Falling in and out of love with home delivery
What a time to be alive!
The world is buzzing with new entrants into the exciting world of home delivery services. Whether it’s a romantic meal for two delivered from your local restaurant, or a litre of milk and a packet of cornflakes that you need to complete breakfast, you can click on an app, and someone will be at your door within minutes.
Think of all the modern things needed to complete those simple transactions:
A handheld computer with third-party applications (your mobile phone!)
Wireless technology that links your phone to the internet (mobile or Wi-Fi)
Computer to computer communication to transfer your order to the delivery company’s back-end systems
Online billing and all the banking infrastructure to transfer funds from your account to the delivery service, and then on to their suppliers and employees
Global logistical infrastructure to get the things you need close enough to be delivered quickly, and able to respond to your specific order
A flexible workforce ready to jump on a bike at a moment’s notice
Satellite communication to support a navigation solution so the driver find you
It seems obvious that no similar services could possibly exist before this exact moment in time, or is it?
If you’re a fan of costume dramas or Westerns, you may recall customers at the “general store” placing their orders, but leaving empty handed. No loading and carrying heavy shopping bags for them. The shop would deliver the groceries later the same day.
I’m not old enough to remember the “olden times” like those, but I do remember daily deliveries of milk and other essential groceries, door to door by several competing companies, via milkmen. They even used zero emission electric vehicles! These were a common sight on the streets of England and many other countries up until the late 1980s.
The death of home delivery
Several macro-economic trends led to the demise of home delivery services over the 1950s, 60, 70s and 80s. A partial list includes:
1) Increase in car ownership
As access to cars increased, people could easily transport their own groceries from the shop to home. Once people have made the large investment to own a car, the costs per journey are relatively small, and the desire to use it is often high.
2) More, and bigger, refrigerators
Estimates of the refrigerator ownership time series for Australia
As refrigerator ownership grew, so did the size of the average fridge, including the addition of a freezer box within the fridge and eventually large separate freezer compartment.
Widespread ownership of large fridges, meant that produce with a short shelf life at room temperature could be kept for several days. It was no longer necessary to have milk delivered by a milkman every day, as it would keep in the fridge for up to a week. The addition of a freezer meant many products could be kept almost indefinitely.
With the increase in car ownership and widespread ownership of fridges, shoppers could switch from visiting small local grocery stores several times a week, to a large “weekly shop” somewhere with a wider range of products, lower prices (economies of scale) and free parking.
Large out of town supermarkets emerged, and these grew from 0% to more than 50% of the grocery market by the end of the 1990s.
Falling back in love with home delivery!
So there were several macro-economic trends that led to the death of home delivery, but why have we fallen back in love it now?
An important milestone might be the guaranteed delivery time. In 1973, Domino’s offered a 30-minute delivery guarantee, longer than that and your pizza was free (https://en.wikipedia.org/wiki/Domino%27s_Pizza).
For hot food deliveries, this was a game changer. For grocery deliveries, large supermarkets are under pressure to give shorter and shorter windows for when the delivery will be made. While hot food needs fast delivery, groceries need precise deliveries.
The thing these early delivery services had in common was that it was not too different from the original “General Store” model, a physical store/restaurant ran the home delivery service, employing its own drivers and owning the vehicles.
But things were about to change. In 2000, Ocado was set up in the UK as a third party company delivering groceries (https://en.wikipedia.org/wiki/Ocado_Group). Only one year later, Just Eat was set up in Denmark to deliver take-away meals from restaurants (https://en.wikipedia.org/wiki/Just_Eat). Third parties could now be the link between the producer and the consumer.
Today there are a wide range of competing companies for customers to pick from for both meal delivery and grocery delivery. Many of these new companies have become household names; Uber eats, Deliveroo, Gorillas, Zapp, Getir, etc. But what were the macro-economic changes that made these businesses possible?
All the technology was available for several years, but the significant event that boosted the demand for their services was the Covid pandemic. At various points during 2020, 2021 and 2022, a range of measures were put in place to reduce the spread of the virus. From merely being encouraged to socialise less, to the total closure of all bars, restaurants and other night-time economy businesses like cinemas, theatres and nightclubs. Together with the number of people working from home increasingly, life became much more home-centric. Other services that catered to people at home, like internet streaming entertainment services also grew during the pandemic.
Delivery services were growing in popularity before Covid, but it trigger a step-change in their use. Having discovered the convenience of home delivery, many people will continue to use their services for the long-term.
This change is generally positive for the environment. One vehicle delivering groceries to several homes on an optimised route will have a smaller carbon footprint than each customer driving to the supermarket and back home in their own cars. Small, often electric, vehicles delivering meals also have a smaller carbon footprint than driving a car to a restaurant to pick up a take-way or have a meal inside. Less congestion, fewer particulates and a reduction in serious road traffic accidents are also other potential benefits.
Let’s hope that this time, our love of delivery is permanent!