by Karim Khoury, Co-Founder of eddress
Spend five minutes in any major global, and you’ll see dozens of branded, brightly-colored cyclists, busily transporting items to consumers. The Q-commerce era is well and truly here.
The growth of the Q-commerce industry has been extraordinary. By 2025, research suggests that the market will have grown to more than $72.3 billion. After all, consumers want the convenience it offers.
But what effect is all this having on cities? And is it all positive? Let’s take a look.
The effect of q-commerce on traffic
How q-commerce will affect traffic volume isn’t entirely clear. On the positive side, companies making scheduled orders are using software advances to make deliveries more efficient. Better routing tools and delivery of multiple items in a single round are helping to reduce congestion. They may even cut the number of trips consumers make to stores and take-out locations.
However, the positive effects depend on the business model. For instance, a pizza delivery firm using cars to deliver to customers individually is more likely to add to traffic jams. The vehicles must return to base after each delivery, making more return trips than a scheduled delivery van that would be serving multiple customers on a single street. “Failed deliveries” because of absent customers could increase the number of trips further.
Interestingly, q-commerce firms may be able to innovate their way out of these problems, as explained here. For example, they may want to ask customers whether they need their delivery immediately, or if they don’t mind getting it later or picking it up themselves. Segmenting customers based on requested delivery speed could help avoid the congestion it currently causes.
Some cities are taking action on traffic and noise proactively. Amsterdam, for instance, has now banned so-called “dark stores” – hyper-local distribution hubs for local q-commerce firms. The city cited the “nuisance” of such outlets, due to delivery couriers constantly cycling backward and forwards outside them.
Additionally, technological innovations may mitigate some of the impacts. Traffic management systems, for instance, may be able to dynamically adjust traffic flow to improve how intensely traffic uses existing roads.
The effect of q-commerce on the environment
The effects of q-commerce on city environments are mostly positive. However, the picture is mixed. Again, it depends on the business model.
Researchers argue that consumers need to order fewer goods to improve city environments. However, the opposite is happening. City residents are demanding more products delivered to their front doors than ever before.
Packaging is a case in point. Indeed, researchers fear that extra deliveries will lead to an increase in waste going to landfill. Consumers will simply throw the packaging in the bin after use.
At the same time, though, the industry is developing solutions. One is to provide consumers with compostable packaging that will turn into soil they can use in their gardens. Another is to reduce the packaging volume, though this may be difficult to achieve given the courier-based business model.
Additional solutions include investing in tech. For instance, replenishment machine learning-backed software could reduce fresh food wastage. Systems could account for product seasonality and stock rotation, hence, reducing waste. And these are just some of the potential solutions. But if you’re looking for some tips on sustainability, make sure to make a quick stop here.
The impact of q-commerce on real estate
Q-commerce is also having an effect on real estate. Many firms are buying up overlooked, less expensive real estate locations for their micro-fulfillment centers. Setting up locally helps them meet their delivery targets of getting goods to customers in 15 minutes or less. Some are converting rented residential apartments to keep costs down.
The result of this is a surge in demand for marginal or subprime property in residential areas, pushing up prices. Since most q-commerce firms only require 2,000 to 5,000 square feet for their operations, a lot of existing housing stock is suitable. And because properties don’t need to be customer-facing, curb appeal doesn’t matter so much.
For cities, this could be both good and bad. On the one hand, q-commerce companies are finding uses for marginal properties. But on the other hand, their activities could make housing less affordable for regular residents.
The impact of q-Commerce on employment
Moreover, the effect of q-commerce on employment could be considerable. New York City, for instance, already has 65,000 bicycle delivery workers. As q-commerce firms look to grow their margins, this number could increase further.
But again, this depends on many factors as it could vary from one business model to another. In fact, we have been witnessing major Q-commerce players reducing their workforce intensely. As Techcrunch mentioned earlier this year: “ Getir — the $12 billion quick commerce upstart that provides grocery essentials and sundries and promises delivery of them in minutes — is cutting 14% of its staff globally.”
Long-term, the picture is less clear as this also depends on the strategy put into place. Drones could also become more commonplace, but If they do, they might displace workers who may not have other employment opportunities.
The effect of q-commerce on smaller & local businesses
Lastly, q-commerce’s popularity may affect local and smaller businesses. Those failing to align with the new customer behavior by integrating an omnichannel approach are the ones that could be the most affected. Nonetheless, this business model requires a certain volume or margins to implement this strategy into current operations.
Nevertheless, even though there has been a massive increase in online shopping post-pandemic, people still want to have the choice between in-store and online shopping. The decision will vary from one day to another as this will all depend on the most convenient approach for a specific customer at that precise time.
Conclusion
In summary, q-commerce may contribute to cities positively. However, it depends on the business model firms use as well as their location. Bicycle-based services provide much-needed jobs while minimizing the impact on the environment. By contrast, conventional vehicle-based deliveries generate more pollution and traffic but aren’t usually as economical.
