This is the first of a series of articles where I explore on-demand delivery. I'll look at the current landscape, emerging players and discuss the best strategies & opportunities for success.
Within days, weeks and months, Australia will be inundated with what many believe will be the future of retail. From 90-minute pickup windows to 10 minute store-to-door, convenience is about to become a lot more convenient. No longer relegated to the grocery leaders, Coles and Woolies. From click & collect to pickup, on demand delivery, and last mile. Let's unpack what is happening right now.
In the on-demand delivery space, the key players are Menulog, UBER Eats, Deliveroo, and DoorDash. They are generally restaurant and convenience aggregators. They take a digital naive business, like a local restaurant or petrol convenience store and digitise them into an app and website directory. You can then browse and shop an aggregate of restaurants (or stores) and upon your order, utilise gig-network drivers to pickup and deliver to you. Of these players, two are pushing to deliver, you guessed it - everything!
UBER and DoorDash are embarking on expanding last mile to include the rest of "local commerce". That makes a lot of sense. Once a network of customers and drivers exist, this is the most logical next step. I'll save "New Verticals" for my next article and keep the focus on food and convenience.
In the US, Canada, UK, Europe, Russia, China ... OK, pretty much everywhere out of Australia this is already happening and has been happening over the last 12 years. The real difference between then and now has been COVID-19. This has accelerated years of e-commerce growth in Australia and brought forward the value of on-demand delivery. Bringing us closer to what the rest of the world has experienced during the last decade.
In the US, DoorDash now dominates on-demand food and convenience. UBER Eats, Grubhub and Postmates are not only getting their lunch served by DoorDash, but also eaten. A lot of this follows the evolution of Amazon Prime. Prime (US) started out as a two-day subscription at reduced cost and has evolved to Prime Now with 2-hour delivery windows in US major cities. Now Amazon Flex aims to reduce the delivery time by leveraging the gig-economy model.
There are a lot more on-demand players.
For US grocery, Instacart occupies the dominant "advertising" model. In Europe, Delivery Hero. Neither are vertical as they follow 3P v. 1P models. In NYC, you now have Jokr that promises a 15-minute delivery. Relative to Australia and the US is Gorillas. They are landing in Sydney as I write this. An emerging vertical player (1P "dark supermarket") that is currently recruiting in Sydney. Here's the crazy part. Gorillas just started in May 2020 right in the heart of the COVID-19 pandemic. They originated in Germany and promise a 10-minute grocery delivery. Yes, 10-minutes. I like the idea of this. Not specifically 10-minute delivery, but micro-fulfilment and hyper local. 1P allows you to own the end-to-end customer journey. This is the secret sauce and the future of retail.
"Gorillas exists to create a world with immediate access to your needs. We are not business people building a delivery company—we are delivery people building a business." — Kağan Sümer, CEO of Gorillas
I could go on. There are literally hundreds of on-demand players coming out of Turkey, China, and Russia and largely focused on food. Incumbents in Australia need to verticalise delivery fast ... and by fast I mean yesterday. In the old days, we spoke about the customer relationship and who owns the customer. In the new world, nobody owns the customer. They are simply not as sticky as you think and when we look at millennials, Gen-Z and beyond, the smartphone isn't a game changer, it's BAU.
The good news is: There will be parallel winners of the on-demand future.
The "everything" delivered stores such as what UBER, DoorDash, Delivery Hero, and Meituan aspire to be will stand alongside niche players in grocery and convenience, like instacart and Gopuff. If you can operationalise your store network to be a micro-warehouse and move beyond the idea of remote, rural warehousing and robotic picking e.g. Ocado, you can thrive. You must offer an immediate delivery window and move beyond multi-channel thinking. There is only one channel and that is immediate, convenient and fast.
In my next article, I'll explore opportunities in Australia, as well as how the current and emerging players will need to move from a "Shop by store (restaurant)" model to a "Shop by product" marketplace if they want to sell & deliver - everything. I'll deep dive Australia's best opportunities in on-demand convenience and how to win the $8.8b GOV prize.
Will Gopuff come toAustralia? An always open model is the key to owning convenience. Australia offers many unique opportunities for immediacy, convenience and speed ... and this is literally Day 1.
About Mike Fowler
Mike is an eCommerce veteran, senior leader & growth strategist for some of Australia's best retailers. Formerly at Afterpay as Director of Merchant Services APAC, General Manager and founder of the growth team at Mosaic Brands (Noni B Group) developing and launching 9 iconic multi-category online marketplaces, including: Noni B, Rockmans, Millers, and Rivers, as well as Head of Digital at Blue Illusion. Member of the Australia Post Customer Advisory Group with more than 15 years experience in helping retailers leverage eCommerce, CX, payments, & logistics opportunities to maximise growth.