Say Hello To Q-Commerce: The Era Of Hyper-Local Delivery Is Here
Q-commerce (short for quick commerce), the next-generation of e-commerce, is all about optimizing delivery time to serve customers better, in addition to a shift in priorities such as supporting SMEs, adopting new sustainable practices, and investing in innovative solutions.
2020 has irrevocably changed the way business is done across the world. While it presented emerging threats and impending challenges, it also brought forward opportunities and gave organizations of all sizes the chance to fundamentally rethink what they stand for, especially so for talabat, the foodtech company I work at, as the year brought a sense of clarity amidst the chaos.
During the COVID-19 pandemic, talabat focused on answering one question: how to serve the community better, and the answer was simple- by creating amazing experiences for its ecosystem, from partner restaurants and customers, to its riders and employees. With that came the rise of q-commerce (short for quick commerce), the next-generation of e-commerce, which is all about optimizing delivery time to serve customers better, in addition to a shift in priorities as supporting SMEs, adopting new sustainable practices, and investing in innovative solutions became more integral than ever before.
With tech advancements improving the customers' online journey, people have become more trusting and reliant on online shopping, buying every thing from clothes to even cars with simple, quick clicks on their smartphone, revolutionizing the online delivery field. The speed at which a business can deliver (now, it's a matter of minutes!) has become increasingly important in the current industry climate, especially when it comes to food, groceries, and impulse purchases.
There is no doubt that COVID-19 had a greater impact on online behavior as lockdowns across the world led to a surge in demand for doorstep delivery of essential goods, changing and forming habits that could remain well post the pandemic. Customers began to appreciate the speed, choice, ease, convenience, and safety of online delivery platforms. The days of waiting days or weeks for an order to arrive are long gone, and customers today are expecting deliveries in well under an hour.
In a briefing held at Gulfood 2021, the world's biggest annual food and beverage trade exhibition, Dubai Chamber of Commerce and Industry's analysis, based on data from Euromonitor, said that online sales within the UAE's food and beverage market surged 25% year-over-year in 2020 to reach an astonishing US$412 million. Dubai Chamber also announced that the value of online food and beverage sales in the UAE is projected to reach $619 million by 2025, and record a compound annual growth (CAGR) of 8.5% over the 2020-2025 period.
In this landscape, what will set foodtech companies apart is their strive for improvement and the continuous evaluation of their business model, as well as the initiation and adoption of new concepts that keep one thing at heart: ecosystem agility.
THE RISE OF Q-COMMERCE
Q-commerce introduced more than just speedy food and grocery delivery for customers- it also reshaped the online food delivery industry, presenting greater economic impact by providing more opportunities for SMEs to grow their business, for new entrants to venture into the market, and for existing businesses to expand and reach a maximum number of people, equipping them with the tools to thrive in a digital world. It additionally presented an opportunity to delve into new areas as a natural evolution to q-commerce, which is in line with talabat's core business model and part of the company's commitment to serve the community better and enhance customer's online delivery experience.
In 2020, talabat identified a gap in the regional market for a service that allows people a safe, online, hyper fast, and reliable grocery supplier. Thus, talabat Mart was introduced in Dubai in February 2020, following its successful launch in Kuwait in October 2019. talabat Mart, also known as t-Mart, is a delivery-only 24/7 store, with no shopfront, and is the region's first to deliver groceries in less than 30 minutes. Today, talabat Mart boasts more than 20 t-Marts across the UAE and 80 t-Marts across the region, with plans to further expand this year.
Additionally, the rise of q-commerce brought noticeable shifts in consumer behavior. During the first four months of the pandemic, talabat witnessed an average rise in grocery orders from 2.5 orders to over 5 orders in the same period in 2021, as people adapted to online grocery shopping. There was also a rise in the percentage of healthy orders, which increased by over 35% compared to pre-COVID-19 times with people making healthier choices, in addition to increased demand for online flower shopping. Today, flower vendors available on the app increased by over 300, and flower orders massively increased by over 400%, with an average delivery time of only 32 minutes.
SUPPORTING LOCAL BUSINESSES THROUGH Q-COMMERCE
The growth of the next generation of e-commerce comes not only with opportunity, but also with responsibility as governments and organizations like talabat feel the urge and social responsibility to support SMEs in the communities they serve, especially during tougher times. To align efforts, talabat collaborates closely with Dubai Chamber of Commerce, Department of Economic Development and other governmental entities on a regular basis to ensure it is working towards a shared goal and mission- to support SMEs and Emirati businesses in the UAE.
Since last year, talabat devoted much of its usual marketing budget to support SME restaurant partners throughout the lockdowns, in addition to deferring commissions and renewal fees for over 4,500 small and medium sized restaurant partners to support their cash flow, and, most recently, announced that brands operating on the talabat platform will receive cash settlements on an average of a three-day cycle, a decision made to help alleviate one of the main concerns for restaurants. During the most critical period of lockdowns, from March to September 2020, talabat's SME partners grew on average by 25%, with some growing more than 100%- a testament to the power of technology and the role that food delivery aggregators play in connecting brands to the largest number of customers.
As a leading global player in the technology sector, Dubai is emerging as a knowledge and innovation hotspot, harnessing technology and digitization to charge its economy. The F&B industry in particular has been one of the industries that received a great share of attention in the UAE. In May 2021, H.H Mohammed bin Rashid Al Maktoum, Ruler of Dubai and Vice President and Prime Minister of UAE, announced the launch of the first phase of Foodtech Valley, a city that will serve as a global destination for startups and industry experts, a project tremendously focused on innovation and R&D.
This reflects the growing weight the UAE is placing on food and innovation as the two work hand in hand to co-create the formula for success in today's digital age. Hence, it comes as no surprise that q-commerce has already started to shape the online food and grocery industry as we enter a new, tech-fueled era. The foodtech revolution will keep playing a crucial role in strengthening the economy, while utilizing the nation's advanced technology infrastructure, world-class logistics facilities, government support, and high-internet penetration rate to invite new, diversified investment.
THE IMPACT OF Q-COMMERCE ON SUSTAINABILITY
Additionally, talabat witnessed a percentage rise in orders of over 100% in January to May 2021, in comparison to the same period last year. With this remarkable hike in orders due to the ease and speed of q-commerce, sustainability has increasingly become one of talabat's core business commitments, aligned with that of the United Nations Sustainable Development Group and the UAE Vision 2021. As a result, last year, the 24x7 quick-commerce grocery platform talabat Mart has shifted from paper bags to biodegradable and reusable plastic bags as part of the company's commitment towards sustainability and providing consumers with environment-friendly options. talabat Mart now only provides biodegradable bags that can be reused in the future and consumes four times less energy to produce than paper bags.
Sustainability doesn't always need to be large-scale initiatives, however. talabat also switched their default option for cutlery to "no cutlery" on food delivery orders made through the app in order to encourage customers to make an eco-friendly choice during checkout and reduce unnecessary use of plastic within the ecosystem. This resulted in no-cutlery orders increasing from 6.5%to an incredible 62.6% in a span of four months.
Other initiatives are currently under discussion with governmental and private stakeholders in an effort to serve customers sustainably and create impact in the ecosystems that talabat operates in and beyond. This commitment is in line with that of the UAE government's, which aims to continually enhance and test new ways that will ultimately improve the business climate in the country.
Despite the pivots of last year, 2021 is the year of change, accelerating the digital transformation process across all industries and bringing a world of new opportunities for businesses. Despite being hard hit by the pandemic, many businesses in the F&B industry diversified their offerings, becoming a lot more delivery focused, utilizing the power of technology to reestablish themselves and highlight their agility. The future now holds endless opportunities for companies, especially for local SMEs and startups, to turn the after-effects of the pandemic into innovation and growth, as the UAE spearheads post pandemic recovery.