In the 1990s, innovative companies like Waiter.com paved the way for online third-party foodservice delivery. However, it took another decade for the proliferation of smartphones and the advent of mobile apps to accelerate the widespread adoption of this service, a trend that was further hastened by the global COVID-19 pandemic. As the industry becomes more exposed to inflationary pressures, intensified government scrutiny, and increasing competition, operators face new challenges. Adapting to this increasingly complex ecosystem requires innovative approaches that balance retaining users’ interest and attaining profitability.
Third-party retail delivery emerges as foodservice delivery shows signs of maturity
With many consumers returning to physical stores and restaurants in the wake of the pandemic, and with inflationary pressure affecting disposable incomes, the growth in demand for third-party delivery services slowed in 2023.
Global third-party delivery sales grew by only 12% in 2023, much lower than the 63% sales increase reported in 2020
Source: Euromonitor International
This shift is especially noticeable in the third-party foodservice delivery segment, sales of which only grew by 8% in 2023. In response to the slowdown, operators are attempting to promote their value proposition in order to effectively position the service they provide as a convenient and affordable luxury. As a result, delivery services have started offering inducements like the provision of digital vouchers providing discounts on dine-in and the ability to order delivery from multiple merchants simultaneously at no additional cost.
Consolidation remains despite intensified competition
One challenge for today’s delivery services is increased competition between international, regional and local operators, supported by changes in competition laws. In Brazil, for instance, where the dominance of local player iFood has been supported by its extensive use of exclusivity agreements with merchants, the local antitrust regulator ruled in February 2023 that exclusive partners could not account for more than 25% of a delivery platform’s sales, effectively reducing barriers for new entrants into the delivery space.
At the same time, with more players venturing into the retail segment, third-party delivery platforms increasingly face intensified competition from legacy retailers investing in digitalisation. A prominent example is South African grocery retailer Shoprite’s Checkers Sixty60 service, which has gained significant ground in the South African on-demand grocery delivery landscape, moving ahead of third-party delivery platforms like Uber Eats and Mr D Food.
The third-party delivery industry remains consolidated, with the top five players accounting for 63% of the global market in 2023
Source: Euromonitor International
The success of entrenched players is noticeable in prominent markets like China, where Meituan – the world's leading third-party delivery service by sales – has been leveraging its existing consumer base and extending localised offerings to stay on top. The consolidation trend is being reinforced by the combined effects of the exit of smaller players – in part due to the drying up of investment capital in the space – and global players' expansion into underpenetrated countries. For example, US-based DoorDash acquired Finland-based delivery service Wolt in May 2023, giving it access to markets like Austria and Iceland for the first time.
Developing long-term growth strategies becomes a priority
As platforms move away from aggressive user acquisition to prioritise sustainable growth models, greater emphasis is being placed on monetising initiatives that support consumer lifestyles. Therefore, added-value services like subscription models, diversified super apps and eco-friendly offerings will likely reshape the industry. For example, Colombia-based Rappi has joined forces with hospitality company Marriott Group to offer online travel booking from its platform. Meanwhile, UK-based Deliveroo has announced plans to become a “Plus-first” business by 2026, with the goal of having members of its Plus subscription service account for the majority of the orders placed on its platform by that time.
In conclusion, the third-party delivery landscape continuously evolves as consumer habits change, competition intensifies, and government policies become more restrictive. Therefore, the performance of individual players will be increasingly predicated upon their ability to adapt to the ecosystem while prioritising strategies supporting long-term sustainable growth.
Read our new strategy briefing, Digital Disruptors: The Global Competitive Landscape of Delivery Platforms, for in-depth trend descriptions, case studies and strategic recommendations.