5 Reasons Why On-Demand Food & Grocery Delivery Is Growing

Ever since Uber kickstarted the on-demand economy, on-demand delivery services have popped out everywhere.

This steady growth is expected to continue as businesses in different sectors find ways to serve their customers better and faster.

Then, the pandemic happened. As people tend to stay home to avoid the contagion, the economy, in general, has suffered. But the on-demand economy is getting stronger.

In fact, Appscrip reports that more than half of the on-demand economy firms have enhanced their profits.

What is “on-demand” and what do we mean by it?

On-demand refers to the “access economy” where consumer demands are met immediately with the use of technology.

This on-demand economy can be found in almost every industry — food, transportation, logistics, groceries— you name it. An example of this is the famous food delivery platform, Uber Eats.

The idea is to make ordering food from restaurants easy and convenient with the use of an app. All you need to do is tap and tap and a few minutes later, your food is here.

According to Appinventiv, out of all the growing industries in the on-demand economy, people spend the most money on online marketplaces.

Transportation and food/grocery delivery comes in second and third, respectively.

ROI Revolution also published an update on their e-commerce statistics where they revealed that 90% of consumers, as of October 2020, prefer home delivery over a visit to their favourite joint.

A recent report by UBS forecast delivery sales could rise an annual average of more than 20% to $365 billion worldwide by 2030, from $35 billion.

As more businesses enter the scene and with the pandemic accentuating digital behaviours, on-demand food delivery is crossing the chasm from millennials to more sections of the population. We believe there are five primary reasons why.

Here’s the first:

Reason #1: Convenience > Cost

There’s no mistaking it — consumers love the convenience that on-demand delivery brings. No need to invest time just to go to the restaurant to pick up your order.

The I-want-it-now mentality is more prevalent than ever. PWC’s Global Consumer Insights Survey 2020 revealed that 38% of the respondents will pay more for deliveries that took less than two hours.

In addition, many people still have anxiety about going out. On-demand delivery eliminates the need for anyone to go outside to buy something. All you need to do is download the appropriate app, place your order, indicate your address, and wait for the delivery.

For the most part, on-demand food delivery services take around 30 minutes to execute the order. With software such as predictive algorithms, real-time tracking, route optimization, task automation, scheduling, and delivery management modules, everything happens at the blink of an eyelid.

This is also why grocery delivery apps across the US are seeing record numbers in terms of daily downloads. Data from the app store intelligence firm Apptopia revealed that Instacart, Walmart Grocery, and Shipt’s daily downloads increased by 218%, 160%, and 124%, respectively.

This data from Apptopia was still from February to March of 2020. However, you can clearly see the precedent of a trend brought upon by the pandemic.

Reason #2: Growth & Variety

The convenience that on-demand delivery brings is also beneficial to businesses. That is, consumers are more likely to purchase from restaurants that have delivery options — and may even pay more for it.

Back in 2018, Metapack had a State of eCommerce Delivery Consumer Research Report. Two particular findings indicate that:

• 75% of consumers have bought more items to avail the minimum spend for the free delivery option
• Around 80% of the shoppers agreed that free delivery will push them to buy more online especially during peak season

No wonder, new disruptive business models that serve customers from dark kitchens or ghost kitchens are taking the food world by storm. With space optimised for speed, menus optimised for delivery and locations optimised for fast dispatch, restaurants shelve large parts of their fixed costs such as the front of house staff, interior decor and signing long inflexible leases.

Deliveroo is offering struggling restaurants space in their dark kitchens to help restaurants get back on their feet and promising to grow as the pandemic eases.

Reason #3: Changing consumer behaviour

With a tectonic shift in behaviour, offering on-demand delivery to consumers seems to be a mandatory option rather than something restaurants pick not to have.

It’s normal to assume that consumers would pick their favourite restaurant based on the quality of the product. However, with the on-demand economy here, there’s a slight change to how consumers choose them.

One of the facts compiled by a complex delivery operations company Bringg stated that 18% of consumers mentioned “fast delivery” as the biggest factor in choosing their preferred store.

Meaning, people are concerned about the delivery as much as the product quality itself.

With an on-demand delivery option, consumers find it convenient to simply order their products online and have it delivered to their homes within 30 minutes to an hour. As on-demand companies invest more in making their services faster with software, it seems that customer experience & satisfaction will move upwards significantly.

Reason #4: Order tracking & food quality

Business owners and consumers can track the delivery of the order in real-time. On the side of the business, on-demand delivery ensures that the ordered product is delivered at the exact location to the right person.

On the side of the consumers, they will appreciate the enhanced transparency and will increase the trust that they have in the business. It will give them greater peace of mind as they can now track their orders and get an estimated time of arrival.

With faster deliveries and predictive algorithms, food quality doesn’t suffer as it was the case in the early days with soggy pizzas and broken curry boxes. While not completely a thing of the past, software to the rescue seems to be the mantra of delivery companies as they optimise, predict and track every single point to make the delivery experience great.

This full transparency, the security of goods, plus the commitment to deliver the product on time enhances customer satisfaction, which leads to the next point…

Reason #5: Competitive edge

Since many consumers prefer delivery methods, many of them will stick with a business that offers one.

As shared by Digital Commerce 360, 79% of the surveyed consumers want the online stores they shop with to offer a delivery loyalty program so they can take advantage of faster or free delivery.

This is supported by the Metapack report you saw earlier:

“49% of shoppers would prioritize shopping with one online provider over another if it offered a loyalty program featuring free next day delivery”

All this points to a single truth — offering an on-demand delivery gives you a competitive edge.

What is the future of the on-demand food economy?

On-demand delivery is now global since humans everywhere always prefer immediate access. With technology, it’s all now possible.

However, how on-demand delivery looks now may be different in the future. There’s a high chance that drones will have a big part in the on-demand economy of the future.

Finally, as the UBS report points out:

“There could be a scenario where by 2030 most meals currently cooked at home are instead ordered online and delivered from either restaurants or central kitchens. The expertise currently resides in-house (to cook, as it once did to produce a pair of trousers) could potentially be rendered immaterial, or the expertise might shrink to preparing breakfast or cups of tea, much like sewing has arguably shrunk to basic clothing repairs carried out at home. … We could be at the first stage of industrializing meal production and delivery.

While the on-demand food & grocery business is still in its investment phase, only 4% of food is delivered through food delivery services. This Nextflix age loves food being delivered. Certainly, on-demand delivery services are here to stay.

What do you think will the future of the on-demand economy look like?

Written by Alan Anthony Catantan. Edited & proof-read by Mahesh Kumar