There are apps out there for basically anything these days. This article took a closer look at the apps that deliver goods to consumers on demand. More specifically, how their pricing systems work, and what it's really going to cost you to have your groceries delivered instead of getting them yourself.
The services compared were InstaCart, Postmates, UberEats, and Amazon Prime Now. With InstaCart, which basically is just instant groceries, if the items you purchase are more expensive in their store than the actual store, you get charged the more expensive price, plus a standard delivery fee of $4 and tip to the courier, Postmatess will pick up and deliver just about anything, from groceries, to burritos, to paint. Their delivery fees are not standard. They are based on a algorithm that takes into account the distance the courier traveled and multiple other factors, not to mention you still tip them. They provide a tip percentage calculator that calculates a tip for you to give, but this isn't a tip on just what your goods cost, it take into account the cost of the goods, delivery fee, service fee, and tax. In some cases, a consumer may end up paying a markup of over 100%!! With UberEats, the consumer is about to pick from a select variety of foods that they want delivered to their residence. The upside to this service app is that there is basically no service or delivery fee, but the quality of product isn't very good since the foods are all pre-made earlier in the day and the drivers just haul the food around until someone orders it. Amazon Prime Now already shrinks their market audience by only allowing those with an Amazon Prime account to use the service (which is $99 a year) and going through this app, you will usually face almost a 50% markup on price, including the $8 delivery fee.
With all these extra charges, not to mention the human error factor, I just have to wonder if it really is worth the price you will pay to not leave your home to go get these things for yourself? However, seeing as how the population is rapidly moving in this direction, maybe more will enter this delivery service market, forcing the existing companies to lower their fees in order to stay competitive.
Link: http://www.nytimes.com/2015/11/05/technology/personaltech/the-high-price-of-delivery-app-convenience.html?ref=technology&_r=0
4 comments:
I think the question of whether or not it is really worth paying the higher price for these food delivery services is answered through consumers' demand for the service and the industry's apparent growth. Consumers who use these services feel the opportunity cost of physically going to grocery store outweighs the additional cost of buying groceries using the app. I think it will be interesting to see if these services will impact traditional food delivery services such as Peapod in similar fashion as Uber's impact on taxi services.
These are really interesting companies and ones that I think will be very profitable in the future. However, I do think that with having all of these services, delivery, and membership fees it in a way takes away from the benefit it could have for people who truly need this service who do not have cars to go to the grocery store or get food for their families. If the companies could re-position their business model to help families who really do need this service in order to make their lives easier you would still have the "regular" crowd of people you are already catering to and who are willing to pay these high prices, but also you could capitalize on those families who really need this service, but at the current time cannot use it due to these high prices. It'll be interesting to see as this industry goes how low the prices will go for these services and how many consumers will continue and start using this service.
I think these apps and services could be extremely helpful depending on how busy or how much time you have. For some, it's completely worth it, and others, not so much. For example, I would totally pay more to get Chipotle delivered directly to my door. It's all about what value people put on their time. If they think their time is better spent doing something other than grocery shopping, then let them pay the markup.
As Emily mentioned, it really just has to do with how people value certain things. If grocery shopping is the worst thing in the world for someone, the opportunity cost of having groceries delivered just by using their phone and paying a fee would outweigh actually having to go to the store. Furthermore, now that there really are apps for everything, and it seems that the modern world is all about using an app to encourage their laziness, it would be plausible that these delivery apps could be profitable.
Post a Comment