The rapid delivery business is older than you think.
The first delivery services emerged in South Korea in the Joseon era (1392-1910) – with the earliest delivery order on record being cold buckwheat noodles in soup. A young scholar named Hwang Yun-seok mentioned in his diary that he ordered ‘naengmyun’ for lunch with his colleagues to celebrate finishing their state examinations in July 1768.
Fast forward to the present day, and there is much more than cold noodles on the menu for consumers. And far more means than just horse and cart to get from door to door.
Rapid delivery services have exploded in the digital era. New research from IDG reveals that the industry is currently worth £1.4bn in the UK alone – and is expected to grow to £3.3bn in the coming years.
Much of this growth reflects how these services are using apps and digital channels to immerse themselves in the habits and routines of consumers. One in three shoppers in the UK have used or are interested in using rapid delivery and the most common drivers for purchase are food-to-go, top-up shopping, and ‘meal for tonight’.
The average age of the quick commerce shopper is 36 and its main consumer group is young adults living in urban locations. More than seven out of ten shoppers who use or are interested in using quick commerce to get last-minute items. This is a significant habitual cut through in a demographic with strong spending power.
These reliable consumers have allowed a few brands to capture significant market share. Services like JustEat and Deliveroo have established themselves as market leaders. But in a fast changing sector – are these services vulnerable to disruption and competition?
Understanding the opportunity
It is easy to make the case for a rapid delivery service. Consumers are increasingly digitally literate and umbilically connected to our smartphones – and we all know how the pandemic has further cemented these habits.
These factors are encouraging investors in rapid delivery service brands.
In June, Getir raised $500m from investors, bringing its valuation to a whopping $7.5bn. That makes it worth more than Deliveroo, Marks & Spencer and Morrisons. Dija, founded just eight months ago by former Deliveroo executives, raised over $20m in seed money before US competitor Gopuff – itself valued at $15bn – bought it for an undisclosed sum earlier this month.
Gorrillas, an eighteen month old Berlin born grocery app, was valued at $1bn within nine months of launch and now finds itself being courted by US’s largest food delivery company DoorDash.
All these services promise fast delivery. Equally they all face the same challenge of growing their popularity and sustaining their brand in the long term.
However most of these apps, from a product innovation point of view, fail to impress.
Distinctiveness in delivery
Each of these brands views their USP as delivery speed – and in doing so they are making the same mistakes bigger brands have. Ultimately these services all deliver goods through the same routes; bikes, cars, and vans. The delivery speed of these services is really the most comparable aspect. The design and the user experience is where there is much more margin for gain.
The design of the application – the connective tissue between consumer and brand – must reflect and accommodate the needs and preferences of the user. For example, where are the apps for people with accessibility needs (how do you pick your delivery if you are blind and your app does not have a screen reader?), or how do you find gluten-free or sugar-free options among the sea of take-outs from Just Eat?
Brands must include features like search filters, empowering users to find what they want and reducing the risk of choice paralysis which can lead to inaction and abandoned baskets.
Rapid delivery is a key feature – but what about bespoke time slots? Having big open time slots worked while the world was WFH – but as hybrid working models come into effect and people return to the office, they will want more certainty and accuracy in delivery times. Adapting to these demands before they surface is a strong way to futureproof a service through distinctiveness.
Delivery-in-hand assurance is also important: too many people have had their package stolen due to it being left outside of a building. Rapid delivery service brands should never overlook the lifetime value of a repeat customer versus the cost of a lost delivery.
These brands should also be proactive in telling their sustainability stories and demonstrating ethical business practices. Can you add an environmental impact score which educates users on the carbon-cost of their purchase? Can you offer reduced packaging? Can users choose delivery options based on this – and can you incentivise users to select these options? Many consumers would go with less packaging and wouldn’t mind waiting a bit longer, or choosing a local brand if it meant safeguarding our planet.
What rapid change means
The rapid delivery industry may be older than you think – but now it is evolving faster than ever.
Brands entering this space should appreciate the immense room there is for competition and growth – but should be wary of getting sucked into the idea that speed is everything. The winners in this market will be the brands who can intelligently leverage data and consumer preferences to deliver the best possible experience.
This could even mean, just like when Hwang Yun-seok ordered ‘naengmyun’ for his classmates 300 years ago, that you include the option to deliver by donkey. For some consumers, being green will trump speed for importance. Brands need to develop apps which understand and service the unique needs of their customers – because doing this will increase brand relevance more than any speedy delivery could.
Vicky Urruela, product manager at Somo