Among the changes that the digital sector has experienced in the last two years is the massive adoption of the habit of home delivery of food. A phenomenon that has been experienced worldwide, as reflected in the report which states that the food delivery apps sector grew 27% per year in 2020 (latest data available). According to this same source, the value of the food delivery sector already exceeds 112,000 million euros worldwide. More than enough reasons to analyze it in depth.
Delivery, a service of more than 1,000 million customers in the world
Specifically, the report indicates that over a billion people throughout the world use the services of an online platform of this type at least once a year and that each user spends an average of €92.40 ($112) a year on them.
Let us remember that food delivery platforms at home are online platforms where orders are placed and they send it to your house. Therefore, restaurants that include this type of service would also be included in this group.
Looking at the data for Spain, we can see in the graph that a 45.2% of Spanish users have made an online food delivery order in the months of 2020. Almost identical percentage to that of USA (45.3%), Australia (45.3%) or (45.5%).
On the other hand, the food delivery industry works much better in Spain than in countries like Sweden (30.5%), Germany (28.9%) or (26.5%) where the impact of this type of platform barely exceeds 30%. The case of Japan is curious: only 15.6% of users Japanese between 16-44 years have used an online platform to order food at home per year.
Young people are more likely to use apps to order food at home
In another order of things, as might be expected, young people are the ones who make the most online orders to delivery platforms of food at home. Especially users between 24-34 years old, and to a lesser extent, the youngest between 16 and 24 years old.
The graph also tells us that the older the user, the less he tends to order food online for home delivery. In general, both men and women make practically the same use of these food delivery platforms, although the percentage is slightly higher for women.
The giants of the sector worldwide
However, if we zoom in and review the state of the sector worldwide, we will see that its main protagonists are few… and very powerful.
Delivery Hero is a multinational food delivery company based in Berlin and valued at more than 17,000 million euros. It was founded in May 2011 by the Swedish Niklas Östbergoperates in more than 40 countries around the world and is associated with more than 500,000 restaurants. In addition to delivering groceries, he delivers other types of items such as flowers, pharmaceuticals, etc.
In 2021 Delivery Hero took over 44% of the shares of the leader of food delivery in our country, and shortly after closed a purchase agreement by which it will own the 80% of your shares. Their paths first met in 2018 when Delivery Hero began participating in Glovo’s funding rounds.
Delivery Hero is one of the promoters of the concept of a new way of delivering at home in which the delivery of products occurs in a almost instant where and when consumers need it. For example, Delivery Hero is already delivering items in half an houror even in less time.
Just Eat TakeAway
In 2020, the Anglo-Dutch firm Just Eat TakeAway became the second of the food delivery giants to buy Grubhub for 6.42 billion of euros. Before, in August 2019, it had already merged with its British rival JustEatforming one of the largest food delivery groups worldwide.
The leading food delivery company, which had its beginnings back in 2000, wants to get away from the controversies that drag other of its competitors like Glovo. In this way, to achieve this differentiation, he implemented a new business model, Scooberbased on its own network of delivery men with employment contract, unlike the “riders” of other platforms such as Glovo or Deliveroo who operated as freelancers before the Rider Law.
But it seems that Just Eat TakeAway has ended up falling like its competitors, since in April 2022 it had to face the Illegal transfer of part of its delivery fleet. The company would have allied itself with Fleet Delivery Solutions SL to employ 183 delivery men fraudulently, thus avoiding paying them the amount that would correspond to them if Just Eat TakeAway hired them directly. The company was sanctioned with a €187,515 finewhile Fleet Delivery Solutions, the other implicated, was involved with €62,503.
Food Panda
Founded in 2012, it has been owned by Delivery Hero since December 2016. In Spain we don’t know it that well, but Food Panda operates in more than 40 countries. Above all it is popular in the Asian area–Peaceful. Among others, it is the platform that dominates the most in countries like Pakistan.
The service it offers allows users to select local restaurants and place orders through its mobile applications and websites. The company has partnered with more than 115,000 restaurants in 246 cities and works with more than 80,000 couriers.
Uber Eats
Uber Eats was born in 2014 as an experiment. At the time, its then-CEO wanted to expand Uber’s reach with new forms of transportation. For this, he created UberFresh, as it was originally called, and used the extensive network of vehicles that Uber already had to make deliveries. This caused that grew very fast. Uber Fresh started by delivering fixed-price menus to people in Santa Monica, California, and within a year, Uber Eats was available in Barcelona, New York, and Chicago.
In 2020, after GrubHub was snapped up by Just Eat Takeaway, Uber acquired another of the large food delivery companies, Postmates, in a new attempt to consolidate itself in the market and also to boost its profitability. Although Uber Eats has been able to grow considerably during the pandemic, it still has some way to go to achieve good profitability data. Its current executive director, Dara Khosrowshahicommented that they expect it to be profitable in 2022.
In May 2022, Uber Eats added the Five Guys hamburger chain to its offer in a beneficial agreement for both parties, which sought to respond to numerous requests from its users, as stated by the general director of Uber Eats in Spain, Courtney Tim’s.
Currently, Uber Eats is present in 32 countries and, only in Spain, in more than 500 cities.
Glovo, a Spanish actor on the international scene
As we have already mentioned before, the Spanish firm founded in 2014 by Oscar Pierre is one of the pioneers of instant shipping Q-Commerce and the most popular home delivery platform in our country, in addition to having a presence in other markets. Currently, Glovo is present in 1,300 cities and 25 countries and has 15 million users.
Although his name has been associated too much with the controversy due to the precarious employment situation of its “riders”. While it considers that the delivery men are self-employed, many others consider -including employees- that these workers are a clear case of false self-employment, where the company takes advantage of not assuming the costs of having them on staff. Scenario that has been gaining some stability thanks to the Rider Law, despite the fact that Glovo has announced in its billing system to dissociate itself from the delivery service.
2020 it was not a brilliant year for Globe. To increase its profitability, it announced the sale of their businesses in Latam to Delivery Hero for 230 million to focus, on the other hand, on the European and Asian markets. Since as with Just East Takeaway, Glovo has had problems generating profits since its inception.
However, when carrying out the operation, Delivery Hero had to pay an amount of 450 million euros due to the economic outlook presented by Glovo. And it is that the home delivery company closed its exercise in 2021 in the red and with losses five times greater than those of the previous year (€474 million).
On the other hand, Glovo’s revenues increased by 60% in the 2021 financial year compared to the previous year, going from almost 360 million to 580. However, this was not enough to achieve good results. These losses grew vertiginously, going from 83 million euros to 474 million.
New companies aggressively break into the delivery sector but raise doubts
During 2021, names like Gorillas, Getir or GoPuff began to make a name for themselves in the delivery scene: these companies seek to unseat their predecessors and the strategy to achieve this is based on offers, discounts and promises of deliveries to each faster to its customers, with the concept of “ultra-fast deliveries”. However, the long-distance race in which they participate has a high initial cost that, apparently, not all of them can manage and succeed at the same time.
And, it is that the profitability of these companies hangs by a thread in their beginningstheir strategy is based on gaining a foothold in the market and, after that, increasing their prices, canceling out the aggressiveness of their offers, which begin to make real profits.
According to a study carried out by the consulting firm Bain & Company, it would be It was necessary that the minimum price per order was €30 for these new ultra-fast delivery companies to become profitable. However, the reality differs from this data, since currently the average price of the order is around €20. It would also be necessary to reach a volume of orders through dark stores (“ghost” supermarkets, located in city centers, from which they take the items to be distributed) more than 1,000 daily per warehousea figure that is also far from the current situation.
getir
In March 2022, the Turkish company Getir went to the next level of the environment becoming «» after raising 700 million euros in one. At that time, its valuation stood at more than 10,000 million euros.
The founder of Getir, Nazim Salur used a metaphor to explain the situation faced by companies in the delivery sector, stating that it needed a lot of fuel to take flight but, once in the air, it reached cruising speed and stabilized. However, it seems that today his flight is experiencing serious turbulence.
Getir has just made a cut 14% of its global workforce, a dismissal of 4,500 people that also affects their situation in Spain. Among the next changes that the company will have to face are reduce much of its capital-intensive expansionin turn reducing hiring, marketing investments and…
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