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On-demand delivery services power up across the globe

On-demand food delivery services are gearing up to become even bigger, as consumer demand for these services rises during the pandemic due to changing food ordering habits. Here are some recent developments in the space:

  • Amazon is expanding its food delivery service in India. Amazon Food is rolling out to 62 new ZIP codes throughout Bangalore, the third-largest city in the country, per TechCrunch. Amazon Prime members can order free delivery from 2,500 restaurants across Bangalore, and nonmembers can order with a delivery surcharge of INR19 ($0.26).
  • The UK’s Deliveroo recently began IPO filing procedures. The food delivery service, which mainly operates in Europe, is kicking off IPO procedures in London, with an expected valuation of $10 billion, per The Wall Street Journal. In 2020, the company’s net revenues grew 54% annually to GBP1.2 billion ($1.5 billion) as on-demand delivery surged due to the pandemic.
  • US-based Olo is set to begin IPO preparations. The software as a service platform, which provides restaurants with ordering and delivery software, filed for a $100 million IPO in February after toying with the idea more than a year ago, per PYMNTS.

The coronavirus pandemic is changing the way consumers order their food. Consumer demand for online food ordering has increased: Prior to the pandemic, 62% of US consumers said they ordered food online at least once per month, while 78% said they either maintained or increased how often they ordered amid the crisis. As a result, US digital restaurant marketplace sales via platforms such as DoorDash and Grubhub more than doubled in 2020, per eMarketer forecasts from Insider Intelligence. Meanwhile, sales increased for providers that helped power digital ordering and delivery last year: Olo’s revenues grew to $45.7 million in 2020, for example.

Food delivery service providers are now looking to bolster their offerings to position themselves for growth as the pandemic subsides. Many consumers likely turned to on-demand delivery services in 2020 out of necessity since the pandemic heightened the risk of indoor dining. But now that pandemic conditions are improving thanks to recent vaccine efforts, some customers may decide to return to in-person ordering and indoor dining. This could pose a risk for companies like Amazon Food and Deliveroo, which depend on digital ordering for revenues. However, it may not be all doom and gloom for these providers, considering 12% of consumers said they may never return to in-person dining and others may still lean on them because of convenience, which consumers still value. By expanding their businesses and shoring up their finances, the on-demand delivery firms can position themselves for long-term growth.