Clash of the Giants: Will UberEats shake up the Dutch online food ordering market?

5

October

2016

5/5 (2)

In a bold move, Uber announced the launch of “UberEats” on September 29th 2016, just one day before online food ordering market leader Takeaway.com had its IPO on the Amsterdam Stock Exchange (Reuters, 2016). The Dutch Food Service Institute (FSIN) estimates that the Dutch online food ordering market will grow from 695 million euros this year to 1.5 billion euros in 2025 (Boogert, 2016). Considering that Takeaway.com, which operates in the Netherlands under the name Thuisbezorgd.nl, holds 80% of the market (Couzy, 2016), will UberEats actually stand a chance?

Online food ordering platforms take the role of a marketplace, matching consumers to restaurants that either have their own couriers or can make use of the courier service of the platform. The consumers can view the menu and complete their order on the platform. The platform then takes a % fee from the transaction. In terms of market dynamics, most restaurants choose to join one or two platforms with the most users, in order to limit the number of technologies they need to integrate with their systems. At the same time, consumers often opt for the platforms with the most restaurant coverage. This gives rise to a ‘winner-takes-most’ market (Financial Times, 2016).

UberEats is already active in 33 cities in 6 different countries, and Amsterdam is the first city in the Netherlands that it is currently providing its services to. Its key value proposition? UberEats does not charge delivery costs, there is no minimum order amount, and it offers a tracking option (RetailNews.nl, 2016). Sound familiar? It’s the same way you can track your assigned driver in the Uber app! You can even order a sandwich from a restaurant from the other side of town – but in this case, it will not always be delivered within the normally guaranteed 20 minute time frame. By letting go of these conditions, that are generally the norm in this market, UberEats could be in a good position to threaten its competitors: Thuisbezorgd.nl, Deliveroo and Foodora. Furthermore, the company also aims to leverage on the thousands of consumers who already have the Uber app on their phones, who can be redirected to UberEats within the app (Couzy, 2016).

However, it is yet to be seen if consumers that are loyal and satisfied with one platform are willing to switch to a new one. Deliveroo and Foodora are currently the two fastest growing delivery businesses in Amsterdam. Both charge 2.50 euros for delivery and set a minimum order value of 12.50 euros. However, both have set up platform exclusivity agreements with several restaurants, which may pose a challenge for UberEats. Furthermore, Thuisbezorgd.nl’s delivery service does not charge any delivery costs; however, this only makes up 1% of its total order revenue. For the other 99% of its orders, where the restaurants deliver the food themselves, it is tied to the delivery costs and minimum orders the restaurants set themselves (Couzy, 2016).

UberEats’ business model could stand out in this ‘winner-takes-most’ market by leveraging Uber’s overall competitive advantage: its high level of efficiency, which may allow the business to deliver the food more quickly and at a lower cost. This could have a significant impact on the current industry model. For example, it could give rise to new restaurants that cater purely to the delivery market. Restaurants wishing to make use of UberEats’ service could locate themselves in locations with lower rent, enabling them to lower their consumer prices. In the future, UberEats could even consider extending its services with Uber’s UberX cabs to deliver food to customers.

What do you think about UberEats entering the online food ordering market in the Netherlands? Do you think it will be able to disrupt the current market, and perhaps even envelop its competitors’ platforms?

Comparing Thuisbezorgd.nl, Deliveroo, Foodora and UberEats
Comparing Thuisbezorgd.nl, Deliveroo, Foodora and UberEats

 

Sources:

  • Boogert, E. (2016). Markt thuisbezorging voedsel verdubbelt. [online] Emerce.nl. Available at: http://www.emerce.nl/nieuws/markt-thuisbezorging-voedsel-verdubbelt [Accessed 4 Oct. 2016].
  • Couzy, F. (2016). UberEats is vastbesloten de bezorgmarkt op te schudden. [online] Financieele Dagblad. Available at: https://fd.nl/ondernemen/1169051/ubereats-is-vastbesloten-de-bezorgmarkt-op-te-schudden [Accessed 4 Oct. 2016].
  • FD.nl, (2016). Aandeel Takeaway stijgt fors bij beursdebuut. [online] Financieele Dagblad. Available at: http://2F%2Ffd.nl%2Fbeurs%2F1169584%2Ftakeaway-com-voor-23-per-aandeel-naar-de-beurs [Accessed 4 Oct. 2016].
  • Financial Times, (2016). Just Eat, Delivery Hero and Takeaway.com fight for dominance. [online] Ft.com. Available at: https://www.ft.com/content/cfa6d3d8-a285-11e5-8d70-42b68cfae6e4?siteedition=intl&_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fcfa6d3d8-a285-11e5-8d70-42b68cfae6e4.html%3Fsiteedition%3Dintl&_i_referer=&classification=conditional_standard&iab=barrier-app [Accessed 4 Oct. 2016].
  • Fortune, (2016). Job Ads Show Uber Expanding Meal Deliveries in 24 Countries. [online] Fortune. Available at: http://fortune.com/2016/09/26/uber-meal-delivery-international/ [Accessed 4 Oct. 2016].
  • RetailNews.nl, (2016). Uber bezorgt eten per fiets in Amsterdam. [online] RetailNews. Available at: http://www.retailnews.nl/nieuws/9IQrmDbkRCCHCZAp1HFowg-0/uber-bezorgt-eten-per-fiets-in-amsterdam.html [Accessed 4 Oct. 2016].
  • Reuters, (2016). Takeaway.com valued at 993 million euros in IPO. [online] Reuters Technology News. Available at: http://www.reuters.com/article/us-takeaway-ipo-idUSKCN1200KJ?il=0 [Accessed 4 Oct. 2016].

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“Now You See Me”: The Potential Added Value of Augmented Reality in the Logistics Sector

2

October

2016

5/5 (3)

During the International Marketing Research course of the International Business bachelor at the Rotterdam School of Management, my team members and I were instructed to research, analyse and evaluate the potential of Google Glass. Through focus groups and questionnaires we learnt that while most respondents found the product intriguing, and would like to try it out, very few of them would actually be willing to purchase it. Around two years later, it has become increasingly clear that the slick virtual reality glasses failed to gain commercial success. Why? Not only because of its price tag – but especially because Google failed to make clear to the customer what problem the product solved, or why they would need to have it. (Altman, 2015)

Although virtual reality glasses have not (yet) become a hit with recreational consumers (other than early adopters), its potential in the logistics sector is being increasingly explored. DHL, one of the world’s leading logistics companies, successfully carried out a pilot project testing smart glasses in 2014 (DHL, 2015). The company is setting an example in how augmented reality could create an industry disruption in the logistics sector, and how it could revolutionise the order processing, transportation, and delivery-services business models that are currently the standard in the industry.

The augmented reality glasses were developed in cooperation with Google, Vuzix and Ubimax, with which DHL will continue to partner to further optimize the glasses. In its Bergen op Zoom warehouse in the Netherlands, where it carries out logistics services for Ricoh (a Japanese electronics company), DHL asked 10 of its warehouse staff to test the smart glasses during the order picking process, for a duration of three weeks. During the pilot, more than 20,000 orders were picked, and over 9,000 orders were fulfilled. The employees were equipped with Google Glass or VuzixM100 glasses containing Ubimax’s special xPick software. The head-mounted devices display all necessary task information, along with aisle location, product location and the required quantity, so that the correct products are placed in the correct trolley boxes. (DHL, 2015)

The result? The project led to a decrease in picking errors and an overall 25% increase in efficiency during the picking process. It also proved popular amongst warehouse staff, who perceived the technology as user-friendly, intuitive and convenient due to its hands-free aspect. (DHL, 2015)

In early September 2016, DHL announced that it will start rolling out more pilot projects in the Netherlands, the US and the UK to further adopt the technology in its warehouses (Retailnews.nl, 2016). It is now also looking at how augmented reality could add value in transportation operations and last-mile delivery processes. M&A advisory firm Digi-Capital estimates that the augmented reality market will grow to $150 billion by 2020 (DHL, 2016).

As DHL further explores the added value of augmented reality in logistics, it is interesting to brainstorm about the economic feasibility of augmented reality glasses in other sectors. Think about the supermarket sector, for example; by equipping smart glasses with real-time stock information, the staff would be able to restock its on-the-floor products more efficiently. They would also be able to more quickly find the products that are overdue and need to be replaced.

Do you see the potential of augmented reality in other B2B or B2C sectors?

Infographic Vision Picking

Sources:

  • Altman, I. (2015). Why Google Glass Failed And Why Apple Watch Could Too. [online] Forbes.com. Available at: http://www.forbes.com/sites/ianaltman/2015/04/28/why-google-glass-failed-and-why-apple-watch-could-too/#7cb6915d58ec [Accessed 15 Sep. 2016].
  • DHL, (2015). DHL successfully tests Augmented Reality application in warehouse. [online] Dhl.com. Available at: http://www.dhl.com/en/press/releases/releases_2015/logistics/dhl_successfully_tests_augmented_reality_application_in_warehouse.html [Accessed 15 Sep. 2016].
  • DHL, (2016). DHL rolls out global augmented reality program. [online] Dhl.com. Available at: http://www.dhl.com/en/press/releases/releases_2016/all/logistics/dhl_rolls_out_global_augmented_reality_program.html [Accessed 15 Sep. 2016].
  • Logistiek Totaal, (2016). DHL investeert in vision picking. [online] Logistiek Totaal. Available at: https://www.logistiektotaal.nl/marktnieuws/dhl-investeert-vision-picking/98923/ [Accessed 15 Sep. 2016].
  • Retailnews.nl, (2016). DHL zet in op orderpicken met slimme bril – RetailNews. [online] RetailNews. Available at: http://www.retailnews.nl/nieuws/6jeruIAEROaoWv2sSmeiXw-0/dhl-zet-in-op-orderpicken-met-slimme-bril.html [Accessed 15 Sep. 2016].
  • Woods, R. (2015). Can DHL smart glasses augment logistics reality? | Air Cargo World. [online] Aircargoworld.com. Available at: http://aircargoworld.com/can-dhl-smart-glasses-augment-logistics-reality-10245/ [Accessed 15 Sep. 2016].

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Technology of the Week Group 70 – The Rise of Online Fashion Retailers Wehkamp & Zalando

30

September

2016

5/5 (3)

Convenience, variety, and easy comparability: these are only some of the reasons why people decide to buy clothes, accessories and shoes online. Countless fashion brands have recognized the importance of adopting an omnichannel approach, by creating their own webshops or joining online fashion retail platforms. Despite the required investments, going online is considered to be fruitful; in fact, the share of clothes bought online is predicted to grow to 30% in 2020 (IAF, 2014).

Wehkamp and Zalando together make up 80 to 85% of the Dutch fashion e-commerce market (Marketingfacts, 2013). Wehkamp evolved from a mail-order company into a fully online platform in 1999. On the other hand, Zalando started as an online platform company, entering the Dutch market in 2010. Both can be considered to be multi-sided platform-mediated networks, with two main user groups: online shoppers on the demand side, and fashion brands on the supply side.

Network effects are present on both sides, and also across these sides. There are positive cross-side network effects, as an increase in the number of suppliers attracts more customers, due to higher product variety. At the same time, an increasing number of customers attracts more suppliers. There are also positive same-side network effects: an increasing number of suppliers encourages new suppliers to join, while an increase in the number of customers also indicates the popularity of a platform and attracts even more customers.

While both platforms follow a sales revenue model, they offer different value propositions. Zalando offers free shipping, a very large variety of brands, and excellent customer service. Wehkamp has a very efficient distribution and logistics network, strong knowledge of the Dutch consumer, and offers extensive payment options such as paying in installments. The two platforms operate using two types of supplier relationships: wholesale and partnerships. In Zalando’s partnership programme, the product assortment, stock levels and logistics processes, which includes all delivery and returns, fall under the responsibility of the supplier. In Wehkamp’s strategic alliance program, the product assortment and stock levels are also the responsibility of the supplier, but Wehkamp takes care of most logistics processes.

Despite their strong market positions, both platforms need to remain alert at all times. The rate at which new technologies and customer preferences are evolving could form either an opportunity or a threat, depending on how (and how quickly) the two platforms leverage new developments.

In 2015, over 40% of online shopping revenue was generated via mobile channels, and the variety of goods online is only expected to increase (Wehkamp annual report, 2015). Currently, most consumers use their desktops to shop online; the second most popular device for online sales are tablets, followed by smartphone devices (Bingham, 2016). However, online sales via smartphone devices are currently growing at a faster rate than its counterparts. Based on this trend, we predict that smartphone purchases will surpass those of tablets within the next 5 years. Do you agree? Let us know what you think!

Bibliography:

Bingham, J. (2016). Are mobiles changing how we shop?. Available: http://www.telegraph.co.uk/news/shopping-and-consumer-news/12172230/Are-mobiles-changing-how-we-shop.html. Last accessed 29th September 2016.

Broeksma, K. (2014). Insight into the Dutch fashion industry in 2014 and the reaction of its Industry association. Available: http://iafnet.eu/iaf-news/insight-into-the-dutch-fashion-industry-in-2014-and-the-reaction-of-its-industry-association/. Last accessed 29th September 2016.

Cooke, J.A. . (2011). wehkamp.nl takes it one day at a time. Available: http://www.supplychainquarterly.com/topics/Strategy/201103wehkamp/. Last accessed 29th September 2016.

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Ecommerce news. (2015). Ecommerce in The Netherlands expected to reach 16.5 billion in 2015. Available: http://ecommercenews.eu/ecommerce-in-the-netherlands-expected-to-reach-e16-5bn-in-2015/. Last accessed 29th September 2016.

Emerce. (2016). Piet Coelewij nieuwe CEO wehkamp. Available: http://www.emerce.nl/nieuws/piet-coelewij-nieuwe-ceo-wehkamp. Last accessed 29th September 2016.

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IMRG. (2016). Over half of online sales now made through mobile devices. Available: https://www.imrg.org/media-and-comment/press-releases/over-half-of-online-sales-now-made-through-mobile-devices/. Last accessed 29th September 2016.

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Riley, M., Ern-Stockum, D., Kitchel, B. (2014). Don’t call it Omnichannel. Available: http://www.kurtsalmon.com/uploads/Operationalizing%2BOmnichannel%2B140717%2BSPVF.pdf. Last accessed 29th September 2016.

Sandra. (2016). HOW ZALANDO DEVELOPS DIGITAL STRATEGIES FOR FASHION BRANDS. Available: https://blog.zalando.com/en/blog/how-zalando-develops-digital-strategies-fashion-brands. Last accessed 29th September 2016.

Statista. (2016). Year-on-year change in sales turnover of shops selling clothing and textile products in the Netherlands from 2005 to 2015*. Available: https://www.statista.com/search/?q=dutch+clothes+retail. Last accessed 29th September 2016.

Thuiswinkel Markt Monitor. (2016). Alle e-commerce feiten in Nederland in één oogopslag. https://www.thuiswinkel.org/data/uploads/marktonderzoeken/thuiswinkel_markt_monitor/Infographic_Thuiswinkel_Markt_Monitor_2016_2.pdf

The Economist. (2016). Fashion forward. Available: http://www.economist.com/news/business/21706332-one-europes-most-interesting-technology-companies-sells-shoes-and-threads-fashion-forward. Last accessed 29th September 2016.

Verschuren, L. for Marketingfacts (2013). Wehkamp en Zalando goed voor 80-85% van de online-fashionmarkt: Een verslag van het a4uexpo-event. Available:
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Zalando. (2016). Partner Programme. Available: https://www.zalando.co.uk/partner-programme/. Last accessed 29th September 2016.

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