Food delivery sector must modernise after delivery aggregator exits Australia: report

Delivery aggregators have been grappling with driver shortages and rising inflations.

With a delivery aggregator withdrawing from Australia, the food delivery sector must focus on coming up with a more modern and sustainable way of covering ‘last mile' delivery to address the problems they currently face, according to a report from GlobalData.

Earlier, UK-based delivery aggregator Deliveroo announced they will withdraw from Australia after just seven years due to tough economic conditions.

Hannah Cleland, foodservice analyst at GlobalData, said delivery aggregators have been plagued by driver shortages, tightening gig work regulations, and growing inflationary pressures such as rising fuel costs amidst the pandemic.

Thus, the sector needs to ramp up its environmental, social, and corporate governance (ESG) and technology investments if it seeks to survive in the long term, she said.

“Delivery aggregators disrupted the industry to provide a convenient modern solution for businesses and consumers, so it seems likely that their continued survival will hinge on keeping up with modern delivery trends,” Cleland said.

For instance, cyclist couriers will help alleviate fuel cost pressures, drone delivery is an attractive alternative in the face of an industry labour shortage, whilst pick-up lockers are another option that is currently being used by restaurant brands the report noted.

“These could provide opportunities for delivery aggregators to make the delivery process more efficient for drivers and cheaper for customers,” Cleland added.

GlobalData noted that consumer demand has not fallen, with 64% of consumers globally saying they ordered food and drink from food delivery channels at least once a month, making it the third most frequented channel surveyed behind quick service or fast food restaurants and supermarkets, based on a survey.

“Although consumers are still tightening their budgets, delivery and takeaway are likely to remain a somewhat regular option as consumers will always seek the occasional convenience–driven ‘treat’ meal in favour of from-scratch cooking. But consumers will increasingly look for the most cost-effective way to do this, Cleland said.

“At the surface level, techniques such as opting for collection or pick up and ordering directly from the brand (where there are no additional third-party fees) put delivery aggregators in a difficult position,” she said.