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The Retail Battleground: Brick-and-Mortar vs. E-commerce and the Rise of Instant Delivery


Written By: Gargi Sarma 


Introduction:


The retail landscape is undergoing a fascinating transformation. Brick-and-mortar stores, the traditional giants, are facing a growing challenge from e-commerce and online retail. But the story doesn't end there.  Each possesses its unique strengths and challenges, evolving differently across various countries. Amidst this evolution, the instant delivery game, especially notable between retail giants like Amazon and emerging platforms like Blinkit and Zepto, showcases intriguing variations based on factors like labor costs and investment dynamics.


Figure 1: Growth Comparison of Retail Sectors, WorldWide (2015 - 2027)


Global Views on Brick-and-Mortar, E-commerce, and Quick Commerce


Brick-and-mortar stores are up against fierce competition from their online counterparts in many affluent nations. Online buying has become more popular due to the accessibility and convenience provided by e-commerce platforms, especially in North America and Europe. Still, adoption rates differ between nations. Driven by tech-savvy consumers and a strong logistics infrastructure, the United States has seen a quick transition towards e-commerce; however, other nations, such as Canada, are still catching up, facing logistical obstacles and higher labor costs.


Figure 2: Estimated Value of the In-Store and E-Commerce Retail Sales Worldwide from 2022 and 2026


Remarkably, brick-and-mortar sales growth outpaced e-commerce growth for the first time in 2021 (Forbes, 2022). This demonstrates how much customers still want the in-person purchasing experience. But physical establishments run the risk of slipping behind if they don't adjust to the internet world, including by providing click-and-collect options.


In recent years, e-commerce has grown at an exponential rate. Global e-retail sales are predicted by Statista to reach USD 6.5 trillion by 2023, making up more than 22% of all retail sales. In emerging nations like India, where smartphone usage and internet penetration are rising quickly, this trend is especially noticeable.


Instant Delivery: A Revolution in Retail


The emergence of instant delivery services like Blinkit and Zepto in India has created a new wave of disruption. These services promise delivery within minutes, which is particularly appealing for time-pressed urban consumers. However, this model is highly dependent on factors like population density and infrastructure, making it less viable in countries like the US and Canada where labor costs are higher and the geographical spread is wider. Realizing the full potential of immediate delivery services is hindered by issues like cost-effectiveness and last-mile delivery constraints, despite the potential advantages.



figure 3: Quick Commerce - Profitability Potential in India (Source: Redseer)


Figure 4: GMV of Quick Commerce in India, 2023 (Source: Redseer) According to Redseer, by 2025, the rapid commerce market in India is expected to grow at a rate of 10-15 times faster than any other market, with a valuation of almost $5.5 billion. This will put it ahead of other markets, including China, in terms of the adoption of quick commerce.


Shifting Logistics and Delivery Investment Dynamics


Delivery and logistics investment trends are changing as businesses look for creative ways to save costs and improve efficiency. To increase efficiency, established firms are adopting technology-driven strategies like automation and predictive analytics, but startups are upending the market with flexible, on-demand supply models. The retail industry is seeing changes in its needs, and venture capital firms and investors are focusing more on companies that can provide scalable solutions to meet those needs. This is leading to investment in areas such as drone deliveries, autonomous vehicles, and sustainable logistics methods.


Figure 5: Logistic Business Models Which are Attracting More Funding for Startups


Conclusion:


Businesses need to be competitive as the retail industry changes and adjusts to shifting consumer tastes and technological improvements. Although e-commerce and rapid delivery services have unheard-of development prospects, these business models' viability depends on tackling regional obstacles and making investments in creative solutions. Retailers may prosper in a world that is becoming more digitally and globally integrated by embracing innovation and comprehending the distinctive dynamics of various markets.


About RapidPricer


RapidPricer helps automate pricing and promotions for retailers. The company has capabilities in retail pricing, artificial intelligence and deep learning to compute merchandising actions for real-time execution in a retail environment.


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