How Food apps are balancing supply and demand during coronavirus

The current craze for Food Delivery apps has been well documented in the news lately, but surges in demand bring their own set of challenges, especially under the current situation. What are some of the strategies and technological developments Food apps are implementing to successfully cater to their users? What technologies can we expect to stay for the long term?

The impact of COVID-19 on Food Delivery apps

Food Delivery is one of the verticals that have seen tremendous growth over the past few weeks as people under lockdown turn to apps for accessing a variety of meal options without leaving their homes.

Weekly sessions in Food apps have increased during the outbreak, and so has their supply side: as regards restaurant partners, Grubhub reported that onboarding requests from new restaurants were now 10-15 times higher1; and, when it comes to riders, the amount of positions for Food Delivery alone jumped by 78% between the first and second weeks of March2.

The challenge

As COVID-19 spreads and users across the globe are forced to stay at home, Food Delivery apps are working overtime to find new and more efficient ways of keeping up with the surge in demand. But balancing supply and demand while introducing new health and security initiatives to protect riders and customers from the virus is a complex task.

How are apps dealing with the surge in food orders?

Ghost Kitchens

Ghost kitchens, also known as dark kitchens, cloud kitchens, or virtual food halls, had a breakout year in 2019, largely driven by the demand for delivery. Last year alone, ghost kitchens received +46.9B in investment from +370 top active investors including SoftBank Group Corp, DST Global, and Accel.

While many restaurants have had to lay off staff, ghost kitchens in some regions are actually hiring. Dark kitchens were gaining popularity globally prior to the pandemic, but the current situation has certainly fast-tracked their adoption (in a way all restaurants have become cloud kitchens). Some restaurants that had been forced to shut down due to the restrictions have taken out short-term leases, shifting their business to home delivery. In turn, since the spaces are usually shared between different brands, this also allows couriers to collect the food from a centralized location.

Investments in Ghost Kitchens (2019-Apr 2020)

Robot Deliveries

Another trend which was picking up speed before the outbreak of COVID-19, and that is also being fast-tracked by the pandemic. Last year, Starship Technologies, the inventors of the autonomous sidewalk delivery robots category, made more than 100,000 deliveries and raised $40 million in Series A funding last year, bringing its total funding to $85 million.

Self-driving vehicles and sidewalk robots have been reported to reduce last-mile delivery costs by 40% in some cities3. But cost-efficiency isn’t the only driver for the adoption of this technology: brands expect using robots decreases the risk of transmission. Unlike dark kitchens, adoption rates for robot deliveries do vary significantly across regions. While this technology has been in use in the US and some European countries since 2014, it has not been widely implemented yet, and countries in Latin America are only now testing it. For example, Rappi, a Latin American super app, recently announced its first deliveries with robots in Medellin, Colombia. Meanwhile, other countries are testing drone-deliveries.

Programmatic Advertising

Dynamic Ads for couriers

While many companies are testing new delivery formats, they still mostly rely on riders. As a result, many marketers are increasingly running campaigns for their supply side. Focusing marketing efforts on both sides of the business at the same time is quite common among ride-hailing companies as well as marketplaces, but this trend is becoming more relevant with the surge in demand following the pandemic.

Dynamic Ads for restaurants and stores

To ensure a steady source of supply and more options for their consumers, several apps are also promoting their services to business owners. With lockdown restrictions preventing restaurants from opening to the public, many are finding it necessary to either shift to food delivery or increase their delivery customer base. In the current situation, restaurants and grocery stores that join Food Delivery apps create a mutually beneficial partnership in which the first get a new outlet for their products and the latter get to increase supply options.

Leveraging Geolocated Ads for consumers

One of the main challenges for marketers trying to capitalize on users' high consumption in this situation is to avoid advertising out of stock products. Luckily there are creative features which plug into the brand’s product feeds, and make this a whole lot simpler.

Marketers leveraging Geolocated Ads can:

• Match supply and demand by showing ads in the areas where there is enough supply and delivery people.
• Show ads featuring the specific restaurants in “your area” to make ads more appealing and relevant for users, showcasing offers from the places that can actually deliver in the moment.
• Leverage automatic updates by integrating their product feed. In this way, marketers ensure the ads are automatically updated according to changes in supply availability.

Moving forward…

The pandemic won’t last forever, but the user habits, technological and business developments that are being implemented are likely to stay.

While some measures, such as contactless delivery, are very specific to the current scenario, other initiatives are likely to remain. The shift in advertising budgets towards measurable channels will help cement lift measurement as a must-have and lead more companies to focus on performance rather than on branding. Similarly, the companies that are investing in new solutions will come out stronger on the other side.

If you want to learn more about Geolocated Ads or how to leverage programmatic advertising to drive growth, get in touch!

References

[1] The Guardian, April 2020.
[2] ZipRecruiter, 2020.
[3] Scientific American, 2019.