Description

Online food delivery is growing at a rapid pace all over the world due to the convenience, variety, and cost effectiveness it offers at the touch of a button. Major cities and urban centers have been the epicenter of this evolution, especially with the increased penetration of smartphones and widespread Internet connectivity. There have not only been significant continual investments into the industry, but also—more importantly—several mergers and acquisitions on a global scale. Currently, many investment, technology, and even transportation companies are entering into the food tech market. This has led to certain companies not only branching out their operations to reach global customers, but also completely dominating the local markets they operate in.

Online aggregators cater to customers across Europe, Asia, Americas, and the Middle East. The rise of digital technology is reshaping the market. Consumers accustomed to shopping online (through mobile apps or Web sites), with maximum convenience and transparency, are increasingly expecting the same experience when it comes to ordering food. Online aggregators receive orders from customers and route them to restaurants. These aggregators also build their own logistics networks, providing delivery for restaurants that do not have their own drivers. The opportunity for aggregators lies in extending food delivery services to a new group of restaurants and customers. In future, lower-end traditional delivery restaurants are also expected to migrate to online aggregators, as it is more cost-efficient to outsource logistics and expand their customer reach through an aggregator platform. North America already has more than 10 online food delivery companies, with Grubhub—the largest participant—accounting for over one-third of the market. Europe also has more than 10 providers, with the Dutch company, Just Eat having a presence across 8 countries in the region. However, in terms of sheer numbers, Asia accounts for a more than half of global online food delivery, with China being the leading market in this region.

Frost & Sullivan’s research, based on a 6-month study covering 21 countries around the globe, provides insights into this fast-changing market. It indicates that the penetration of online food delivery reached 14.3% of the total global population in 2018. Penetration rates are expected to grow further as the market matures, eventually reaching 21% by 2025. Key factors influencing the adoption of online food delivery are the size of marketing budgets and the overall funding for the industry. Technology penetration—predominantly that of smartphones—has been the only suitable parameter for assessing the degree of penetration of online food delivery services, with the demand for these services expected to grow in line with smartphone usage (as new smartphone users begin to optimally leverage the technology).