Convenience, quality and choice are reshaping Australia’s home delivery sector.
Time poor, health conscious Aussies are now spoilt for choice - and ordering out more than ever.
“Having convenience when it comes to fueling your body is definitely an important thing.”
– Erika Christensen.
Not too many years ago the most convenient dinner choice available, aside from leaving the couch, would have involved a pizza delivery or fast food chain.
But it’s 2018, and food delivery is opening up a whole new world for time poor professionals, families and anyone who wants convenience without compromising on quality and variety.
Back at home our city-dweller is swiping their finger across an iphone, pressing the touchscreen and finding themselves presented with a mouth-watering array of options including barramundi burritos; dishes from every corner of Asia; wagyu beef burgers cooked American style; rotisserie and Cuban delights; a range of authentic curries and a selection of slow-cooked Moroccan tagines. Once the order is placed, the items will arrive in as little as 20 minutesi.
It’s a scenario that would obviously vary depending on location and a range of other factors, but it also accurately reflects the options that are now available to hundreds of thousands of Australians across a range of urban, suburban and regional areas where delivery aggregates have set up shop. And the expansion is continuing.
Aggregators sign up restaurants to an online and app platform that allows consumers to place takeaway orders with the restaurant to be either picked up or delivered, with delivery performed either by the restaurant or the aggregator, depending on the model.
What is an aggregator?
According to research from Morgan Stanley, food delivery service providers, also known as aggregators, have been in Australia for more than a decade. The niche began experiencing noticeable growth in April of 2016, with the expansion of Uber Eats.
Morgan Stanley estimates that food delivery aggregators in Australia today are already generating more than $600million in total transaction value (TTV), a figure they estimate will expand to $2.4billion by 2026, due to demographics, increasing population coverage and greater restaurant adoption.
Some coverage of the home delivery boom suggests that, if Australia’s food aggregator market continues to follow in the footsteps of the U.S, our weekly spending on restaurants and takeaway food will soon overtake the amount spent on groceriesii.
Restaurants that sign up to delivery aggregators can potentially access a whole new customer base, or at least expand on their existing clientele. For businesses struggling in an economic climate where cautious household spending regards dining out as an extravagance, opening the door to online ordering and delivery could be a lifesaver.
Online ordering can bring enriched marketing opportunities to food outlets, providing another avenue for boosting revenue. The act of going online and seeing an entire menu can have the psychological impact of driving people to order more items – such as drinks, side orders and other add-ons. Online loyalty offers, often initiated by aggregators, can be a strong incentive for repeat business, while restaurants who sign up with aggregators also benefit from a platform’s existing technological infrastructure, branding and targeted advertising campaigns and promotions. For aggregators, signing up more restaurants makes the platform more appealing to consumers, which in turn attracts more delivery drivers, which leads to reduced delivery times and enhances the consumer offering.
For information on investment opportunities in innovative or disruptive new business models, please contact your Morgan Stanley Financial Adviser.
iReal life example of individual experience in March 2018.
ii‘Sweet and sour of food delivery boom.’ Tony Featherstone. The Sydney Morning Herald. February 2018.