E-commerce with rapid delivery is taking off: $20 billion by 2024

09 August 2021 Consultancy-me.com 3 min. read
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Quick commerce (q-commerce) – delivery within two hours of ordering – in Middle East and North Africa (MENA) is set to touch $20 billion in market value by 2024, powered primarily by the food delivery segment.

This is according to new RedSeer Consulting research, which tracked the maturity of a rapidly advancing Middle East ecommerce landscape – spurred on by the Covid-19 pandemic through last year. 

While most consumption moved online in the thick of lockdown, the stellar shift came in the egrocery and food delivery segments – as people found new ways of accessing basic necessities. Businesses soon realised that these are segments where speed is of the essence, and innovative players – Talabat, Hungerstation, etc. – have emerged with sub-two-hour delivery propositions. 

MENA Q-commerce Market Size

As it happens, these businesses might have kickstarted a soon-to-be booming q-commerce market. “Given that roughly 40% of online shoppers mention quick delivery as an extremely important criteria in their decision- making process, I think we are at the cusp of the q-commerce growth in MENA.” explained RedSeer Middle East managing partner Sandeep Ganediwala.

He explained how the infrastructure is already in place for such a model – developed during the pandemic last year. “Quick commerce is another such innovation in the digital economy which builds on the hyperlocal delivery capability developed by ecommerce players in the region.”

Q-commerce in the Middle East grew to a $9 billion market in 2020 – having nearly doubled from $5 billion in 2019. Much of this growth was driven by food delivery, although the researchers predict that other segments such as groceries, pharma and gifts will edge into the market over the next couple of years. 

MENA q-commerce market size by category

The segment will likely grow to roughly $20 billion by 2024 as a result: nearly 75% of which will still be occupied by food delivery, while groceries will take up just over 20%, leaving around 5% for the other up and coming q-commerce categories. 

The market is gearing up. “Food aggregators such as Hunger Station, Talabat and Jahez were the first to penetrate this market and already possess the logistical capabilities required,” explained Ganediwala. 

“As consumers are adopting newer categories, food aggregators have also expanded their offerings. Given the fast growth of this model, more retailers are adopting q-commerce as a viable “way-to-play”. For example, Nana in Saudi Arabia and Instashop in UAE have emerged as egrocery leaders in a short span of time,” he explained.

As it stands, q-commerce makes up 20% of the Middle East’s digital economy, although the researchers expect a few years to pass before the investments required to make the switch start yielding profits for platforms.