Is Quick Commerce Pricing Strategy Sustainable ? A Qualitative Exploration of a Way Forward for Last-Mile Delivery
This qualitative study argues that the aggressive, volume-driven pricing strategies of quick-commerce platforms are financially and environmentally unsustainable due to their incompatibility with efficient batching, proposing differentiated pricing to shape demand as a critical solution for a viable last-mile ecosystem.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the bustling heart of modern cities, a new rhythm has taken hold. It is the rhythm of the quick-commerce delivery, where a smartphone tap summons a basket of groceries, a meal, or a forgotten household item to arrive in minutes rather than days. This speed is not merely a convenience; it is the entire business model. Companies compete fiercely on how fast they can move an item from a small, hidden warehouse, often called a dark store, to a customer's doorstep. To win this race, they have relied on a simple, aggressive strategy: charge very little, or nothing at all, for the delivery itself. The logic has been that if they can get enough people to order enough things, the sheer volume of work will eventually make the operation profitable. However, this approach has created a hidden tension. The promise of ultra-fast service clashes with the physical reality of moving goods. When a driver must deliver a single item in fifteen minutes, they cannot wait to pick up other nearby orders to share the trip. They must drive out, drop off one package, and immediately drive back to the warehouse for the next. This constant stopping and starting, known as fragmentation, burns more fuel, creates more traffic, and puts immense pressure on the workers who must rush to meet the clock.
A researcher set out to investigate whether this high-speed, low-cost model can survive in the long run. They did not rely on computer simulations or financial spreadsheets alone. Instead, they sat down with thirty-two experienced professionals who actually build and run these delivery networks. These were the people who design the routes, set the prices, manage the drivers, and plan the warehouses across India and other parts of the world. The researcher asked them a direct question: is the current way of pricing these deliveries sustainable? They wanted to know if the system could pay for itself, if it was hurting the environment, and if it was fair to the workers, all at the same time. The study looked at the entire picture, treating money, the planet, and people as three sides of the same coin, rather than separate issues.
The findings from these conversations were stark and consistent. The professionals agreed that the current pricing strategy is not sustainable. The core problem is that the price charged for a delivery often does not even cover the cost of the driver's time and the vehicle's fuel for that single trip. Because the delivery fee is so low, sometimes zero, the company loses money on every order. They hoped that doing millions of orders would fix this, but the researcher found that the opposite is true. The demand for speed prevents the companies from grouping orders together efficiently. When a driver can only carry one or two items because the time window is so tight, the cost per item stays high. The study calculated that under these tight time limits, the cost to deliver an order is significantly higher than the fee collected, creating a structural gap that cannot be closed simply by selling more.
This financial gap is not just a number on a balance sheet; it drives the other problems the researcher identified. Because the system cannot group orders, drivers make many more trips than necessary. This means vehicles travel further to deliver the same amount of goods, which increases pollution and congestion in cities. The researcher found that even switching to electric vehicles does not solve this issue. While electric cars are cleaner, the sheer number of extra trips caused by the inability to bundle orders means the total environmental damage remains high. The professionals noted that the most effective way to reduce emissions is not just to change the fuel, but to change the route, allowing drivers to make fewer, smarter trips.
The human cost of this model is equally clear. The pressure to deliver in ten or fifteen minutes transfers directly onto the workers. Drivers face constant time stress, which increases the risk of accidents and leads to unstable earnings. Because the price of the delivery does not include a buffer for safety or fair wages, the workers bear the brunt of the inefficiency. The study showed that the social well-being of the delivery partners is directly tied to the pricing structure. When the price is too low to cover the cost of a safe, unhurried trip, the system forces workers to take risks to make a living.
The researcher did not just identify the problem; they listened to the professionals describe a way forward. The most widely supported solution was to change how customers are asked to pay. Instead of offering instant delivery as the default option for a low price, companies should make it a premium service. The standard option would be a slightly slower delivery, perhaps thirty to sixty minutes, which allows the system to group several orders together. This grouping, or batching, would lower the cost per item, reduce the distance traveled, and give drivers more time to work safely. The professionals reported that customers are willing to accept this slower option if it is presented clearly and priced fairly. They suggested that instant delivery should be an upgrade that customers pay extra for, rather than the baseline expectation.
The study also explored whether technology alone could save the day. The professionals were skeptical. They argued that better algorithms or electric vehicles cannot fix a system where the pricing forces drivers to make inefficient trips. The root cause is the price signal that tells the system to prioritize speed over everything else. As long as the price encourages single-item, instant trips, the technology will only optimize a broken process. The researcher concluded that the solution lies in redesigning the pricing architecture itself. By aligning the price with the actual cost and effort of the delivery, companies could create a system that is profitable, cleaner, and safer for workers.
The evidence for this conclusion came from two directions. First, the interviews showed that nearly all the professionals saw the same link between low prices, fragmented routes, and high costs. Second, the researcher built a simple model to test the logic of these claims. They calculated how the cost and distance of a delivery change when a driver carries one item versus three or four. The math confirmed what the professionals said: when a driver can carry more items in one trip, the cost per item drops dramatically, and the distance traveled per item shrinks significantly. This simple shift in how orders are grouped has a massive impact on the bottom line and the environment.
Ultimately, the paper argues that the quick-commerce industry is at a crossroads. The current path, built on subsidized prices and ultra-fast promises, leads to a dead end where the company loses money, the city gets more polluted, and the workers face more danger. The path forward requires a shift in mindset. Sustainability in this field is not a technology problem to be solved by a new app or a new battery. It is a design problem. It requires building a system where the price reflects the true cost of the service, allowing for the grouping of orders that makes the whole operation work. The professionals who run these systems know this is possible. They see a future where customers have a choice: pay a little more for speed, or wait a little longer for a delivery that is better for everyone. The study suggests that making this choice explicit is the only way to make quick commerce truly quick, profitable, and sustainable.
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