Who needs groceries in ten minutes? Would you really use an app on your device to order an emergency prescription after you are in need? What’s next — the telepathic delivery of consumables before you even order them? Is instant commerce the next frontier of concentrated capital chasing vain ideas for their own sake? The rubble of flailing, hyper-funded 15-minute grocery startups in high-density urban clusters seems to have made everyone an expert on the topic. However, instant commerce is not dead yet.

The Consumer’s Need for Convenience

Big box retail put the store at front and center. Products made their way from farm or factory to distribution centers to retail storefronts. Consumers picked goods off the shelves, loaded their carts, and bagged their items at checkout. Once they left the store, it was on the customer to make sure the eggs didn’t break on the way to the fridge. Then came e-commerce — distribution centers became fulfillment centers, dispatching online orders and skipping stores to make their way to consumers’ homes within a matter of days. Next came on-demand commerce, which treated high street stores and dark stores as micro-fulfillment centers, equipping an army of gig workers with apps to receive orders, pick them up and drop them off within hours.

Each step of the evolution was driven by the consumer’s need for convenience. Say it with me: ”What do we want? Convenience. When do we want it? Now!” When stores closed in March 2020 and we were all locked in our homes, the jump in online ordering accelerated growth in ways that caught the attention of investors and entrepreneurs.

This is when instant commerce was born — the next step in the commerce evolution after on-demand.
Big box retail, e-commerce and on-demand shopping all came of age a decade apart, yet each with over a decade to mature. The maturity cycle typically involved an ambitious entrepreneur validating the model in one category, generous venture capital firms investing sizable amounts of capital, and proving that there was an adequate supply and demand to build out the ecosystem. As one category expanded into multiple, more capital made its way in, more entrepreneurs rinse-repeat-adapt, and market externality triggered a shift from growth to profits.

Instant commerce is now a toddler going through a similar cycle. As a stakeholder in consumer retail and e-commerce, you can always bet on the insatiable consumer desire for convenience. As the Amazon founder said in his 2008 letter to shareholders, "It is difficult for us to imagine that ten years from now, customers will want… slower delivery.” While the logical brain says we do not really need it, once we have it and get habituated to it, the emotional brain rebels when it is taken away. The question almost always comes down to what is economically viable.

Here’s how instant commerce becomes just that. The most significant supply chain innovation in instant commerce is the ability to identify high density consumption clusters, where a whole lot of customers are concentrated in a small geographical catchment who consume a common assortment of products. Then, dark stores or fulfillment centers can be set up in those clusters, with store designs that allow semi-skilled workers to pick and pack an order within minutes, and a supply chain that lets you replenish inventory multiple times a day.

Lastly, you employ drivers who can get those packets from store to door while burning little to no fuel without breaking the eggs.

Just as the evolution of big box retail paved the way for e-commerce by investing in infrastructure for warehouses, roads and trucks, e-commerce paved the way for on-demand commerce with investments in last mile delivery, pick & pack technology, and workforce. Now, on-demand commerce has paved the path for instant commerce. The technology and infrastructure to forecast demand, source one or partial day-of inventory at a time, and use gig workers to pick, pack and deliver orders are already in existence. This supply chain innovation creates viable economics for certain consumption categories and clusters. As investor dollars that funded its creation and growth are now demanding profitability — just as they did for its predecessors — signals will emerge from the noise.

As this instant commerce toddler comes of age, goes through its teens and grows into a full-blown adult, only time will tell whether it becomes as influential of an innovation as big box retail, e-commerce and on-demand commerce, or remains merely a cool cousin of on-demand. Either way, the rumors of instant commerce’s death are exaggerated.

Kashyap Deorah is co-founder and CEO of HyperTrack