Quick Commerce: Who will turn it into a profitable long-term play?

Looking at our own team, where we have a mix of Gen Z and also new parents as an example, their usage of (Getir, Zapp, Gopuff, Gorillas etc.) reflects how pure players will need to extend their proposition beyond its present core of urgent/distressed buys (i.e. needing some nappies in a hurry!) to increase basket size. For example, connecting the service to other spend categories like leisure & hospitality, pharmacy or wider consumer goods to unlock larger opportunities (take for example the recent launch of Zapp Boutique). They also need to find ways of extending their core customer base beyond Gen Z and professionals in Tier 1 urban settings.

Another consideration to take a bigger slice of the pie is if pure players look to combine grocery and take-out services, by merging the two, partnering or expanding their offering to cover both. Although a lot of the large aggregators do cover both, these two markets currently operate two separate quick commerce missions however combined could strengthen overall market position.

At present, the pure plays rely heavily on promotions to lure in new users as they grow their consumer base – with over a quarter of items discounted by 30- 40 percent. That’s not sustainable in the long term and a strategy of when to reduce/ switch-off the discounting will need to be in place. Most players are debt-financed and will eventually need to make a profit especially with “cheap” money becoming less readily available.

Our view is that the future market is only large enough to sustain 3-5 credible pure play operators alongside the large aggregators (e.g., Just Eat, Deliveroo, Uber Eats) who are already embedded in consumer consciousness. A divide is becoming apparent between those that are well-funded in the near term, evident in their marketing efforts and visibility across major cities, and those that are smaller scale, more localised, and likely to be subsumed as the market matures. We’re seeing growing demand from these operators to help them think through the M&A market and opportunities that may arise.

As Paul observes, the retailers face some big strategic decisions. Do they partner, or launch a service of their own? If they partner, who is the right player to pick – which one(s) will survive and thrive? Then there’s the decision on whether to follow a unilateral or multilateral partnership model.

These are questions which many grocers are currently asking themselves, with several recent announcements (e.g., Aldi withdrawing from the quick commerce market). Multiple relationships allow access to more customers as customer bases can be complementary, but they can also bring additional operational complexity. If aggregators and retailers can share the customer relationship and create a ‘connected customer’ view, future opportunities would be available for cross-merchandising. There can also be greater operational synergies – for example from internal picking systems with dedicated staff from the on-demand player in physical stores or setting up consignments of stock within dark stores.

Different grocers are placing different bets. It will likely be 2026 before we start to see which model emerges as the winning formula.

Another key question for retailers: if quick commerce continues to grow, what does that mean for their own networks of express stores as the pure players have publicly stated that they are looking to replace the traditional physical convenience store in the future? Some structural rethinking may be needed.

The aggregators (e.g., Just Eat, Deliveroo, Uber Eats etc…) have been successfully creating a range of partnerships. They are particularly strong in Tier 2 mid-size cities (e.g., Bristol, UK), and also Tier 3 locations including outer urban and suburban areas (e.g., Swindon, UK) where there is less competition. However, can they also drive up their penetration in Tier 1 locations where the pure plays are especially prevalent? This will at least partly depend on how much ‘appetite’ they have to expand from take-out food to other items.

Having a strong network of riders/drivers and moving outside of the existing customer saturation areas and exploring new vertical sector revenue streams all plays a major part in the future growth. European markets for example have been hard nut to crack due to the lack of customer density or infrastructure countrywide and the differing buying habits. E.g., those selecting to purchase from independent retailers instead.

There are opportunities and questions for the consumer goods giants too. Do they leverage quick-commerce through the retailers, or can they get more of their products into the pure players’ dark stores and leverage the opportunity for exclusive product launches or testing? They may be able to use this as a channel to sell more of their less popular brands or create bundled offers without needing to offer huge discounts.

But Linda’s view is that key to all of this is the consumers themselves. We know that value, quality and convenience are the guiding factors for most shoppers (in that order). Quick commerce ticks the convenience box, and quality too (although ensuring that familiar quality brands are available needs to be a priority). But will rapid grocery be able to sustain value through such widespread discounting? They are not charging properly for delivery yet either – there is a question mark over how long that will be sustainable. One approach may be to start offering more delivery options – hourly slots, same day, next day – and introduce a charging model with it.

With cost of living pressures, consumers may increasingly turn away from impulse buys towards more regimented shopping regimes. Those that continue with quick commerce may become more ruthless about jumping between the best bargains, making it even harder to make a profit. Players need to appeal to a range of customer missions and occasions – not just panic buys but treats/luxuries, special occasions and planned purchases too, embedding it in consumers’ habitual shopping patterns. The target demographic is price-sensitive and willing to trial all quick commerce platforms on offer. 

Then there’s ESG – an ‘elephant in the room’. Can quick commerce show it’s not only fast but also sustainable and environmentally conscious? Some players are arguing they reduce food waste through enabling purchasing of only what is needed now, but the idea we would all order all three meals per day through quick commerce seems perhaps an ambitious message intended for investors than a realistic shift in consumer behaviour. And regulatory requirements around ESG are only likely to rise, while from a consumer point of view engagement could wane if quick commerce becomes perceived to be wasteful or polluting. There are already live debates in developed markets like New York around the social agenda, where there have been protests and a perception that quick commerce is the enemy of localism and community-based shops. One way forward could be for pure players to consider including local and independent businesses on their platforms. That could be an important differentiator in the eyes of some consumers, as well as broadening the selection of available items.

Despite the headwinds, there’s no doubt that it’s all to play for. Quick commerce is here and there’s no turning back. In many ways, it fits like a glove with our digital, on-demand age.

The question is, who will be most successful in honing their proposition and navigating the hurdles to truly make the quick commerce tills ring?

If you would like to continue the conversation, please contact Linda Ellett. 

This article is co-authored by Niall O'Dea (Director, Deal Advisory, KPMG in the UK) and Tino Hwata (Manager, Consumer Markets, KPMG in the UK).