3 Important Notes in Building a Quick Commerce Service
In the last two years, Indonesia has experienced significant online retail growth. Indeed, its contribution is still very small, around 10% of total national retail sales, but this growth is quite significant when compared to several years ago, which contributed only 2%-4%.
This growth was also driven by increased demand for on-demand shopping during the Covid-19 pandemic. People are starting to use digital platforms to shop for products, especially for daily needs or (grocery).
Along with the growth in demand, people’s expectations of product delivery also increased. Startup players are starting to develop innovations to accommodate the need for fast online shopping or what is known as quick commerce.
In this #TuesdayStartup session, Astro Co-Founder and CEO Vincent Tjendra shared his views and experiences in building a quick commerce business in Indonesia. Here’s the full summary.
Talking about quick commerce, basically this term has a similar concept to e-commerce. The difference is that the delivery of goods in quick commerce is done instantly, at least within an hour.
Referring to the RedSeer report, quick commerce is defined as the delivery of consumables within 45 minutes at normal shipping costs.
The main driving factors for quick commerce include increased demand for delivery of daily necessities, impulsive or unplanned shopping behavior, including changes in consumer behavior due to Covid-19.
In developing Astro, Vincent emphasized the element of speed by making deliveries in just 15 minutes. In contrast to instant delivery or same-day delivery which takes more than one hour.
According to him, the determination of the 15-minute delivery time is in accordance with research that has been carried out to accommodate the on-demand needs of people who really need their products right away, for example cooking ingredients.
However, the commitment to fulfill deliveries within 15 minutes is considered quite difficult because Jakarta and its surroundings are prone to traffic jams. He believes that one of the keys to overcoming this problem is to build a product storage hub so that it can be shipped to the location closest to the user.
“In Jakarta alone, it seems impossible to deliver goods within 10-15 minutes. However, from the transactions made by consumers, 15 minutes is quite the right time to reach a certain radius. We also see that, even though this concept is relatively new, consumers appreciate the service [quick commerce],” he said.
One of the things that makes e-commerce quite attractive compared to physical retail stores is the availability of more diverse products. Then, how can a quick commerce platform be able to reduce products that can be sent quickly and according to people’s needs?
In Astro’s case, his party chose to focus on accommodating daily needs, such as fresh products, staples, food and beverages, to emergency supplies. According to him, product curation keywords are based on items that are really needed at that time.
“With this curation, the platform can ensure product availability because the stock is definitely accurate, the service becomes more efficient because it reduces the time to ask for product availability. The platform can focus on shipping only,” said Vincent.
However, exceptions are made for fresh produce. According to him, stock availability is not always equal to quality. Stock may exist, but not necessarily fit to be shipped.
Given that fresh produce is always catching up with consumption time, it is important to store it in the refrigerator and check regularly at each hub.
This is one of the challenges in undergoing quick commerce services for fresh products. In addition, Vincent also highlighted the importance of applying the right product price in running this business.
Even though it brings speed, it doesn’t necessarily have to be cheaper or more expensive than similar platforms. “Competitive pricing is important, but the main thing is to apply a fair price for buyers,” he added.