What’s in store for Q-commerce?

Consumers in the mobile age have learnt to expect their online purchases to be delivered instantly, just like their coffee, noodles, or even online entertainment. The quicker their demands are met, the more appreciative they are.

This year – 2023 – is poised to be an exciting one for Q-commerce (quick-commerce), as it continues to gain momentum globally. However, despite its potential, there are still many people who haven’t experienced the convenience of this service and may not fully understand its benefits. The ability to have your online purchases delivered within 45 minutes, compared to hours or even days, is a game-changer for many people, especially those who lead busy lives and appreciate quick, convenient and hassle-free service.

Looking at the business lens of Q-commerce from a global perspective, it’s important to note that this industry is not without its challenges. While it may seem like a certain future globally, many experts are sceptical and question whether it can make a lot of money. Most companies have struggled and many have failed, raising questions about the model’s sustainability. One of the challenges is predicting which areas will buy what products, and there have been issues with dark store operations in Europe due to their close proximity to residential areas.

In Pakistan, however, Q-commerce has been received very positively by consumers because of the convenience it brings and regulatory regimes have consequently been more business-friendly, allowing companies to operate more efficiently. While Pakistan may only be the 39th largest e-commerce market in terms of revenue, the ratio of Q-commerce to e-commerce is quite high compared to the rest of the world, making it a unique and promising market for this industry.

New entrants to the Q-commerce market pushed existing players to rapidly expand their services along with the variety of products they already offer. It’s no secret that the new model of vertical integration has turned out to be immensely successful, and promises to reach even greater heights in 2023. The industry’s revenue in Pakistan is predicted to operate on an annual growth rate (CAGR 2023-2027) of 28.43 per cent, projecting a market volume of $164.4 million by the year 2027.

Tier-1 cities like Karachi, Lahore, Islamabad and Rawalpindi consist of 70 per cent of the nation’s population, making them the perfect opportunity for Q-commerce to thrive. These four major cities offer approximately 150 million tech-savvy customers that are looking for quick service.

It’s clear that Q-commerce has the potential to revolutionize the way we shop and receive goods, but it’s important to recognize that there are challenges that come with this business model - including the right marking sizing assessments, customer awareness, product diversification/coverage, security of supply, developing hybrid solutions for effective delivery etc. In Pakistan, however, the unique regulatory regime and the fast adoption of this service make it a market that is ripe for growth and innovation.

Nobel Prize winning economist Ronald Coase observed that the most important question for any firm is to determine which activities are worth doing internally and which it should look for the market to supply. He further noted that the above question is never straightforward, and the answer may change over a period of time. For Pakistan, however, Q-commerce may be the answer for now.

The writer is director Q-commerce and New Verticals at foodpanda Pakistan.