Post COVID-19 World: The Rise Of On-Demand Delivery Businesses
Post COVID-19 World: The Rise Of On-Demand Delivery Businesses
Last Updated on July 25, 2020
Every pandemic starts with people thinking they are immune to it, but as it starts spreading, people come to terms with the fact that they are only mortal. This is exactly how COVID-19 snuck through in every country. Governments of different countries were indifferent to it till the time they had no choice but to put restrictions on the entire country. But by then, it was too late to eradicate the virus completely. The result was; the post coronavirus world became the new normal.
This brings us to the present scenario, where most governments have put nation-wide lockdowns and most of the economies have slowed down as a result of the same. There’s no stopping the virus for now, but the countries that were quick to bring about resolutions are the ones that saved thousands of their residents from being severely affected. The total confirmed cases as of 17th May were 4.66 million. You can see how fast the virus is spreading in the world.
The New Quarantine Lifestyle
The most threatening thing about COVID-19 is how easily the virus spreads. The virus spreads through human interaction and hence simple things like shaking hands, touching each other or common surfaces where someone infected has touched are now the things that scare people the most. Governments have put a lockdown on their respective countries and people are scared to even come out of their houses. Social distancing has become a mandate as nobody is safe from this pandemic. Sanitizers, soaps, and masks have become our biggest ally and washing hands thoroughly has become the best remedy. All this menace has confined people to their homes and common places like malls, schools, theatres have all shut down. Stepping out of homes has become a big deal now and people are only doing so if they have no other choice. This is the new lifestyle post coronavirus. The life where people prefer to stay at home with their families, eat home-cooked meals, step out only if required and wear masks if they decide to go out.
The global economy has been hit the worst due to the virus. The alarming pace at which the virus is spreading is overwhelming for the government as well as the hospitality sector. The result of all these changes is a world that is adapting to the current scenarios and innovating itself to satisfy the current needs. Consumption patterns have changed drastically and the uncertainty has led to panic buying. Businesses around the world have been affected differently among different industries. While some industries are experiencing a serious slowdown with many companies shutting down, others need to reinvent themselves in order to fulfill the changing demands. There also are unique opportunities for some industries to come up and flourish during this time.
Impact On Different Industries
Industries like the travel industry, food delivery, automobile, online/physical shopping have seen a serious slowdown and reduction in revenue. Even though some industries have not seen a huge slowdown, they still need to alter their business models to fulfill the needs of the current economy. Companies are now looking for alternate ways of earning money and sustaining their revenue. The biggest trend that has become popular during this time is the on-demand industry.
Related read: On-demand food delivery business models
People cannot come out of their homes like they previously would, and this has caused a state of panic. Many industries require face-to-face interactions and without the same, it has become difficult to fulfill the needs of the market.
Some industries that have used this time of distress for their gains include:
- Health industry as their apps have started giving out free meal plans, healthy cooking recipes, at-home consultations, etc
- Fitness companies coming out with workout videos and keeping their users engaged even at home.
- Conferencing apps have come up that allow people to interact with friends that stay far away and hold meetings/online classes.
- Gaming apps have come up as a source of killing time
An industry that has seen a great spike in its demand is the grocery industry. People are going in a panic mode. On top of that, the uncertainty regarding whether certain things will be available in the future or not has forced people to practice hoarding. The result? Grocery retail items like food, beverages, personal care, and home necessities have become popular. On top of this, the added fact that people don’t want to step out of their houses, again and again, has led to bulk grocery shopping. Another reason for increased sales is cooking meals at home. With all this time to kill, people have started experimenting with new dishes.
One way in which different industries can tackle this new change is by going online. As social distancing is becoming important, people don’t want to step out of their houses. If people cannot come out of their homes to buy your services, the next best option is to reach out to them. On-demand apps are a great way to do this.
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The Grocery Industry
While other industries are negatively impacted by the virus, the grocery segment is one industry that has seen more opportunities to grow. The main products sold by this industry are essential items that cannot be bypassed. But this does not mean that it has been smooth sailing for the industry. Social distancing has forced people to stay in their houses, and if they do step out to buy groceries they end up hoarding stuff. The result is products going out of stocks, grocery aisles being empty and the owners not being able to replenish the items as quickly as they are going out. Ensuring a good balance of demand and supply has become a problem.
The On-Demand Grocery Sector
In its attempt to help in flattening the curve, many grocery businesses have gone online. The result is an estimated growth in the industry from $36.2Bn in 2019 to $117.0Bn in 2023.
This shift to on-demand is owing to the challenges that the physical grocery sector cannot solve. If products in your nearby grocery store are out of stock or if you just can’t go out of your homes, you don’t want a shortage in necessary items. Additionally, grocery stores fulfilling needs via apps has helped reduce the stress on governments as well. Because of the surge in on-demand grocery, apps like Instacart and Walmart Grocery have seen a surge in daily downloads by 218% and 160% respectively since February.
Many apps are providing aid in this industry, they include:
- DoorDash will deliver essential items like cleaning supplies, medicines at consumers’ doorstep. For the same, they have partnered with stores like Casey’s General Store and 7-Eleven in the US
- Zomato has collaborated with Grofers to provide grocery delivery in approx 80 cities across India
- UberEats realised that online food ordering was going to observe a dip. In order to cover the losses, they partnered with Carrefour, a supermarket giant in France, and dropped groceries and essential items to the residents of Paris in real-time.
Challenges Faced By The Industry
It was like the industry was suddenly forced to step out of its comfort zone. Companies were used to physical shopping, and under the current scenario that isn’t feasible anymore. The only option the grocery sector had; was to adapt itself to the changing scenario. Many of them didn’t even have an app or the availability of on-demand delivery. This became a big drawback under COVID-19. And obviously, most contributors decided to go on-demand. But going on-demand has its own set of challenges. The challenges faced by the grocery industry are:
- New ways of working- Many companies were not used to this new way of operating. They were comfortable with people buying groceries physically and doing the same online meant more work for the companies.
- Poor supply chain- The management of supply chains is already a tricky task and a post coronavirus state has made it even more difficult. The issues in supply chain management include low levels of stocks, imbalance in supply and demand, hoarding by consumers, and inadequacy in delivery management.
- Inadequate workforce- When going on-demand, your workforce and delivery personnel have to be at the front of everything. This sudden change has left companies with untrained employees. On top of that, many employees have refused to work or have become ill and hence cannot come in contact with consumers.
- Delays in delivery- Delivery employees generally work on a contractual basis and hence employing these in a time of distress has become a huge issue.
- Unavailability of goods- Managing inventory of goods with regards to the changing atmosphere has become difficult. When it comes to ordering via an app, you don’t want to show your customers the ‘out of stock’ sign.
Overcoming The Issues Faced
The issues related to the grocery industry have also created some sort of opportunity for people who are already a part of it as well as the early adopters who want to benefit from the industry. The industry is nowhere near its saturation point; hence if you are someone looking for a way in here hence are some things to keep in mind:
- Introduction of a new business model- A completely different way of functioning means you will have to rethink your entire business model. Online ordering needs building an app, fluctuating stock in real-time, and accounting for the remuneration of your delivery guys.
- Inventory control- Online ordering requires fluctuating stock remaining on the app in real-time. It also means you will have to replenish stocks depending on how fast they are purchased and their demand. Inventory control is all about the balance between supply and demand.
- Adding shopping lists- People are under distress, this may lead to panic buying. Your role here is to make sure you are providing aid to customers to make sure this does not happen. You can ration out items or even let people know how much inventory may be required for a particular number of members.
- Employee training and welfare- During this time, make sure you are taking extra care of your employees. It is a unique situation that will need them to be equipped to handle various situations. Make sure you are training them enough. Additionally, provide them with the required protective accessories, put sanitizers wherever necessary, and provide them with adequate remuneration.
- Full disclosure while fulfilling orders- Make sure you provide your customers with the necessary guidelines for their regions. Let them know if their order will be delayed and never overpromise.
- Real-time supply management- Insight-driven supply management is your biggest asset right now.
- Creation of an app that improves customer experience- Make sure your app solves the issues of your users. Your app should be tailored to the needs of the customers. A great way to do that is by providing multi-niche apps that offer multiple things at the same place and remember to keep it simple to access.
The pandemic is not only a health hazard; it is also an economic issue. Many companies are fighting really hard to go through it and many have even shut down. If you do enter this industry, make sure you are being safe and providing an opportunity for work to the necessary people. Remember to pay them adequately and not loot them in the facade of a pandemic. If you take the right steps, you can convert this pandemic into an opportunity for you that will continue to reap benefits even in the future.