Internet delivery services win terrain in the hearts and minds of users. What are the drivers behind at-home delivery services, like those in food, flowers, books, and merchandise? They fit our busy lives and offer the service we only used to get in the high-end stores. There is a reason to think that the delivery business continues to expand, grow, and specialize further in the coming years.

Our observations

  • Deliveroo, Foodora, Uber Eats are growing and expanding rapidly in Europe and the U.S.
  • The growth of the food delivery companies also triggers criticism, for these companies offer low salaries and strict work-schedules to employees (the cyclist with the large backpacks) while making high profits. SMEs in food (restaurants, snackbars, etc.) are also critical about the profits food delivery companies make.
  • Amazon and Bol.com have offered faster (possibly same day) delivery services in the Netherlands since 2017. In some large U.S. cities, Amazon can deliver even within a few hours.
  • Dutch supermarkets introduce delivery services of food packages, partly inspired by the success of Hello Fresh.
  • General retail companies also follow, for example construction markets such as Karwei, Gamma, Praxis, and Hornbach and fashion stores such as Zara and H&M.
  • Zalando offers fashion advice to its customers. Other online fashion stores follow this path as well.
  • Experimental new delivery services are also successful, such as Bloomon in delivering flowers.

Connecting the dots

There are several consumer trends related to the rise of the delivery economy that are also reinforced by it: time saving, more convenience, more luxury, and an intensification of product experience.

An obvious driver behind the rise of companies such as Foodora is the convenience they offer. You do not have to go to your favorite restaurant anymore; it comes to you. This is related to the time saving aspect, which is especially relevant for supermarket delivery services. Convenience and price do not fully explain the success of Hello Fresh, Zalando, and Bloomon. What these companies offer is ‘affordable luxury’ at home. Bloomon offers stylish flowers every two weeks. A distinguishing aspect of their services it that their flowers are fresh and last for two weeks. Due to their effective supply chain, they do not lose the time in between production, retail, and consumer; they deliver directly from the flower farms. Hello Fresh has the advantage of not only offering luxury food, but also supplying recipes and therewith selling cooking skills and ideas on forgotten or rarely used products. We can see comparable developments in clothing where product advice is growing.

Zalando, for instance, offers tailored fashion advice. Delivery services help to develop and refine tastes and skills.  The difference between supermarkets, Hello Fresh, and Bloomon is the membership model. Membership is not (yet) normal in clothing.

What are the drivers behind the delivery economy? Most importantly, people win time that they no longer want to use for shopping. In bigger cities, it is normal that people live in two-income families. Simply saying, there is less free time left, and the spare time is preferred to be used intensively. Indeed, the delivery economy does not compete on prices but on services.

Another driving force is the growing need for personalized products. People want to consume in a more differentiated way; special clothing combinations, new recipes every week, fashionable flowers, etc. All of these can be offered in stores, but high service and 24/7 availability are more easily offered online than offline. Due to the aggressive sales strategies of delivery services – customers need to stay for a while, and companies get their time to impress customers – this business has time to build a relationship with consumers.

Implications

  • Large platforms offer online products for a while now; we can expect the rise of smaller special and luxury product delivery companies specialized in coffee, wine, biological food, etc.