To mention that recent capital inflows in the food-ordering space have already been growing rapidly wouldn’t do the actual funding environment justice. Actually, it might be also considered a gross injustice similar to calling Mark Zuckerberg only a website developer.
While just $46 million and $25 million were committed to food ordering companies in 2013 and 2012, respectively, an astounding $600 million was purchased 2014. And thus far this current year, we’ve had approximately $360 million invested to date, which when annualized, is released to approximately $1.2 billion1. That sort of growth is just not something the truth is too frequently.
So, what’s driving investors to throw such large sums of money into this area give fist? Well, in light of how much coverage companies within this sector have been getting in the media lately, the solution is probably not as clear and obvious because of all of the noise out there.
To the public’s detriment, the continuous barrage of headlines associated with funding, M&A, etc. has swayed popular opinion in a way that one’s initial inclination would be to think that the competitive landscape is crowded, and this the industry itself is accordingly saturated.
Now, as the arena has indeed become highly competitive, the second point on market saturation couldn’t be further from your truth. In fact, this is basically the under-penetration on this market that presents a huge opportunity commensurate with the quantity of risk being assumed by investors today.
One thing to note would be that the buy coleus forskohlii is itself a whopping $70 billion market. More importantly, of that particular $70 billion, only about $9 billion (roughly 13 percent) is online2.
Thus, inside a world where all sorts of things is performed either on the pc or through mobile apps, approximately 9 from 10 folks are still utilizing the traditional approach to picking up the cell phone to contact takeout and delivery orders.
Furthermore, way back in February, Morgan Stanley/AlphaWise did some survey work that showed surprisingly low awareness levels among consumers of GrubHub – the largest and most recognized player in the space – as well as its services3.
The outcome demonstrated that approximately 55 percent of consumers in Ny (their core market) had limited knowledge of the GrubHub (and Seamless) service, and that percentage rises to eighty percent in markets away from New York. Remember that GrubHub has been around since 2004 (pre-Facebook). This means that nearly all consumers aren’t even aware that these kinds of services even exist.
When you look for large chains like Domino’s and Papa John’s today, their online penetration rates are roughly 45-50 percent2. Seeing the exponential development in order volumes reported by competitors, small and large, inside the food ordering space, it’s clear that achieving similar penetration rates is not actually an issue of if, but of when. We can easily also look to comparable metrics outside of the U.S. for additional insight.
For instance, the UK’s GrubHub equivalent, JustEat, features a market penetration rate of approximately 25 percent. And also in South Korea, a country well-known for having a solid delivery ecosystem, Baedal Minjok, that is South Korea’s GrubHub equivalent, features a 75 percent market penetration rate2. The U.S., at a meager 13 percent, is just at first stages of its own broad migration to online/mobile ordering.
What this all points to is some serious room for growth. That being said, we should also consider how this growth stacks up against the direction in which relevant market dynamics 46dexipky trending within the United states For this, have a look at the chart below:
The direction we’re heading in is pretty clear, and skilled professionals usually agree that online orders are anticipated to surpass offline orders sometime inside the next decade. The key takeaway is we’re from the very initial phases of your broad, secular shift to online/mobile ordering. And it is this paradigm shift in the market that is the power behind every one of the dollars being thrown in to the space as investors place their bets on which horse ultimately becomes that proverbial sought-after unicorn.