing can often exceed margins. Monthly billing can be a satisfactory solution here. This adds together all the small purchases into a single invoice. When consolidated like this, it is then treated like any normal invoice, with a payment deadline of 14 days for example. Generally, processing is easier when all the main steps of the order-to-cash chain are automated where possible – i.e., invoicing, payments, and accounting. This way, the capacity limits of merchants can also expand, and they are well equipped for rapid growth. 

 

* German Association for E-Commerce and Mail Order Business (Bundesverband E-Commerce und Versandhandel, BEVH): annual meeting. 26/01/2022.
** Delivery Hero: Company Presentation. November 2020. P. 16.