Trouble For Ultrafast and On-Demand Delivery

In the past week, there has been a flurry of announcements of cut-backs, closures, and staff reductions from delivery firms, particularly the ultrafast, on-demand delivery service providers.

The home delivery industry more broadly has seen its share of innovations, developments, and growing pains… but what’s going on now?

• A tight labor market and rising labor costs are making it hard for delivery companies of all stripes to find the workers they need at a cost that allows them to keep prices at a level consumers will accept.
• Rising grocery costs are leading consumers to think twice about convenience spending for delivery services.
• Supply chain troubles are making it harder for on-demand delivery firms to ensure that they will have what a customer needs when stocks are low and out-of-stocks are common.
• More grocery stores have developed their own in-house delivery services, including Walmart’s in-home delivery option.
• Curbside pickup operations have matured to function better and more seamlessly, with a greater number of pickup times run more efficiently to accommodate more customers with less waiting.
• More consumers are willing to venture out and do their own grocery shopping as pandemic fatigue is rampant despite ongoing high infection rates.
• Getting enough early state funding is problematic for some, particularly as a few on-demand service providers relied on investments from Russia.

Still, there are opportunities as better established delivery firms expand beyond an initial grocery or foodservice scope. The more broad use of predictable subscription orders will also add efficiencies. Technological improvements from electric vehicles to AI-assisted ordering and drone delivery (for small orders anyway) will allow for cost reductions and greater efficiencies in more areas.

The delivery industry will continue to innovate and Freedonia analysts will continue to watch trends for additional opportunities.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Consumer Goods markets, Packaging industries, and Automotive & Transport industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.