Quick commerce industry (through lens of short and long run
producer theory)
A case study of Airlift Express
Quick commerce (Q-commerce) refers to the rapid delivery of goods
and services, typically within 10 to 60 minutes, leveraging technology,
small fulfillment centers, and a network of delivery riders or drivers. It is a
subset of e-commerce focused on convenience and speed, catering to
consumers seeking instant gratification or urgent needs.
Key Characteristics:
1. Speed: Q-commerce emphasizes ultra-fast delivery times, often
targeting same-hour service.
2. Product Range: Focuses on essential or frequently purchased
items, such as groceries, snacks, beverages, toiletries, and over-the-
counter medicines.
3. Small Fulfillment Centers: Operates through localized
warehouses or "dark stores" strategically located close to customers
to enable rapid dispatch.
4. Technology Integration: Utilizes advanced algorithms for
inventory management, route optimization, and real-time tracking
to ensure efficient operations.
5. Convenience: Provides a seamless ordering experience through
mobile apps or websites.
Examples of Q-Commerce Companies:
International: Gorillas, Gopuff, Zapp, Flink.
Pakistan: Airlift (before its closure), Foodpanda Mart, and Bykea (to
some extent).
Advantages of Q-Commerce:
Convenience: Meets consumer demand for speed and flexibility.
Market Differentiation: Offers a competitive edge in crowded e-
commerce markets.
Increased Impulse Purchases: Encourages spontaneous buying
behavior.
Challenges:
High Operating Costs: Maintaining a network of fulfillment
centers and delivery personnel can be expensive.
Unit Economics: Achieving profitability is challenging due to small
basket sizes and high delivery costs.
Logistical Complexity: Requires precise coordination to deliver
efficiently within a tight timeframe.
Airlift Express – Pakistan’s Leading Quick Commerce Solution
Introduce Airlift as a pioneering quick commerce company in
Pakistan.
Airlift Technologies, founded in 2019, began as a mass transit
startup in Pakistan, offering an Uber-like service for buses. The
company aimed to provide a decentralized mass transit system by
leveraging existing networks of higher-capacity vehicles.
The onset of the COVID-19 pandemic in early 2020 led to a
suspension of Airlift's transit services. Recognizing the challenges in
the mass transit sector, Airlift pivoted to a quick commerce (Q-
commerce) model, focusing on rapid grocery deliveries
This strategic shift introduced new long-term considerations:
o Infrastructure Investment: Establishing warehouses and
distribution centers to facilitate quick deliveries.
o Inventory Management: Procuring and managing a diverse
range of products to meet customer demands.
o Technology Development: Enhancing digital platforms to
streamline order processing and delivery logistics.
o Workforce Expansion: Hiring personnel for warehouse
operations, customer service, and delivery roles.
At its peak, it operated in 8 cities, and it was fulfilling a claimed
10,000 orders per day.
Airlift's unexpected exit in July 2022
Despite raising significant funds—$85 million in a Series B round in
2021, marking the largest funding round for a Pakistani startup at
that time—Airlift faced challenges. By July 2022, the company
announced a complete shutdown, citing a global recession and
downturn in capital markets that adversely affected its operations.
Airlift announces to shut down operations in Pakistan
Airlift cites "global recession" as one of the major reasons behind
its closure
[Link]
shut-down-operations
July 13, 2022
Airlift — one of Pakistan's top startups — has announced to shut its
operation in the country citing “global recession and the recent downturn
in capital markets” as the reasons behind its closure.
The q-commerce startup had already curtailed its operations in several
cities a few months ago.
“While the global recession and recent downturn in capital markets have
affected economic activity across the board, it has had a devastating
impact on Airlift and rendered its shut-down inevitable,” the company said
in a statement, announcing that on July 12th, Airlift’s operations will shut
down permanently.
The company termed the development an “extremely taxing decision”
that impacts a large set of stakeholders and an emerging technology
ecosystem.
In recent years, it said, Airlift has proven to be one of the most resilient
and agile startups coming out of emerging markets and the company was
able to navigate the COVID-19 crisis, pivoting into q-commerce and
building scale in a new domain.
The company said that with the onset of the recession it “restructured” its
business operations and in response to the situation adapted three codes
which include; (i) an immediate reduction in headcount, (ii) shutting down
operations across all expansion markets, and (iii) revision in platform
configurations to ramp up monetization (i.e. introduction of higher prices
and delivery fee).
“With the above adaptations, Airlift was able to achieve order-level
profitability, maintain reasonable scale, and reduce financial burn by 66%.
As of July, 2022, Airlift was about three months away from operating
profitability (i.e. positive cash flow from operations), and about 6-9
months from company-level profitability (i.e. Free Cash Flow),” it added.
Funding issues
Mentioning the fast-changing scenario in the industry, the firm said that in
May one of its investors stepped up to lead Airlift’s Series C1 financing.
“We’ve received tremendous support from the potential lead in opening
doors to other investors to put together the round,” the statement added,
noting that investors including First Round Capital, Indus Valley Capital,
Buckley Ventures and 20VC agreed to participate in the round with sizable
checks.
“In early July, Airlift had a clear path forward to close the round – the
Company pushed out documents for signatures to all participating
investors. Last week, amidst rapidly deteriorating conditions in the global
economy, several participants shared uncertainty in wire schedules and
their disbursements – this ultimately meant that the Company’s capital
requirements would not be met. Ultimately, the round was unsuccessful.
“With the above clarity, a complete shut-down was inevitable, Airlift could
not risk leaving its employees unpaid or reneging from its commitments.
The Board deliberated on this via multiple calls and ultimately decided to
not assume the risk of leaving teammates unpaid. For our management
team, and for the broader set of investors, the above became clear only
on July 7th – a day before the Eid holiday in Pakistan.”
The company has also announced a severance package for its employees,
providing them two months’ pay and setting up a platform for job
placement.
“For suppliers, vendors and other third parties, our team will communicate
proactively to manage arrears and liabilities as a part of our ongoing shut-
down process,” it added.
Airlift hoped that the closure will not affect the overall technology
ecosystem in the country and “will continue to thrive and that some of the
most valuable technology companies in emerging markets are still yet to
be started.”