by Gilles Paché

The skyrocketing and near collapse of quick commerce in France over the course of a few months might lead one to believe that this new business model was merely a “passing meteor”. However, that would be hasty, as quick commerce thrives in other countries around the world. Nevertheless, it is true that it raises significant logistical and human challenges, sparking both fascination and hatred. Gilles Paché sheds light on a topic at the heart of many political debates about the future of the retail industry.

“Shopping on the couch” has become not only possible, but virtually unavoidable during the successive lockdowns of the COVID-19 pandemic. It is true that, by their very nature, large retailers make sure that consumers do not put themselves at risk while shopping. The proliferation of pick-up points and home deliveries have thus proved to be operational solutions that are perfectly suited to an environment where the emphasis is on making shopping safer. In the aftermath of the pandemic, it must be acknowledged that new habits have become deeply entrenched among customers, whose visits to physical outlets for food purchases are perceived as a chore. The pandemic has generated a true “disruption” with the introduction of what is known as “quick commerce” (subsequently referred to as “Q-commerce”), particularly in large European cities. Here, we look at a phenomenon that could transform the daily lives of millions of consumers, as projected by Statista to 2027 (see figure 1), and which is provoking reactions ranging from love to hate.

A Dark New World?

In a broad sense, Q-commerce allows consumers to place an online order through an app and have it delivered to their home ‒ or workplace ‒ a few minutes later, often in urban areas. The ability to respond quickly to an online order is a key element of the business model’s success, as it is possible to see for example in Turkey or India. Managing the last mile is a major challenge explored extensively in abundant literature on city logistics¹. Delivering products in cities is costly and environmentally harmful, even with increasingly common decarbonised transportation methods. It also requires a real ability to navigate through congested urban spaces, especially during certain times of the day (in the morning and evening). Q-commerce operators, more than others, cannot escape such constraints, compelling them to devise an efficient organisational framework while reducing financial burdens associated with the workforce involved in delivery activities.

As the latest trend in the limitless digitisation of retail industry, with well-known side effects such as the closure of physical stores, particularly in city centres, Q-commerce is both fascinating and frightening. It fascinates due to the exceptional logistical feats on which it relies. Who could have imagined, just 20 years ago, when online orders were taking off, that product availability would take only a few minutes? However, it also frightens, given its predatory power over traditional (physical) retailing, not to mention the working conditions it imposes on delivery operatives, enduring continuous time pressure. Aaron Shapiro writes that Q-commerce is certainly a step closer to “going dark”², a world where the worst dimensions of retail are exposed. This evolution poses an even greater problem for Q-commerce companies as customers show a higher intention to repurchase when delivery workers’ working conditions are deemed satisfactory³.

Journey to the Centre of the Business Model

While the emergence of Q-commerce predates the COVID-19 pandemic, with Amazon’s Prime subscription system (2005) and the Leclerc “pedestrian drive” system (2017) often cited as successive birth acts of the business model, the pandemic is considered a significant accelerator of the phenomenon. Q-commerce had already started expanding into the restaurant industry, particularly for the home delivery of prepared meals⁴, but it quickly spread to other segments of the platform market, especially in the grocery sector. As early as spring 2020, consumers in many countries had to resort to online purchases due to distrust of physical stores, fearing contamination in the absence of a known vaccine (remember that the AstraZeneca and Pfizer vaccines would only be available by the end of 2020). Large retailers like Walmart and Tesco saw a real opportunity to develop their home delivery services.

Observing this development closely, established players in fast delivery, such as Deliveroo, GoPuff, and Postmates, also entered the Q-commerce universe. Their common characteristic is being start-ups that quickly realised that the key to Q-commerce success lies in the perfect control of logistical operations to enable same-day delivery to the consumer, minutes after their online order, using micro-fulfilment centres in the heart of cities as a key element of the business model (see figure 2). With intensifying competition, companies fiercely vie for the same customers in order to increase their market share, especially when customers’ hedonistic values lead them to pay close attention to the quality of their digital experience. The key idea of the Q-commerce business model is that it enhances the customer experience and loyalty of time-sensitive consumers. Instead of leveraging price competitiveness, “convenience” emerges as the major competitive advantage of Q-commerce⁵.

The rapid success and equally rapid decline of the most successful start-ups in several countries are based on four main elements: (1) developing an effective and engaging app; (2) sourcing products efficiently from suppliers; (3) establishing a network of multiple logistical structures; and (4) having ready-to-go delivery operatives. However, customers must be willing to pay a significant price for a service based on nearly instant delivery. The successive failures of Q-commerce companies in the French market between 2021 and 2023 can be largely attributed to an inflationary context that reduces household purchasing power, with consumers refusing to pay what is deemed an excessive fee for logistical services. An unfavourable and highly unpredictable economic environment has thus disrupted a business model operating on thin margins.

Looking for Efficient Actions

Q-commerce is structurally characterised by low profitability, mainly due to the cost of last-mile management and warehousing, both of which are still labour-intensive. To make matters worse, the average value of an order, which is usually impulsive, remains low. As a result, the delivery business is structurally unprofitable, as bicycle delivery operatives can only make a maximum of three deliveries an hour. To achieve profitability, Q-commerce companies therefore need to process higher-order volumes. A major marketing communications effort is required in order to reach a critical mass that can absorb logistical costs, notably through sales arguments such as guaranteed ultra-fast delivery times, an improved customer experience thanks to a drastic reduction in shortages, and even the presence of ecological brands, to which millennials are increasingly attache⁶.

To optimise flow management in the Q-commerce model, appropriate information systems are required, given the unique context: companies do not have a wide assortment of products but only a limited and fast-moving range (see figure 2). In these conditions, it is essential to forecast demand with the utmost precision and store products accordingly, especially when their shelf life is limited (as is the case with fresh products). The use of advanced forecasting tools and big-data analysis, which predicts demand based on rotation and consumer habits in different geographic areas, is essential for making the right purchasing decisions from suppliers. Additionally, variable pricing strategies based on technology must leverage factors such as purchase history, the time of day the order is placed, and even changes in weather conditions in a geographic area. In summary, figure 3 shows a series of possible actions to transform Q-commerce into a profitable business.

Super-Pumped

As is evident, the digitisation of distribution based on the Q-commerce model faces significant logistical and technological barriers. However, regulatory barriers prove even more problematic, as evidenced by the case of France. Since 2022, a wave of protests has swept through many large French cities like Paris and Lyon, with residents’ collectives multiplying to denounce the harms of Q-commerce⁷. The main criticism revolves around the movements of bicycle and scooter delivery operatives, who navigate through already-congested streets, disrupting the tranquillity and mobility of residents. The critique becomes even more pronounced when left-wing political parties highlight the status of these delivery workers (as independent contractors)⁸. This is not an entirely new phenomenon, as Q-commerce revisits important legal issues, especially in the context of massive gig work and “uberisation”.

Recall that the word “uberisation” emerged in reference to the company Uber, a well-known Californian company offering ride-sharing services through a smartphone app. Anyone can be a customer, and those who wish can easily become drivers. After intensive lobbying by Uber, a local referendum in reference to a “proposition 22” was held to decide whether drivers should be considered independent entrepreneurs or employees⁹. The outcome was that 58 per cent of Californians decided that they should be seen as independent entrepreneurs, while enjoying certain benefits, including an Uber contribution to healthcare, a guaranteed minimum income for time worked, and workers’ compensation insurance. On the other hand, drivers are not entitled to the collective bargaining rights afforded by employee status.

Uberisation continues apace based on this disruptive business model, which gave rise to the first season of a highly successful American TV series created by Brian Koppelman and David Levien. The creation of companies seen as constellations of independent entrepreneurs is at the origin of the platform economy (or “platform capitalism”), which has been developing at great speed since the mid-2000s in almost all areas of activity, including hospitality (Airbnb offers 1.5 million beds worldwide on its global web platform), publishing (Amazon allows authors to publish and deliver their books), and accounting (ECL digitises and automates the flows and entries of its clients). Q-commerce is indeed a specific form of uberisation, particularly evident in the use of independent workers to handle the most critical phase of service production: delivering products to customers within minutes, a non-negotiable marketing promise.

Until Death?

The proponents of Q-commerce argue that delivery workers with the status of independent contractors can benefit from a personal management that prioritises autonomy and flexibility in work organisation. In contrast, opponents argue that collective bargaining power is greatly weakened, forcing delivery operatives to endure difficult working conditions with reduced remuneration. Looking at the case of Uber Eats in Japan, Hamza Umer emphasises that questions related to the coverage of accidents suffered by delivery workers remain unanswered¹⁰. One-fifth of delivery personnel involved in workplace accidents in 2020, at the height of the COVID-19 pandemic, were forced to stay home due to their injuries without any health insurance coverage. The Japanese case is far from unique. On the contrary, the same situation is found in many European countries, posing a problem regarding the reality of an “elusive” legal protection, or even violated human rights – up to the death of some delivery operatives?

However, one should not believe that Q-commerce constitutes a kind of “vice island” within an ocean of virtuous logistical systems. One only needs to look at the operation of many value chains to note that children work in deplorable conditions to supply European and North American consumer markets with textile products. Additionally, sailors on ships flying flags of convenience, transporting toys from China, are not paid for several weeks or even months. In short, human rights are violated in multiple places and in multiple value chains. It is clearly the responsibility of legal research to shed light on the “dark side” of these condemnable managerial practices. More than ever, a dialogue must be established between researchers in law and researchers in management to decipher uncomfortable truths. In the absence of dialogue, business as usual, associated with vague ethical considerations, should not continue.

About the Author

Gilles Paché is Professor of Marketing and Supply Chain Management at Aix-Marseille University, and Director of Research at the CERGAM Lab, in Aix-en-Provence, France. He has more than 600 publications in the forms of journal papers, books, edited books, edited proceedings, edited special issues, book chapters, conference papers and reports, including the recent two books Variations sur la consommation et la distribution: individus, expériences, systèmes (2022) and Heterodox logistics (2023).

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