Chapter 15: e-Commerce: Q-Commerce and Artificial Intelligence
Every business must decide how it will reach its customers. For most of the last century that meant a shop, a counter and a salesperson. Once computer networks became widely available, firms began to conduct the same buying and selling electronically, so that a customer could order, pay and follow a delivery without ever meeting the seller. Consider a household that runs out of milk at nine in the evening. A few years ago the choice was a neighbourhood shop or waiting until morning. Today an order placed on a mobile application can reach the door in under thirty minutes, packed from a small stocking point a few kilometres away. Delivery at that speed does not come from faster riders alone. It rests on where the stock is held, on how narrow the delivery area is kept, and on software that forecasts demand and selects routes. This chapter explains what e-commerce means and how it differs from e-business, what quick commerce is and what features define it, and how artificial intelligence and chatbots are used to run such a business.
Figure
Fig. 15.0-1 — A Delivery Rider With An Insulated Order Bag Photograph of a delivery rider in a city street carrying a branded insulated bag on his back, with a two-wheeler parked alongside.
15.1 Meaning And Definitions Of e-Commerce
A business that trades only across a physical counter is limited in three ways. It can serve only those customers who can reach the shop, only during the hours the shop is open, and only through paperwork that must be written, carried and filed by hand. Every one of these limits raises cost and slows the transaction down.
Electronic networks remove all three limits at once. When the order, the payment and the record of the sale travel over a computer network, the seller is no longer tied to a location or to working hours, and the information moves without being re-entered at each stage. This is the practical reason businesses adopted electronic trading, and it is the idea that the term e-commerce describes.
What The Term Covers
e-Commerce, or electronic commerce, means carrying on commercial activities — the offer, the order, the payment and the delivery arrangement — by electronic means over a computer network, chiefly the internet. The buyer and the seller are connected by the network rather than by physical presence.
It is a mistake to treat e-commerce as nothing more than online payment. Payment is only one step of a trade. The wider point is that all the business information surrounding a sale — the catalogue, the enquiry, the order, the invoice, the despatch note and the delivery record — is exchanged electronically, so that human handling is reduced to a minimum.
Technologies That Support It
Several supporting technologies make this exchange possible. Electronic Data Interchange (EDI) allows standard business documents to pass directly between the computer systems of two firms. Bar-coded product numbering identifies each item uniquely, so stock and billing records update themselves. Satellite positioning allows a consignment to be located and tracked while it is in transit.
Parties To An e-Commerce Transaction
Electronic trade is not confined to a firm selling to a household. The same network carries dealings between two firms, between two consumers and between a firm and a government department. The main combinations are set out in FC 15.1.
Flowchart
FC 15.1 — Parties To An e-Commerce Transaction e-Commerce → Business to Business (B2B), Business to Consumer (B2C), Consumer to Consumer (C2C), Business to Government (B2G)
Because the parties differ, the character of the transaction differs too. A B2B order is usually large, repeated and settled on credit, while a B2C order is small, occasional and paid for at once. The technology is common; the commercial terms are not.
15.2 e-Commerce And e-Business
The two terms are often used as though they meant the same thing, and in ordinary speech little harm is done. In a business examination the distinction matters, because the two words describe different amounts of the firm’s work.
The relationship follows from the ordinary meanings of ‘commerce’ and ‘business’. Commerce is buying and selling together with the services that assist it; business is the whole of what a firm does, including everything that happens before a sale is made and after it is completed. Adding the prefix ‘e’ to each does not change that relationship — it only says that the work is being carried on electronically.
What e-Business Includes
e-Business is the conduct of all business functions by electronic means, not merely the trading ones. Production scheduling, stores and inventory control, accounting and finance, and human resource records are internal functions; none of them involves a customer, yet each can be run on computer systems and networks. When they are, the firm is doing e-business.
e-Commerce, by contrast, covers only the firm’s dealings with outsiders over the network: its customers on one side and its suppliers on the other. A firm may therefore be doing e-business without doing any e-commerce at all, but it cannot do e-commerce without that activity also counting as part of its e-business. The points of difference are set out in Table 15.1.
The safest test in an answer is to ask where the activity is directed. If it faces a customer, a supplier or a government department across the network, it is e-commerce. If it faces inward, to the firm’s own operations, it is e-business but not e-commerce.
15.3 Q-Commerce: Meaning And Features
Customer expectations do not stand still. Once ordering online became ordinary, the point on which sellers competed shifted from whether goods could be bought online to how soon they would arrive. Waiting two or three days is acceptable for a book or a shirt. It is not acceptable for a packet of milk, a strip of medicine or a missing ingredient in the middle of cooking.
That gap in the market is what quick commerce answers. It is not a new technology but a new arrangement of an old one — the same electronic ordering, organised so that the goods are already close to the customer before the order is placed.
15.3.1 Meaning And Concept Of Q-Commerce
Q-Commerce, or quick commerce, is an advanced form of e-commerce in which goods are delivered to the customer within an extremely short time, usually within an hour and often within ten to thirty minutes. The customer orders on an application in the ordinary way; what differs is the promise attached to the order.
The goods handled are therefore not chosen at random. Quick commerce concentrates on everyday essentials — groceries, snacks, household supplies, personal care items and common medicines — because these are bought frequently, are needed at short notice and are small enough to be carried on a two-wheeler. Furniture and machinery cannot be sold this way, however good the technology, since the goods themselves defeat the promise.
The promise also forces a different physical arrangement. A conventional online seller can hold its stock in one large warehouse serving a whole region, because it has days in which to move the goods. A quick commerce seller has minutes, so it must break its stock into many small stocking points spread across the city. The differences that follow are set out in Table 15.2.
The sequence behind a quick commerce order is short and tightly controlled, as summarised in FC 15.2.
Flowchart
FC 15.2 — Fulfilment Of A Q-Commerce Order Customer places order on the application → nearest stocking point is selected → items are picked and packed → delivery partner is assigned a route → order reaches the customer within the promised time
15.3.2 Features Of Q-Commerce
The features below are not separate advantages that a firm may pick and choose. Each one exists because the promise of delivery in minutes could not be kept without it.
- Ultra-fast delivery — orders are delivered within about ten to thirty minutes. This is the defining feature, and every other arrangement in the model is made in order to support it.
- Small order size — customers order a few items at a time but order often, because the platform is used the way a neighbourhood shop is used rather than the way a department store is used.
- Local fulfilment centres — stock is held in dark stores, small warehouses closed to the public and laid out for speed of picking. Because they are small and numerous, an order can be packed within a few minutes of being received.
- Hyper-local delivery — each stocking point serves only the area immediately around it, commonly a radius of a few kilometres. Hyper-local delivery keeps the travelling time short, which is the only reliable way to keep the total time short.
- Automation in stocking — demand is predicted from past orders and local patterns, so that fast-moving items are already on the shelf. If the item is not in the nearby store, no amount of speed in delivery can save the order.
- Personalised buying experience — recommendations are drawn from the customer’s earlier purchases, and the progress of the order is shown as it happens. Both shorten the time the customer spends searching and reduce anxiety about a delivery that is meant to arrive within minutes.
- Round-the-clock availability — many platforms accept orders at any hour, which suits a model built on urgent and unplanned needs.
- Lower dependence on large warehouses — since stock sits in small local stores, the firm avoids the cost of very large central warehouses, though it takes on the cost of running many small ones.
Read together, the features show that quick commerce is a trade-off rather than a simple improvement. The firm buys speed by holding stock in many places and despatching each order separately, and it pays for that speed in higher operating cost per order. Whether the trade-off is worthwhile depends on how many customers in a locality are willing to pay for speed, and how often.
15.4 Artificial Intelligence And Its Integration In Q-Commerce
A promise of delivery within thirty minutes cannot be kept by supervision alone. In the few minutes available, a firm must decide which stocking point holds the item, which rider should carry it and which route that rider should take, and it must take those decisions for thousands of orders at the same time. No manager can do this by hand at the speed required.
This is why quick commerce depends so heavily on software that can decide for itself. The decisions are repetitive, they rest on large quantities of past data, and they must be taken instantly — which is precisely the kind of work that artificial intelligence performs well.
15.4.1 Meaning And Role Of Artificial Intelligence
Artificial intelligence (AI) is the use of computer systems to perform tasks that would otherwise require human intelligence, such as recognising patterns, making predictions, choosing between alternatives and learning from past results.
The role of artificial intelligence in quick commerce is best understood as a role in decision-making rather than in physical work. The goods are still picked by a person and carried by a rider. What the software supplies is the judgement that surrounds those acts: what to stock, where to stock it, whom to assign, which way to go and what to offer the customer next.
15.4.2 Areas Of AI Integration In Q-Commerce
Artificial intelligence enters quick commerce at several distinct points, and each point answers a different operating problem. The main areas are set out in FC 15.3.
Flowchart
FC 15.3 — Areas Of AI Integration In Q-Commerce AI in Q-Commerce → Inventory management, Route optimisation, Personalised recommendations, Customer support through chatbots, Dynamic pricing, Demand forecasting
- Inventory management — the software predicts what a locality will buy from past orders, local buying habits and the time of year, and the stocking point is filled accordingly. This matters because a quick commerce order can only be filled from the store nearest the customer. If the item is missing there, the sale is lost, however efficient the delivery arrangement may be.
- Route optimisation — traffic conditions, weather and the number of orders waiting are read as they happen, and the fastest route is selected for each rider. Since travelling time is the largest part of the total delivery time, even a small saving on each trip lets a rider complete more orders in a shift.
- Personalised recommendations — the customer’s earlier orders and browsing are used to place likely items at the top of the screen. The gain here is in the customer’s own time: a household that reorders the same twenty items every week should not have to search for them.
- Customer support — queries about the status of an order, a refund or a payment are answered by software rather than by an agent, at any hour. This is dealt with in detail in Section 15.5.
- Dynamic pricing — prices, discounts and offers are adjusted in response to demand, competition and local conditions. A firm can encourage sales of an item that is overstocked, or reduce discounts when demand is already heavy, so that stock and profitability stay in balance.
- Demand forecasting — predictive analytics estimates what will be ordered, where and when, so that goods are distributed across stocking points before the demand appears rather than after. Correct forecasting reduces both stockouts of fast-moving goods and wastage of perishable ones.
The Limits Of AI In Q-Commerce
Two cautions belong with this account. First, the software is only as good as the data behind it — a new locality, or an unusual event, gives the system little to learn from, and its predictions will be poor. Second, decisions taken automatically can go wrong at scale, since a faulty pricing or stocking rule applies itself to every order at once. Human supervision is reduced by artificial intelligence, but it is not made unnecessary.
15.5 Chatbots And Their Integration In Q-Commerce
Speed in delivery creates speed in enquiry. A customer who has been promised an order in twenty minutes will ask about it in five, and will expect an answer at once, whatever the hour. A firm handling lakhs of such orders cannot employ enough agents to answer every question personally, and most of the questions are the same few asked repeatedly — where the order has reached, why it is delayed, how a refund will be made.
Work of that kind is routine, high in volume and urgent. It is therefore given to software that can hold a conversation with the customer.
15.5.1 Meaning Of A Chatbot
A chatbot is a software program that converses with a user through text or voice and answers questions, supplies information or completes simple tasks on the user’s behalf. It appears on a website, inside a mobile application or on a messaging platform, and to the customer it behaves like a support agent who is always available.
A chatbot works in two stages. It first reads what the user has typed or said and works out what is being asked, commonly with the help of Natural Language Processing (NLP), which allows a computer to interpret ordinary human language. It then produces a reply, either by following rules laid down in advance or by drawing on what it has learnt from earlier conversations.
15.5.2 Types Of Chatbots
Chatbots are of two main types, distinguished by how the reply is produced.
- Rule-based chatbots — these follow fixed instructions and can answer only those questions that have been programmed into them, usually through a menu of set choices. They are cheap to build and behave predictably, but any question outside the list defeats them.
- AI-powered chatbots — these use machine learning and language processing to work out the intent behind a question and to improve from past interactions. They handle unfamiliar wording and complex requests, but they need large quantities of data and are costlier to develop.
The two are compared in Table 15.3.
Where Chatbots Fit In Q-Commerce
In a quick commerce firm the chatbot sits at the front of customer service and the human agents sit behind it. Routine queries — order status, delivery time, cancellation, refund — are settled by the chatbot immediately, at any hour and for many customers at once. Only the matters it cannot settle, such as a disputed payment or a repeated complaint, are passed to a person.
The benefit therefore runs both ways. The customer is answered in seconds instead of waiting for working hours, and the firm meets a far larger volume of queries without enlarging its support staff in proportion to its orders.
15.6 Chatbots And The Customised Customer Experience
Answering a query quickly is the first thing a chatbot does. It is not the most valuable. Because every conversation, order and preference passes through the same software, a chatbot accumulates a record of how each customer buys, and that record can be used to shape the next visit rather than merely to close the last complaint.
This is what is meant by personalisation — adjusting what is shown, offered and suggested to suit the individual customer instead of showing the same screen to everyone. In quick commerce it has a practical purpose beyond goodwill: a customer who finds the required items at once places the order sooner, and the whole promise of the model rests on saved minutes.
Ways In Which The Experience Is Customised
- Personalised product recommendations — the chatbot suggests items the customer has bought before or is likely to want, so that a regular basket need not be searched for item by item. The saving is in the customer’s own time, which is the part of the transaction the firm cannot otherwise shorten.
- Conversations that adapt to preferences — the replies change according to what the customer is looking at and has chosen in the past, so that information about a substitute, a larger pack or a bundled offer arrives at the moment it is useful rather than as untargeted advertising.
- Personalised discounts and offers — offers are directed at the categories a particular customer actually buys. A discount on an item a household never purchases is a wasted cost to the firm and an irritation to the customer; a discount on its usual purchases encourages the repeat buying on which the model depends.
- Customised delivery preferences — the customer’s usual delivery time, address and instructions, such as contactless handover or particular packing, are remembered and applied automatically. Each remembered preference is one instruction the customer no longer has to repeat.
- Handling of complex requests — an AI-powered chatbot draws on the context of earlier conversations to deal with requests that are specific rather than routine, such as locating goods suited to a dietary restriction. Requests of this kind would otherwise occupy a human agent for several minutes each.
Figure
Fig. 15.6-1 — A Chat Assistant Inside A Shopping Application Photograph or screen image of a mobile phone showing a chat assistant window with an order-tracking reply and suggested reorder items.
The Other Side Of Personalisation
Two limitations should be weighed against these gains. Personalisation depends on collecting and storing a detailed record of what each customer buys, and customers may reasonably object to how much is known about them. Further, a customer who is repeatedly shown only familiar items may never discover anything new, and one whose genuinely difficult problem is met by a chatbot that cannot solve it and will not transfer the conversation is left worse off than if no chatbot existed. A well-designed system therefore keeps a route to a human agent open.
15.7 Summary
- e-Commerce is the carrying on of commercial transactions — enquiry, order, payment and delivery arrangement — by electronic means over computer networks, chiefly the internet.
- e-Commerce is far wider than online payment. It is supported by technologies such as Electronic Data Interchange, bar-coded product numbering and satellite tracking, which allow business information to move with little human handling.
- Electronic trade is carried on between different parties, mainly business to business, business to consumer, consumer to consumer, and business to government.
- e-Business is wider than e-commerce. It covers all business functions conducted electronically, including production, inventory, accounts and personnel, while e-commerce covers only the firm’s electronic dealings with outsiders.
- Q-Commerce, or quick commerce, is a form of e-commerce in which everyday essentials are delivered within a very short time, usually within an hour and often within ten to thirty minutes.
- Quick commerce differs from traditional e-commerce in delivery time, range of goods, size of order, storage arrangement and cost per order.
- The main features of Q-Commerce are:
- Ultra-fast delivery, which is the defining promise of the model.
- Small but frequent orders of daily essentials.
- Local fulfilment through dark stores laid out for speed of picking.
- Hyper-local delivery within a radius of a few kilometres.
- Automated stocking based on predicted local demand.
- A personalised buying experience with live tracking of the order.
- Round-the-clock availability.
- Lower dependence on very large central warehouses.
- Quick commerce buys speed at the cost of a higher operating cost per order, since stock is held at many points and each order is despatched separately.
- Artificial intelligence is the ability of a computer system to perform tasks normally requiring human intelligence, such as recognising patterns, predicting outcomes and learning from past data.
- Artificial intelligence supports quick commerce through inventory management, route optimisation, personalised recommendations, chatbot-based customer support, dynamic pricing and demand forecasting.
- Artificial intelligence is limited by the quality of the data behind it, and a faulty automatic decision applies itself to every order at once, so human supervision remains necessary.
- A chatbot is a software program that converses with a user through text or voice to answer questions or complete simple tasks, commonly using Natural Language Processing to interpret what the user has said.
- Chatbots are of two types: rule-based chatbots, which follow pre-set rules and answer only anticipated questions, and AI-powered chatbots, which interpret intent and improve with use.
- In quick commerce the chatbot handles routine queries immediately and at any hour, and passes only unresolved matters to human agents.
- Chatbots customise the customer experience through personalised recommendations, adaptive conversations, targeted discounts, remembered delivery preferences and the handling of complex requests.
- Personalisation depends on storing detailed records of customer behaviour, which raises concerns of privacy, and a chatbot that cannot resolve a difficult problem must still allow the customer to reach a human agent.
15.8 Key Terms
- Artificial Intelligence The ability of a computer system to perform tasks normally requiring human intelligence, such as recognising patterns, predicting outcomes, taking decisions and learning from past data.
- Chatbot A software program that simulates conversation with a user through text or voice in order to answer questions, provide information or help the user complete a task.
- Dark Store A small warehouse closed to the public, stocked with fast-moving goods and laid out for quick picking and packing of orders.
- Dynamic Pricing The adjustment of prices, discounts and offers in response to demand, competition and local conditions as they change.
- e-Business The carrying on of all the functions of a business — production, inventory, accounts, personnel and administration as well as buying and selling — by electronic means over computer networks.
- e-Commerce The conduct of commercial transactions in goods, services and information by electronic means over computer networks, including ordering, payment and the exchange of related business information.
- Electronic Data Interchange (EDI) The direct exchange of standard business documents between the computer systems of two firms, without re-entry of the information by hand.
- Hyper-Local Delivery Delivery restricted to a small area around a stocking point, commonly a radius of a few kilometres, so that travelling time stays short.
- Natural Language Processing (NLP) The ability of a computer system to interpret ordinary human language as it is written or spoken.
- Personalisation Adjusting what is shown, offered and suggested to suit an individual customer, in place of showing the same content to every customer.
- Predictive Analytics The use of past data to estimate what will be ordered, where and when, so that stock can be positioned before the demand arises.
- Q-Commerce A form of e-commerce in which orders for everyday goods are accepted electronically and delivered within a very short time, usually within an hour, from a stocking point close to the customer.
15.9 Points To Ponder
- Quick commerce buys speed by holding stock at many small points and despatching each order separately. In which localities, and for which kinds of goods, is a customer likely to be willing to pay for that speed — and where would the cost simply exceed what the market will bear?
- If a firm can already deliver in twenty minutes, is there any commercial gain in reducing that to ten? Consider what the customer notices, what the firm spends and what the delivery partner is asked to do.
- Personalised recommendations save the customer time, but they also narrow what the customer is shown. Does a shopper gain more from being offered the familiar quickly, or from being exposed to what is unfamiliar?
- Chatbots answer routine queries at a fraction of the cost of human agents. At what point does replacing people with software stop improving service and begin to damage it?
- Artificial intelligence takes decisions on stocking, routing and pricing automatically and at scale. Where should a quick commerce firm insist that a human being still approves the decision, and why?
- Personalisation depends on a detailed record of what each customer buys. How much should a firm be permitted to know about a household in exchange for a more convenient shopping experience?
15.10 Objective Questions
- Two statements are given below, marked as Assertion (A) and Reason (R). Read them and choose the correct option. [1] Assertion (A): A quick commerce firm cannot serve a whole city from a single central warehouse. Reason (R): Quick commerce promises delivery within a very short time, and travelling time forms the largest part of that promise.
- Both (A) and (R) are true, and (R) is the correct explanation of (A).
- Both (A) and (R) are true, but (R) is not the correct explanation of (A).
- is true, but (R) is false.
- is false, but (R) is true.
- A firm runs its production scheduling, stores records and payroll on its internal network, but sells nothing online. This is an example of: [1]
- e-Commerce but not e-business
- e-Business but not e-commerce
- Neither e-commerce nor e-business
- Quick commerce
- Match the items in Column A with the correct descriptions in Column B. [1]
- Dark store
- Predictive analytics
- Rule-based chatbot
- Dynamic pricing
- Adjusts offers in response to demand and local conditions
- Answers only those questions programmed in advance
- A small warehouse closed to the public, laid out for quick picking
- Estimates from past data what will be ordered, where and when
- (i)–(C), (ii)–(D), (iii)–(B), (iv)–(A)
- (i)–(B), (ii)–(A), (iii)–(C), (iv)–(D)
- (i)–(D), (ii)–(C), (iii)–(A), (iv)–(B)
- (i)–(C), (ii)–(A), (iii)–(D), (iv)–(B)
- Fill in the blank: The ability of a computer system to interpret ordinary human language, used by a chatbot to work out what a customer has asked, is called __________ Language Processing. [1]
- State whether the following statement is true or false: e-Commerce is wider in scope than e-business, because it includes the firm’s internal functions such as production and payroll. [1]
15.11 Check Your Concepts
- Define Q-Commerce and name any two categories of goods commonly sold through it. [2]
- Distinguish between a rule-based chatbot and an AI-powered chatbot on any three bases. [3]
- Why must a quick commerce firm restrict each stocking point to a small delivery radius? Explain with reasons. [3]
- Explain any four areas in which artificial intelligence is used by a quick commerce firm, stating in each case the operating problem it answers. [4]
- ‘Quick commerce is nothing more than traditional e-commerce made faster.’ Evaluate this claim, referring to the goods handled, the storage arrangement and the cost of serving an order. [6]
15.12 Case-Based Questions
- Nirvi Mart Ltd. sells daily essentials online and promises delivery within thirty minutes. It holds stock at eleven small stocking points across the city, each serving the area within about six kilometres of it. Its software studies past orders locality by locality and fills each stocking point accordingly, and a chat assistant on its application answers questions about the status of an order at any hour. During a recent festival week, several stocking points ran out of sweets and dry fruit by mid-morning, and the chat assistant could tell customers only that their orders were delayed.
- Identify the feature of Q-Commerce that allows Nirvi Mart Ltd. to promise delivery within thirty minutes, and explain how it makes the promise possible. [2]
- Explain how artificial intelligence and the chat assistant could each have been used better to prevent the situation that arose during the festival week. [3]