This Week’s On-Demand Business Activity Rundown

Didi Chuxing, purchased Brazil’s 99 for $600 million, in addition to its previous investment in the target company. 

Splend, an Australian fleet management company that provides cars to Uber, Lyft, and other transportation network company drivers, raised $220 million in new debt financing this week to support inventory expansion. Between equity and debt financing, Splend has $232.2 million on hand to spend now.

Search and content don’t always go together. In fact, they may work at cross-purposes, raising barriers to search access to competitive content sources and reducing trust in the search engine’s objectivity. Google seeks to sell restaurant guide Zagat after purchasing it for $151 million in 2011.

GrubHub’s annual Year In Delivery list is out. Lettuce Chicken Wraps were the biggest gainer among orders last year and is expected to be popular in 2018. Avacado toast peaked earlier in 2017, but earned the biggest gain in orders overall.

Transportation network companies are changing wealthy New Yorkers’ home buying preferences, sais a leading realtor.  “Today, in our Uber-tech world — I [can be] in the back of a car with my iPhone, and I’m not losing out on anything. That has changed [commutes] dramatically. Your commute time is not lost productivity,” realtor Leonard Steinberg told Business Insider. Consequently, the wealthy are willing to buy homes further from work than in past years.

Consumers experience of media will inform their retail expectations. Now that the majority of audio consumption is fulfilled through streaming services, with video close behind, consumers have come to expect immediate gratification in most transactions.  Watch for media to set consumer’s patience levels with on-demand delivery and service experience.

Beauty products companies are shifting to chatbot-based and interactive customer interfaces.  The idea is that beauty-related tasks are immediate and susceptible to machine analysis. Wondering if you have too much eye shadow on, let a camera-equipped bot check it out? What if a human being was also able to provide advice? That’s a one-two punch that will convert.

GrubHub court signals drivers could be considered employees

JDSupra, the legal news service, points to a filing in Lawson v. GrubHub that bodes ill for labor marketplaces, such as GrubHub, Uber, Lyft, TaskRabbit and, well, the rest of the on-demand economy. 

Last week, the plaintiff’s attorney, Shannon Liss-Riordan, submitted a Notice of Supplemental Authority that points to a pending decision by a New Jersey court to apply a restrictive standard to the categorization of workers. If that standard is applied in the GrubHub case, GrubHub will have to treat drivers as employees, as well as confine on-demand markets to specific industries. A disaster for the current model in on-demand economies.

The case, which is in the hands of the US District Court for the Northern District of California, could set the standard for the entire industry. In that case, a new organizing point for the engagement with customers, workers, and government.

Home Delivery: Gen Z, Millennials, and Their Values Define The Market

2018 will be a watershed year in local on-demand, particularly home delivery of food. The industry has set down roots in North America, Europe, Asia, and the Middle East. McKinsey projects 25 percent growth for food delivery companies in 2018. UberEats reportedly accounted for $3 billion in 2017 revenue, suggesting that its revenue could climb by as much as $750 million in sales this year. GrubHub could see more than $170 million in additional revenue.

In short, there is $1 billion in growth to be captured by food delivery companies this year.

UberEats, which is reportedly driving more revenue than the company’s car services in some markets, has carved out an early advantage in prepared meals by partnering with McDonald’s and smaller local restaurants in the U.S., Europe, Asia, and elsewhere in the world.

Deliveroo (restaurant delivery), GrubHub (restaurant delivery), DoorDash (restaurant delivery), Instacart (groceries), Amazon (groceries), Home Chef (meal boxes ready for cooking), Blue Apron (meal boxes), among others, are the chief competitors in UberEats’ markets. Deliveroo and  Peach have invested in centralized kitchens to prepare their own and local restaurant’s recipes for delivery. Multiple models for the preparation of food are emerging:

  • Distributed Restaurant Delivery Networks, such as UberEats and GrubHub;
  • Centralized Kitchen Delivery Services (office- and home-centric, which account for 16 percent and 82 percent of the market, respectively), a la Deliveroo and Peach;
  • Delivery of Prepared Ingredients for Cooking, and;
  • Grocery Delivery.

Generational progress is poised to reinforce the trend.

Millennials, who live at home in Depression-era numbers in their 20s and early 30s, and the 18-and-younger Gen Z, who have not had a chance to move out, are redefining the values that influence buying decisions. In particular, they want healthier, responsibly produced food and are more selective than older people, who weren’t offered as much information about their eating choices.

Source: USDA Economic Research Service; Information Resources Inc.

Where older Americans order less food at home, younger people are showing early signs that they have embraced the convenience of home food delivery. Millenial eat out in restaurants more than their parents. The quality and provenance of food, notably its sustainable production, are the levers of differentiation for these generations.

Given the growing values-based scrutiny young consumers apply to their decisions, which may trump convenience and price when deciding what to order, differentiation of services will be essential to food delivery services. Millennials prefer to eat out — for the experience — rather than stay in. However, they haven’t entered their parenting years en masse and we can expect home delivery to displace some dining out as they age. Even when living with their parents, Millennials tend to buy more prepared food, notably candy, than older Americans.

Gen Zers, on the other hand, may be even more home-centric. These 18-year-olds and younger save more,  exercise resistance to impulse buying, and already represent $44 billion in discretionary spending. They also seem to impact their family’s spending more than previous generations, based on their parents’ reported spending. Gen Z has embraced the frugality of the times with discipline and digital information, doing more research and tapping social sources of recommendations more than earlier generations.

Source: McKinsey & Co.

Millenials and Gen Z will account for more than 60 percent of the U.S. population when they have grown to their majority. They will transform food consumption from a commodity to a values-supported experience. Food and information will be combined to delight the customer and confirm the sustainability and healthfulness of meal tim. There lies the missing link: Human trust.

Usability is currently the focus on food delivery platform and app experience. Simplicity, however, does not remove the tedium from selecting meals day in and day out. So much new information, from calorie counts to organic certification, is involved in choosing the next meal. Ordering for children, as well as keeping within a food budget, are just two complexities that Choosing meals is work that will be outsourced, too.

The need for local curators or influencers to craft menus by customers’ personal and demographic preferences is the critical gap in this process. A story of why the food one buys and eats, that they feed to their family, is essential to food delivery success.

Food choices are strongly influenced by media, by tastemakers, and chefs. Especially chefs, who are brand unto themselves these days. The Food Network and its myriad competitors prove the importance of suggested meals and stories to support consumers’ embrace of new foods and unfamiliar cuisines.

A local food media and influencer network closely attuned to regional tastes, trends, and crop quality is the missing layer of this market. As infrastructure investment-driven growth tails off and people find the limits of their patience with meal selection tools, human contributions to the customer experience will transform food delivery from the current gradual growth rate to hockey stick adoption.