How the market environment is changing

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The Covid-19 pandemic has changed the way almost all industries do business. There have been surprising innovations, shifts in demand and trends across the board, and food delivery is no exception.

Global online food delivery services are expected to grow by more than $ 44 billion by 2024. This includes on-demand grocery delivery as well as take-out services. This forecast is interesting because, while food delivery is undoubtedly gaining popularity, it has not entirely exceeded most consumers’ preference for convenient and physical purchases.

As food delivery services expand their service lines and refine their business models, we will likely see a shift from wholesale purchasing to a more streamlined, on-demand food purchasing model.

Will consumers forgo the convenience of traditional grocery shopping?

For many consumers, the idea of ​​on-demand food purchases was not even on the radar before the pandemic struck. Partly because it wasn’t as prevalent in US markets, and part because it’s the exact opposite of how most people have always shopped.

As with any new technology or service, there are always those who are ready to jump on the bandwagon early and those who prefer to stick with proven methods for as long as possible. On-demand food delivery is no different. While some consumers immediately make the mental connection between takeout and grocery delivery, many are slower to come to terms with the idea that grocery delivery can really be as easy as ordering takeout. This is one of the challenges facing food delivery services.

Even now, consumers say they generally prefer to spend a few hours in a physical store to buy their groceries in bulk. This is especially true in the United States, where food consumption still largely follows a more traditional pattern. However, the pandemic has accelerated the slow transition to convenient, on-demand grocery delivery in many markets.

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Grocery on demand is on the rise

Online on-demand food delivery services have grown rapidly in the wake of Covid-19. Just like changes in other industries, the idea of ​​being able to easily order groceries online and have them delivered is now part of the new normal.

Improving online ordering has been a big factor in how customers choose to shop. As more and more consumers become more tech savvy, they prefer the ease and convenience of online ordering for everything including food. A study found that about 60% of U.S. consumers plan to continue shopping online at a similar frequency after the Covid-19 pandemic has completely subsided.

Big companies like Walmart, Amazon, and DoorDash have jumped on this trend. They have invested a significant amount of resources to make the on-demand grocery segment a viable part of their market strategy. However, they still compete with smaller brands like Food Rocket, 1520, and GoPuff. This is mainly due to the overall customer experience offered by these brands.

Most shoppers crave speed, freshness, and precision, and it’s something smaller brands have so far managed to do better than their big box counterparts. With nearly half of consumers turning to online grocery delivery services for fresh meat, fresh produce and baked goods, quality and speed of delivery play a major role in customer satisfaction.

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Investors think instant buying is the future

Investors have noticed that smaller on-demand grocery delivery brands have managed to thrive despite big names like Amazon and Walmart entering the field. This, combined with the expected growth of the online grocery delivery industry, has made these online grocery startups much more attractive investment options.

CNBC has reported that more than $ 10 billion has been raised by venture capital-funded grocery startups so far in 2021. In 2020, these startups have only raised a total of $ 7 billion for the entire ‘year. In the United States alone, startups like GoPuff, Food Rocket, and Fridge No More raised more than $ 1.5 billion in the first half of this year alone. In Europe, similar startups like Getir, Glovo and Gorillas have already raised hundreds of millions. This incredible infusion of capital from greedy investors has enabled many of these startups to grow rapidly and improve their overall user experience, which is critical to success in the early stages.

These startups are offering a new take on the on-demand online grocery delivery model. They focus on speed and reliability, with Food Rocket and GoPuff delivering deliveries in 15 minutes or less. It’s akin to the Amazon Prime model of specific markets receiving same-day deliveries, and customers are feeling the pull. Investors understand how attractive it is to be able to push a few buttons and have alcohol, snacks and essential household items delivered to your door almost instantly.

As this trend develops, it is highly likely that it will completely change the way consumers view grocery shopping. Rather than feeling pressured into the traditional method of weekly or bi-weekly shopping for a stock of food, they can rely on a local delivery service to drop off the eggs they need for breakfast or the poultry they need. need for a healthy dinner. This potential shift towards a more streamlined and lean view of grocery consumption in markets is making investors look for ways to get on the ground floor of this new trend.

The future looks bright for on-demand grocery delivery

The bigger question for these grocery delivery services is whether or not consumers will stick to the convenient home delivery model they enjoyed during the pandemic. There is unlikely to be a total abandonment of physical shopping, but these on-demand services have shown consumers that the traditional wholesale model of shopping is not the only way to shop for groceries.

The fact that consumers have been able to successfully discover how easy and convenient online grocery shopping can be means that there is a good chance that there will be a permanent change in their perspective on food shopping. After all, if ordering groceries can be as easy as ordering takeout, then why not take advantage?

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