Both Thuisbezorgd.nl and Deliveroo changed and disrupted the home-food delivery industry by adding an innovative element to their business models. In order to gain a deeper understanding of the changes these companies made, it is important to know how the traditional home food delivery market functioned.
As explained in our video, and shown in a simplified image above, the traditional home food delivery industry (HFDI) involved two actors: the restaurant and a customer. A customer would contact an individual restaurant (e.g. your local Italian restaurant) and the restaurant would take the order and deliver it by their own delivery staff.
The market creator Thuisbezorgd.nl saw opportunities to step into the HFDI by taking on the role of an intermediary between restaurants and consumers. Thuisbezorgd.nl offers an online platform where supply (a variety of restaurants) and demand (individual customers) meet. Individual consumers can choose from a great variety of restaurants on the company’s website, and restaurants gained additional marketing benefits through Thuisbezorgd.nl’s webpage. As the firm acted as a broker between the two parties, no direct contact between restaurant and consumer was needed anymore. In our video-presentation Thuisbezorgd.nl’s business model is discussed extensively (starting at 1:32 in the video). Important to note is that only restaurants with their own delivery services could join Thuisbezorgd’s online platform, restaurants without their own delivery service could not join the firm’s business model.
This is where Deliveroo steps in.
Three years ago, an intermediary with a new value proposition entered the market where Thuisbezorgd.nl was the market leader. Deliveroo’s mission statement involves the delivery of delicious meals made by local restaurants to consumers, fast. Deliveroo’s business model, similarly to Thuisbezorgd.nl, can be characterised as a market creator. Additionally, an extra logistical service is offered. Put differently, next to acting as an intermediary between restaurant and end-consumer, Deliveroo took up the task of delivering food from restaurant to a customer’s home. This allowed (high-end) restaurants without in-home delivery services to join Deliveroo’s platform. In our video (starting at 3:32) Deliveroo’s business model is discussed in detail.
In order to see why Thuisbezorgd.nl and Deliveroo could both enter the home food delivery industry, the Theory of Newly Vulnerable Markets (Granados et al., 2008) is used. For both companies the main factors are summarized in the table below. For a more detailed explanation, we encourage you to watch our video.
| Vulnerable Market Conditions | Thuisbezorgd.nl | Deliveroo |
| Newly Easy to Enter | Technology increased transparency. | Low upfront investment. |
| Attractive to Attack | Activity Profitability Gradient was high.
First intermediary in the market. |
Customer Profitability Gradient was high à New ‘high’ customer segment. |
| Difficult to Defend | Incumbents had different strategic goals & outdated IT infrastructures. | Incumbents (including Thuisbezorgd) lacked the strategic vision of offering their own logistical services. |
Table 1 – Theory of Newly Vulnerable Markets
When comparing Deliveroo to Thuisbezorgd, both strengths and weaknesses for both companies can be identified. For example, Thuisbezorgd.nl’s 6000 connections are responsible for the company’s high network value. As Deliveroo is relatively new to the industry, it has yet to establish such a strong network. The companies’ main differentiators are summarized in the table below.
By using Porter’s Five Forces we can shift our focus from the individual companies to the industry as a whole. Additionally, by viewing the HFDI through the Five Forces lens the changes both firms brought to the industry can be made visible. In its current state the industry has a high threat of substitute services, a mediated threat of new entrants, high bargaining power of buyers, relative low bargaining power of suppliers, and a high competitive rivalry between existing competitors.
An overview of the industry’s characteristics is made visual below.
After boiling down the individual analyses in combination with the general overview of the industry, several predictions about the future of the industry can be made. First, we expect that the market share of independently delivering individual restaurants will diminish, as the network value of delivery platforms will increase. This process will be accelerated through the user-friendly IT environments of these platform service providers, attracting more customers through their ease of use. A side effect of the increasing network value of these brokers involves the increasing variety of meals offered, as more and more restaurants will join one of these platforms. By increasing the overall variety of a platform, we expect a shift towards the long-tail principle within this given industry. Meaning that products (i.e. restaurants) with relatively low sales volumes can collectively make up a market share that rivals the few current top sellers.
Second, it is expected that both Deliveroo and Thuisbezorgd.nl will continue to exist as they target different consumer segments. Where Thuisbezorgd focuses on the relative low end spectrum, Deliveroo shifted its focus to the more high-end consumers. However, between these focus groups some overlap exists, leading to fierce rivalry between the analysed firms in the overlapping area.
Technology of the Week – Industry Disruption
Our Video:
Group 13:
Iris van der Heijden 462360
Dylan Janssens 460023
Sarah Schleeper 459820
Jaimy Siegersma 461932
Dear Team 13,
What an interesting industry you chose to analyze! Furthermore, I truly enjoyed the analysis and prediction for the future. However, I also had some thoughts on the topic myself.
First of all, you mentioned in your predictions about the future that restaurants’ service of delivering independently from the platforms will diminish and probably switch instead to said platforms. Thus, would it not be conceivable that either Thuisbezorgd.nl or Deliveroo even start incorporating into their portfolio kitchens that are not based in restaurants, but only concentrate on creating food to be delivered? In other words, could these platforms not lead towards a market where the need for a restaurant is not necessary when it comes to delivering food at home? Therefore, there would only be kitchens that cook food for the sole purpose of food delivery and owned by the platform.
Another of my thoughts is related to your prediction of the industry’s shift towards the long-tail principle. While I agree that a long-tail is possible by adding a group of restaurants of low sales volumes to the current top sellers, it does not seem to be really profitable. One has to consider that the long-tail principal is usually driven by suppliers who wish to reduce their inventory costs by any means. However, in a restaurant context this is near to impossible, since the low sales providers are not going to “centralize” their restaurants’ locations, because they still depend on their “face-to-face” clientele. Thus, both platforms are not going to be able to truly take advantage of the long-tail principle. The only benefit they would see is that their customers would be able to choose from a wider variety of niche restaurants, so that Thuisbezorgd.nl or Deliveroo create an aggregated demand.
My final thoughts are on the delivery platforms and interoperability. For sure there is a way that these platforms could increase their value by creating cross-platform transactions with other platforms.