The blunt truth is that the vast majority of quick commerce companies had business models that were broken from the very start because the cost of the service they provide is not covered by fees consumers pay. On top of that, quick commerce is a solution that went in search of a problem. The vast majority of people do not absolutely need things delivered in minutes. They will take the service if it is cheap and readily available, but they won’t pay high fees for it. As so many companies piled into the space during the pandemic, there will now be quite a few casualties.

Unless it is an emergency, there really is no need for 15-minute deliveries. In NYC it is causing chaos. Battery-powered delivery bikes are absolutely everywhere — going diagonal across intersections, through red lights, on sidewalks, going the wrong way on bike lanes and on streets. Do we really want more and more people to be hurt and sometimes killed because you may be dying to eat Thai food tonight?

With Inflation increasing and companies not able to compensate for the fees, I don’t see this continuing as a needed service.

This phenomenon reminds me of a famous quote often attributed to Henry Ford, “If you asked consumers what they wanted they would say faster horses.” Consumer demand for faster delivery was perhaps at a fever pitch during the height of the pandemic. However the reality is, how fast is fast enough? Undoubtedly there is a point of diminishing return and zero-sum gain.

Here are four factors that I personally believe trump speed every day:

1. Accuracy of order (deliver the stuff I truly ordered);
2. Timeliness of delivery (get it to me when you promised);
3. Consistent experience (remain reliable and predictable);
4. Affordability (I’m not going to pay extra to save a few minutes).

So does consumer sentiment put a pause on ultra-fast delivery? Yes. Does this suggest companies need to reprioritize what is most important to consumers? Absolutely!

Fifteen-minute delivery is a once-in-a-long-while need. Is it worth it for retailers to invest in being able to provide ultra-fast delivery of their own? No. Is that an opportunity for a third party to provide the delivery service? Sure, but it is the retailer that has to be able to receive and process an order in very short order, even if another entity will pick it up to deliver it within the 15 minutes promised.

The ultra-fast grocery delivery business model never made sense to me. As has been discussed before on RetailWire, what would drive the need for a 15-minute grocery delivery? I can see people trying it as a novelty, but not using the service regularly. The biggest issue delivery services and their customers face today is product availability. Getting a delivery fast is great but not if you can’t get the items you ordered.

Same-day delivery makes sense, but 15 minutes from order to door is not sustainable. I’m not sure the timing is right for ultra fast delivery (pun intended). Especially for pizza (which I must have!). They need time to cook it first.

As consumers, we will always take the faster but lazier approach. Were fast-food drive-thrus a fad? I don’t think so. Give humans an inch and they’ll ask if they can just move a half an inch instead. No, if ultra-fast delivery is to succeed and push beyond the low numbers in the Stor.ai study, retailers must get fulfillment and service quality right. The pizzas will probably have to be delivered by drones and cooked in-flight!

It is not surprising that these companies are finding it hard to keep up the momentum they built during the pandemic, it is also not surprising that some of them will go to the wall as the market matures. There will be a place for this type of service, the good ones will fine tune their operations and improve which will make them more attractive to consumers. Will they be mass market? Probably not, but if they take a few percent of the massive grocery market that can sustain a few big businesses. They are now investing in inventory management and supply chain solutions to improve availability. The ones who do will be better placed than the ones who don’t.

Thai food? Maybe. A $200 grocery order? That’s impossible to pick and deliver in 15 minutes. Some of these efforts just don’t make sense.

Ultra-fast commerce in 15 minutes or less is not sustainable for the long term for most geographies in the U.S. Yes, super dense cities like NYC might be the exception, but for the rest of the country — not so much. It’s no surprise several startups have folded and we’ll see even more consolidation and/or shuddering over the next six to 12 months. Rather than focus on quick delivery, retailers should continue to focus on delivering exceptional customer experiences in their stores.

Delivery is here to stay in a world where many people are working longer hours and are time-poor. But — I remember living in Manhattan in 1999 and using Urbanfetch to deliver DVDs from Blockbuster (remember them?), no tipping allowed. It was great! While they didn’t guarantee 15 minutes, it was fast. But fast forward to October 2000 and they were gone.

There’s a lot of hype around on-demand delivery and, if executed well, it can build brand loyalty. But you need to get your inventory accuracy up so you don’t end up disappointing customers and having to cancel orders. Companies should approach investments in ultra-fast services cautiously. And definitely make sure they get their stock availability right first.

Rapid delivery is a great way to expedite a company’s demise. Grocery chains seem to think that home delivery is like being a gunfighter – the fastest draw wins. Unfortunately this mindset is just setting the industry up for a race to the bottom. Retailers have done an excellent job of training shoppers to expect free shipping to the point where now it’s become an expectation. Shoppers still perceive home grocery delivery as a convenience and not a necessity they are willing to pay for. This is in direct opposition to the tremendous toll that shipping has on profit margins – even more so for rapid shipping. It’s also next to impossible to maintain consistency and quality when delivering products at hyper-speed, no time for any sort of customer service or brand reinforcing experience. Ultimately rapid delivery – or even free delivery of any kind – will be the undoing of too many retailers. Only a handful of massive retailers like Amazon and Walmart will have the scale and ancillary revenue streams to support this.

Is anyone the least bit surprised that an industry without clear customer demand and an upside-down cost/revenue model has failed? Most BrainTrusters have been predicting doom for ultra-fast delivery since the day they launched, and we have all been right. Too bad the investment bankers who elevated ultra-fast to unicorn status don’t spend more time on RetailWire – they could have saved billions!

The race to zero in this category always seemed excessive and unnecessary to me, to say nothing of knifing your profit margin. If you order something today (other than food), is getting it tomorrow (vs. in a half hour) really all that bad? It’s a good idea to train consumers about the great operational abilities of your brand, but when you train them to expect the unrealistic, that’s a mistake you’ll pay for.

Some of the hype around ultra-fast delivery services has been driven more by media attention and brand awareness than by customer demand. As noted by the survey, most customers are not willing to pay a premium for ultra-fast delivery. Less than 30 minutes is rarely a real customer need.

As has been noted here already, most of the companies had bad business models that were built on unrealistic growth forecasts. I do think there is a market for this service, but it’s small and very niche. I see high-end grocers continuing to provide this service to differentiate themselves in customer service. I also think in high density neighborhoods there might be demand for a few specialized items. Day in, day out grocery shopping? No.

Many of us have been saying this for a long time – nobody needs stuff that fast (except for Cathy’s Thai food) and nobody wants to pay for it. Retailers should just forget about rapid delivery now and stay in business instead.

Ultra-fast delivery services have proven to be unprofitable service and have set unrealistic expectations with customers. Almost instant gratification in cities such as NYC is close to reality. However it comes at a cost for the companies and the cities they serve. Speedy delivery became an emerging force at the heart of the pandemic, and customers have become used to this experience, despite all the negative consequences.

For the companies it’s a zero-sum game, as ultra-fast delivery services are an unsustainable and unprofitable operating model. The costs of speedy delivery capabilities are not passed onto the customer, which eats into the bottom line. For the city dwellers, the streets and sidewalks are a battleground for who could deliver the products faster. This has created another element of congestion and frustration on already packed city streets.

I never understood the business model of ultra-fast delivery with the premium cost and consumers not willing to pay the premium after COVID-19 lockdown. Given increasing fuel prices and labor costs I don’t see employees signing up to do deliveries and with economic uncertainty I don’t see any but a few customers being willing to pay a premium for it.

My fellow BrainTrust experts have outlined the key points already, there is only one item I would add — as inflation rises, ultra-fast service becomes even less attractive with additional fees and costs that can easily be avoided with a smart detour past the grocery store from a client meeting. The market was already small, and with inflation grows even smaller.

The quick poll says that ultra-fast delivery is most likely to survive. But if you read the comments, they are all asking the same questions I am. How often do you need a product in 15 minutes or less, especially if you have to pay for the service? The consumer will end up paying for it one way or another. It is going away.

The business models these companies followed didn’t really work from the start. The actual cost of running a quick commerce service and competing with the business that already offers two- or same-day delivery just doesn’t make sense for the majority of items people need. Consumers will only use it if it is around the same cost of these other established services/businesses but the cost model doesn’t support it.

It’s tough to make a profit when you’re delivering something for less than nothing! While the “word of the day” in retail for the past two years was always “speed” or “agility,” it’s now become “profitability.” I agree with the consensus of the BrainTrust in the comments so far — the quick commerce model just cannot be executed profitably. As the provider, you need scale to make your unit economics work. That means you want to drive large orders. Problem is, it’s tough to pick and deliver a large order in 15 minutes or less. Which means you end up trying to get scale by finding a larger volume of orders. Except then you’re back to the original problem where you can’t charge a high enough delivery fee to break even on each order. Lastly, customer demand for getting grocery items in 15 min just keeps getting smaller and smaller. There are just too many headwinds for most of these companies to succeed. Could one or two manage to make this work? Possibly, if they’re… Read more »

Convenience continues to be a theme in a lot of our RetailWire Braintrust conversations. Fast service is all about convenience. The people who said they wouldn’t pay, probably don’t care about that type of service and convenience. But the ones that do care … Well, that’s an interesting market to target.

Fascinating question — one I had been wondering about given the threat to consumer prices that many western economies are currently facing. As consumers look at cutting back, one area where they may choose to focus is eliminating rapid delivery — something that needs improved planning.

Certainly many online forums focused on saving money focus on diligent meal planning and careful shopping — where these practices are adopted it could well result in a fall in demand.