Wait a minute, food delivery apps are not into retail, or are not retailing? Well, not, unfortunately. Retailing is defined as doing business with physical products instead of food. Retail is retail, while food delivery is food delivery. It’s like comparing apples to oranges.
However, a new study by no other than the Yale School Management is saying food delivery platforms won’t take too long to dive into retail as well. Interesting. Here’s the scoop.
The study is actually spearheaded by the school’s Yale Center for Customer Insights, which began by saying how online food delivery apps saw a suge in popularity during the pandemic. Usage soared since this was the only standing option to get food since groceries were mostly closed.
Yet, the study pointed out, saying, “However, with the regression of the pandemic and return to normalcy, demand dampened. Despite consistently higher revenues across the industry, valuations of many apps began to decline significantly from their 2020 peak.”
So, in line with this trend, businesses saw opportunities in offering non-food merchandise. Not to compete with their other products, but to sustain and fuel the continuous business operations. Platforms like Postmates – well, not really primarily a food delivery platform – offers not just food, but also groceries, alcohol, and other merchandise.
The study’s proponents explored customer behavior on high-demand special occasions, such as Valentine’s Day, Easter Sunday, Mother’s Day, and Father’s Day to identify key marketing opportunities.
“Advertising a service to wrap gifts before delivery also increased recipients’ willingness to use delivery apps for their needs on special occasions,” Yale School Management indicated.
They also conducted interviews with delivery app users to examine their notions about delivery apps targeting special events, beyond food and the usual patterns.
“Delivery apps are known for their convenience, and their marketing emphasizes how their last-mile services can solve last-minute problems. While interview subjects confirmed this association, the convenience of solving a last-minute crisis in the context of a special occasion was dampened by several factors,” the school stated.
These are the findings:
- Customers are doubtful about food delivery apps also offering physical products, such as gifts for special occasions.
- Even if they are gifts, the respondents are strong in saying that a delivery service offering physical products does not signal thoughtfulness.
- There are various issues that customers still encounte with food delivery apps to swiftly venture into these new products.
“Despite these challenges in customer perceptions, delivery apps are built on a foundation that address customers’ deeply ingrained needs on these special occasions,” the study noted.
So, is it a no? Food delivery apps cannot offer merchandise? Not quite yet. The YCCI study indicated three addressable areas that can bridge the gaps: suggestion, surprise, and gift-readiness.
There is still a long way to go before you see your favorite food delivery apps offering physical products, but the effort to reach this goal is there. For more news stories on ridesharing and food delivery, sign up for your account here.