Online food distribution sites improved their selection and flexibility so that consumers can buy from a wide range of restaurants using their mobile phones. The industry of food delivery is fast changing with new online outlets attracting audiences and consumers across the United States, Europe, the Middle East, and Asia.
Even though these novelty internet channels draw considerable investments and huge valuations, with five start-ups already estimated having a worth that’s over $1 billion— there is little knowledge regarding the market’s dynamics and potential growth, including consumer behavior. The McKinsey report, which is focused on a 6-month survey that covered sixteen countries worldwide, offers some insights into this rapidly-changing industry.
A Closer Look at the Food Delivery Industry
Worldwide, the food delivery industry amounts to almost $100 billion. It compromises 1% of the entire food sector and 4% of fast-foods and restaurants. It has evolved in most nations, with an estimated average annual growth of 3.5% in the next 5 years.
The traditional food delivery model is the most popular method used. Here, customers place their orders with any Chinese restaurants or pizza parlors in their locality. Then they just wait for the delivery man to arrive at their door. Although it’s also true that many restaurants have their own delivery systems. This typical category has a market share of 90%. Most of these orders, which are about 75% of the total, are placed by calling a number.
But the advent of digital computing has reshaped the industry. Consumers who are comfortable with online shopping use mobile apps with full ease. The accessibility of these applications and websites is gaining more popularity.
Today’s Food Delivery Systems
There are two kinds of online delivery platforms today. The first group is called the aggregators, which originated about 15 years ago. The second group is referred to as the new players, which started in 2013. Each type enables customers to check restaurant menus, scan images, and read reviews from past customers. If they like what they see, then they’ll place their orders with just one tap or a single click.
The aggregators, who belong to the conventional class of food delivery, simply receive orders from consumers and pass them to the food chain or restaurant that will deliver the food themselves. On the contrary, the new players have their own networks and logistics. They provide delivery services for restaurants and food chains that don’t have drivers.
The Future of Food Delivery
The digital distribution offers an opportunity for many businesses to expand into the food delivery industry. Instead of directly competing with aggregators, the food industry market is widened by the new players. In the future, however, low-end modern distribution restaurants might be switching to use the services of the new players since outsourcing is more economical. The new trends favor the new players while there’s a threat to the services of aggregators.
The increasing consumer demand drives the growth of the new players. Many people are opting to dine in their homes than to eat in restaurants. With the new players, consumers can eat whatever takeaway food that they want right at the comforts of their home. They get to enjoy the same type of food they would in a fine-dining restaurant. Several outlets even provide delivery services for Michelin-starred restaurants in chosen locations.