The changing market of food delivery

When it comes to the core values of Hong Kong people, being fast and convenient are always the most important ones. That probably explains why food delivery in Hong Kong is so popular right now.

Traditional delivery model vs the new model

Turning up the heat is the online food delivery websites, which enable customers to order a variety of food with a single tap with heir smartphone. Food delivery is not a new business. However, digital technology is reshaping this fast-changing market. Within the traditional delivery model, restaurants simply take orders from customers and ask them to take the food for themselves or to be delivered with their hired bikers. In contrary, the new model builds a vast network of efficient logistics which provides delivery for restaurants that cannot afford their own bikers. It is actually more cost-effective to outsource logistics as in the new model. The new model saves time for customers to enjoy the same menu in their favourite restaurant at home and save waiting time for meal preparation. That’s why demand for online delivery service is surging in recent years and leads to keen competition.

A study from McKinsey revealed that customers are loyal to the ordering platform that they feel personalized. In order to stand out within this fierce competition, most platforms tend to store customer order histories and data for further analysis. For instance, Foodpanda is investigating possibilities of using artificial intelligence (AI) to facilitate the delivery process. The average delivery time of Foodpanda is around 32 minutes. AI can assign the best rider for each order by calculating the average walking speed and travelling time of every rider, analyzing how familiar are they with the assigned route and traffic in peak hours etc, and hence, send out the rider who can deliver the food in the fastest pace. Delivery time will hopefully be further shortened as AI learn and adjust from time to time. Moreover, Foodpanda can also suggest a specific dish or restaurant for different customers according to their order histories. Restaurants in partnership can also amend their menu based on customers’ preferences.

Opportunities in Hong Kong

Hong Kong is a fast-paced city where people are working 24/7. However, orders usually come from families rather than workspace which places another challenge to the industry. Order spike on weekends too. There is another app called Plum popped up a few months ago targeting at the working population. Maybe major players in the Hong Kong market can think of expanding to the working population as well.

Besides, platforms may be investigating in drone delivery in Hong Kong. Although major ordering platforms have covered most areas in Hong Kong, it is difficult to deliver to some remote areas like the rural areas in New Territories. Drone maybe another breakthrough for platforms to speed up the delivery. A ‘Customers-to-customers’ (C2C) type of order is also another opportunity. Users can order food not only from a restaurant but also from another user.

After all, customers are only loyal to the platform which provides personalized experience, fast delivery, and best food quality. Platforms should review their services and explore more opportunities at the same time.

Reporting from Natalie Ng