Exploring the Booming Online Food Delivery Market: How Technology is Changing the Way We Order Meals Delivery Aggregators

Online food delivery platforms are becoming increasingly popular, as they allow customers to order from a wide variety of restaurants with just a few taps on their mobile phones. These platforms are quickly changing the way people order meals from restaurants and have become a popular choice in many countries around the world. However, despite the high valuations and investments in these platforms, not much is known about how they are impacting the market, their growth potential, and the behavior of customers.

The Growing Popularity of Online Food Delivery Platforms: Convenience and Transparency Changing the Market

Food delivery is becoming more popular and convenient with the help of online platforms. These platforms allow customers to order from a variety of restaurants with just a few clicks on their mobile phone. The market for food delivery is currently worth €83 billion and is expected to grow at a rate of 3.5 percent in the next five years. The traditional way of ordering food delivery, where customers call the restaurant directly, still holds a 90 percent market share. However, with the rise of technology and online platforms, more customers are expecting the convenience and transparency of ordering food online.

Two Types of Online Food Delivery Platforms: Understanding the Differences between Aggregators and New Delivery Player

Online platforms have become popular in recent years as a way to order food from multiple restaurants at once. There are two main types of these platforms. The first, called "aggregators," have been around for about 15 years. They allow customers to compare menus, read reviews, and place orders from multiple restaurants with just a few clicks. These usually work by taking orders from customers and then sending them to the restaurants, which handle the delivery on their own.

The second type of platform is called "new delivery" players. These platforms are newer and appeared around 2013. They differ from aggregators as they establish their own delivery networks, enabling them to deliver food from restaurants that do not possess their own drivers. This enables customers to order food from a broader selection of restaurants and have it delivered to them directly. This allows customers to order food from a wider variety of restaurants and have it delivered to them directly.

Understanding the Business Model of Aggregator Food Delivery Platforms: How they Achieve High Profit Margins and Dominance in the Market

Aggregators are a type of online food delivery platform that provide consumers with access to multiple restaurants through a single website or app. By using these platforms, consumers can easily compare menus, prices, and reviews from other customers. Aggregators make money by collecting a percentage of the order total, which is paid by the restaurant, and the restaurant is responsible for the delivery. This means that there is no extra cost for the consumer. These platforms have a business model that does not require significant investment in assets, allowing them to achieve high profit margins, typically around 40-50%.

Some examples of popular aggregator platforms include Delivery Hero, Foodpanda, GrubHub, and Just Eat. These companies have achieved global scale and dominate in different regions. However, consolidation in this market is advanced, with a few dominant players in most markets, and is expected to continue. According to research, currently only 26% of traditional food delivery orders are placed online, but it is expected that this number will increase significantly in the future.

The Impact of New Delivery Platforms on the Food Delivery Market: Understanding Consumer Behaviour and Impact on Traditional Delivery Models

New-delivery players are another type of online food delivery platform that allow consumers to compare menus and place orders from multiple restaurants through a single website or app. However, these platforms also provide the logistics for the delivery, which allows them to open up a new segment of the restaurant market for home delivery, including high-end restaurants that do not usually offer delivery services. The new-delivery players generate revenue by collecting a fixed percentage of the order total from the restaurants and a small fee from the customer. 

Despite the higher expenses of maintaining delivery vehicles and drivers, these platforms are capable of achieving high profit margins of over 30%.Examples of new-delivery players include Deliveroo and Foodora, which operate globally and continue to expand into new regions. The market for this type of service is expected to reach over 20 billion euros by 2025.

New delivery platforms offer an opportunity for a new group of restaurants and customers to access food delivery services. Instead of directly competing with DeliveryAggregators, new-delivery players are expanding the overall market. However, it's possible that in the future, even lower-end traditional-delivery restaurants may shift towards new delivery as it may become more cost-efficient to outsource logistics. This could potentially disrupt the traditional-delivery model, including This could potentially overthrow the traditional-delivery model, including the aggregators.

The expansion of new delivery is propelled by two sources of consumer demand. The first is as a substitution for dining in a restaurant. With new delivery, consumers can enjoy the same high-quality food they would get at a restaurant, but in the comfort of their own home. Some platforms even provide meals from Michelin-starred restaurants in chosen cities. The second source of demand is as an alternative to home-cooked meals. With new delivery, consumers can have restaurant-quality meals delivered to their doorsteps, making it more convenient and appealing for them to order out instead of cooking at home.

Customers who use new online food-delivery platforms have different needs and expectations compared to traditional pizza customers. According to a study, these customers value the following factors:

• Platform stickiness: New-delivery platforms that personalize the ordering experience by storing customer data tend to be "sticky," meaning that once a customer signs up, they rarely switch to another platform. This creates a strong winner-take-all dynamic where the platform that can sign up the most customers in the shortest amount of time is most likely to succeed.
• Delivery speed: The speed of delivery is the most important variable in customer satisfaction, with 60% of consumers across markets identifying it as a crucial factor, the ideal wait time for delivery is no more than 60 minutes.
• Home delivery: Most orders (82%) are placed from home, while only 16% are placed from the workplace.
• Weekend orders: The highest volume days for the online platforms are Friday, Saturday, and Sunday, when 74% of orders are placed.

These findings demonstrate that customers using new-delivery platforms value convenience, speed, and the ability to have restaurant-quality meals delivered to their homes, particularly on weekends.