Digital Legacies: Delivery

Julius Wiedemann examines the emergence of on-demand delivery services, with regards to their exponential growth, strong market allure, and grand designs for global expansion.

by Julius WiedemannPublished on : Nov 09, 2021

Once in a while someone comes up with an idea that disrupts an entire field. Or rather, retire something we used to take for granted as the only option. Uber has ignited a type of sharing economy that shows no turning back. Other companies have followed, including the business model, that are in this case making taxi services obsolete. The delivery industry, which has surfed the wave of the gig economy, is now creating its own monsters, including Uber itself, with Uber Eats. This market, which is now being agitated by cash burners, is becoming so unique that some companies are even thinking about becoming banks, so much is the money they move. To be a giant is crucial if you are disrupting anything. It gives people the visibility, and authorities a positioning that what you are doing is utterly necessary and is used by so many people that it is better to upset a professional community then upset customers, who happen to be voters. Let alone the jobs created by these disruptors. To have in a politician’s CV that a service like Uber was finally shutdown is certainly not the greatest thing. And politicians know that very well. Taxi drivers used to elect people, but not anymore.

Consumer desires for faster, streamlined delivery services have brought in giants such as Deliveroo, which is now operational in over 10 countries | Digital Legacies by Julius Wiedemann | STIRworld
Consumer desires for faster, streamlined delivery services have brought in giants such as Deliveroo, which is now operational in over 10 countries Image: Courtesy of Julius Wiedemann

In the case of food, restaurants now need new channels more than ever. With Amazon delivering products next day, and many times just in a few hours, it has become unthinkable not to have all types of food in big cities in just a few minutes. There is simply no reason for that in our minds anymore. It’s taken just so little time for us to take it completely for granted. The strategy to become big as quickly as possible, and to accumulate market share as large as they can, have the logic that they need to become too big to fail. As long as investors are attracted by company evaluations, burning cash should not be a problem. From iFood in Brazil to Deliveroo in 12 countries, from Insntacart and DoorDash in the US, to Rappi in South America, all these companies are ready to fight for a sunny spot in a few years.

  • Since its founding in 2013, DoorDash has become a market leader within the food and convenience delivery industries in the USA | Digital Legacies by Julius Wiedemann | STIRworld
    Since its founding in 2013, DoorDash has become a market leader within the food and convenience delivery industries in the USA Image: Courtesy of Julius Wiedemann
  • Colombian on-demand delivery company Rappi has followed a similar trajectory, and is now available in nine countries across South America | Digital Legacies by Julius Wiedemann | STIRworld
    Colombian on-demand delivery company Rappi has followed a similar trajectory, and is now available in nine countries across South America Image: Courtesy of Julius Wiedemann

The pandemic has certainly brought new appetite for investors in the field. However, the movement towards muscular and bold delivery services have been there for some time. These services have been quite amateur for too long, and technology could give an answer as to how things can be arrived at faster and how response can be quicker. The level of sufficiency that can be created through applications is not to be underestimated. Parcel services such as UPS and FedEx have been there for a little while. In 2020, revenue generated from parcel shipping activities made a turnover of over USD 400 billion worldwide. By comparison, DoorDash experienced exponential growth last year when it grew its sales three times, expecting sales to reach $28.6 billion in 2021, in the USA alone. Of course, we are talking about different profit margins, but the numbers are impressive regardless.

While organisations such as UPS and FedEx have been in the market for a while, their growth pales in comparison to newer entrants such as DoorDash | Digital Legacies by Julius Wiedemann | STIRworld
While organisations such as UPS and FedEx have been in the market for a while, their growth pales in comparison to newer entrants such as DoorDash Image: Courtesy of Julius Wiedemann

What 3G and 4G have done for services is just unimaginable. Technological infrastructure is the first thing that makes those platforms viable. They depend on hard work to build brick and mortar infrastructure. It is not just well-coded software. It’s much more. We depend on real towers for spreading telecommunication signals around cities and the countryside. They are the invisible heroes of this revolution. When something stops working, they are usually not to blame, simply because we don’t know who they are.

Technological advancements allowed on-demand delivery providers to tap into a vital gap in the hospitality and service sectors | Digital Legacies by Julius Wiedemann | STIRworld
Technological advancements allowed on-demand delivery providers to tap into a vital gap in the hospitality and service sectors Image: Courtesy of Julius Wiedemann

During the pandemic, the gig economy of delivery services simply became the lifeline of many people, and sometimes the only human contact with the external world. They were affected by COVID-19, but could not stop working, simply because they have become indispensable. They are now too big to fail, or rather, too important to not exist anymore. Companies can go bankrupt, but industries are different. Pan Am ha bankrupted, as well as Enron, but the industries survive because we cannot live without them anymore. Deliveroo was founded in 2013 by Will Shu, an American banking analyst who had moved back to London. He was shocked at how few of London restaurants offered delivery. He then created Deliveroo, alongside Greg Orlowski to try to tap into this pent-up demand. But the market offers fierce competition, and no one knows who of these players will actually survive.

Delivery apps gained even more importance during the pandemic, and are now deeply ingrained into daily life | Digital Legacies by Julius Wiedemann | STIRworld
Delivery apps gained even more importance during the pandemic, and are now deeply ingrained into daily life Image: Courtesy of Julius Wiedemann

The crucial thing to understand is that we have achieved a point of no return for those types of conveniences. The future will display the heroes, the vindicators, the bankrupted, the visionaries, the innovators, the crazies, and also the ones who have paved the way for us not to think about something: whenever you want to buy, any time of the day, just get your phone, register in five minutes, and receive in another 15 whatever is missing in your life from the grocery store.

Read more from the series Digital Legacies where our columnist Julius Wiedemann investigates the many aspects of digital life.

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