Q-commerce accelerates in the Middle East.
If you took a stroll through any major city in the Middle East in 2022, you probably noticed two things: the intense heat and the intense celebration of life post-COVID. But try to cross the street and you would quickly notice something else – the swarm of delivery bikes weaving between cars. These bikes exemplify the booming quick-commerce (q-commerce) industry, a relatively new segment in the regional e-commerce space that’s expected to reach a whopping $20 billion market size by the end of this year.
So, what’s driving this meteoric rise? Shouldn’t the market be cooling off in a post-pandemic economy?
The Q-commerce Business Model
At its core, q-commerce is about speed. As defined in a 2022 report by Roland Berger, q-commerce promises delivery times of 30 minutes or less, thanks to a network of small, efficient warehouses called dark stores. These stores aren’t open to the public but are strategically placed in urban areas to fulfill orders quickly.
The q-commerce ecosystem relies on four main elements: the online platform, dark stores, pickers, and a fleet of delivery riders. Customers place orders online, pickers quickly gather the requested items from the dark stores, and delivery riders race against the clock to get groceries and other essentials to your doorstep – often in under 15 minutes. Many apps even let you track your order in real-time, tip the delivery person, and leave feedback.
On paper, it sounds like a dream – groceries delivered in less time than it takes to cook a meal. But despite its appeal, q-commerce hasn’t taken off everywhere. So why is the Middle East a hotbed for its growth?
Challenges in Europe and the U.S.
In places like Europe, the q-commerce wave that surged during the COVID-19 pandemic began to falter once the world reopened. Victor Thiry (MBA ’26), who worked with delivery platform Gorillas before it was acquired by Turkish competitor Getir, attributes this decline to several factors: high labor costs, strict regulations on gig workers, and noise complaints from residents living near dark stores. In addition, heavy discounting strategies that drew in customers early on backfired, as consumers began waiting for sales before placing orders – making it tough for companies to stay profitable.
Across the Atlantic in the U.S., q-commerce faced its own set of challenges. Jake Goodman (MBA ’26), who worked at Gopuff, observed that American consumers were happy to work with any provider as long as their groceries arrived on time, whether their groceries came from a dark store or the nearest Target didn’t matter to them . That indifference, combined with tough negotiations with wholesalers and competition from apps that partnered with established retailers, made it hard for q-commerce companies to thrive. Gopuff, like many others, had to lay off staff in its hunt for profitability.
The Middle East: A Different Story
While q-commerce struggled in other parts of the world, the Middle East proved to be fertile ground for its growth. In cities like Dubai and Riyadh, demand for quick deliveries didn’t fade as COVID restrictions were lifted. Talabat, a Kuwaiti startup now owned by Delivery Hero, was among the first to introduce dark stores to the region, launching its Daily service with the promise of 15-minute deliveries. Competitors like Deliveroo, Amazon, and UAE-born Noon were quick to jump into the game.
One key difference in the Middle East is that most of the major players weren’t exclusively focused on q-commerce. Companies like Talabat and Deliveroo, which built their brands around food delivery, were able to tack on grocery delivery as an additional offering for existing users. This gave them a head start, with dark stores soon popping up across cities. Low labor costs in the region – due to a large pool of migrant workers and more relaxed labor laws – have also played a significant role in keeping q-commerce profitable.
Local startups are getting in on the action too. Egypt’s Breadfast, known for its "fresh bread at your doorstep" service, recently raised $257 million and is expanding into grocery delivery. Similarly, Yassir in Algeria and Nana in Saudi Arabia have both secured funding, with ambitious plans to become "super apps," offering everything from groceries to private chauffeurs.
The Road Ahead
Of course, q-commerce in the Middle East isn’t without its challenges. Investors, once eager to cash in on the region’s IPO boom, are becoming more cautious. Geopolitical risks, including ongoing conflicts, could disrupt oil markets – a major concern for outside investors and market players alike. Perhaps what differentiates the Middle Eastern players is their focus on expanding services beyond groceries as fast as possible. If players in the U.S. and Europe wish to succeed, it might be wise to take a “super app” approach to the market and be more open to partnerships, especially given the prohibitive costs of real estate and labor.
This author thinks that the golden age of q-commerce in the Middle East is coming to an end. A stressed startup environment in Northern Africa and AI-fever in the Arabian Gulf means that investors might soon be chasing more AI-heavy applications as private sector attention shifts from better serving the individual to better serving other businesses.
But for now, it seems that the convenience of having groceries at your doorstep in under 15 minutes is enough to keep q-commerce rolling in the Middle East. Whether that can outlast the region’s economic and political uncertainties remains to be seen.
Youssef Abouelnour (MBA ’26) comes from Cairo, Egypt. Prior to HBS, Youssef spent 7 years working as a Sales Engineer for SAP covering emerging tech. He is currently on the hunt for the best hot chocolate in town and looks forward to seeing snow for the first time.
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