Food delivery apps are looking at extending their menu of options for users as they struggle with gig economy costs and strive for profitability.
Niklas Östberg, Delivery Hero’s chief executive, told the FT’s Joe Miller that customers may be willing to pay more for faster delivery. “Many people are not willing to pay another 30 cents per order,” he said, but might be prepared to wait 25 minutes to get their food, while others would pay a euro to get their order delivered more promptly.
But the Swedish executive stressed that the Berlin-based group would only implement such a policy if rising costs were eating into its profit margins. His comments came after the company announced its food delivery business would break even for the first time during the second half of the year, using its adjusted earnings-before-interest-and-tax measure.
Alphaville has thoughts on a Bloomberg report that Delivery Hero is also considering selling ads and allowing consumers to delay payments on purchases. It is already testing an eat-now-pay-later service for food ordered in the Middle East and north Africa and could also make money from providing financing to its vendors.
Amsterdam-based Just Eat Takeaway.com reported on Wednesday a 14 per cent increase in orders year-on-year to 274m in the fourth quarter, in line with expectations. Chief executive Jitse Groen said he expected orders for Europe’s largest food delivery company to increase and losses to fall in 2022, but he stopped short of forecasting it would break even on an operating basis this year.
Meanwhile, analysis of UK consumer spending habits by Cardlytics shows purchases on rapid grocery delivery apps like Getir and Zapp rose by 123 per cent in the past five months, while spending at convenience stores fell 22 per cent.
Covid restrictions were a main cause and the emergence of Omicron signalled a record Christmas for food delivery services like Just Eat, Deliveroo and Uber Eats, with spending last month double that of December 2019.
That growth may not be repeated this year as the impact of coronavirus subsides, hence the need for companies like Delivery Hero to get creative and find new revenue streams.
The Internet of (Five) Things
1. Facebook fails again on antitrust dismissal
A US judge has denied Facebook’s attempt for a second time to dismiss the antitrust lawsuit brought by the US Federal Trade Commission seeking to force the social media company to unwind its acquisitions of Instagram and WhatsApp. Separately, Meta has appointed Tony Xu, chief executive of online food delivery platform DoorDash, to its board.
2. Didi in Hong Kong IPO talks
China’s leading ride-hailing app has begun informal discussions with the Hong Kong stock exchange about a public listing, according to two people familiar with the situation. Didi’s shares, which began trading in New York in June at $14, are now worth $4.90, having lost more than $40bn in market value. Meanwhile, New York’s Justworks, a human resources software company that was planning to list in a $260m initial public offering this week, has suspended the flotation in a sign of strains radiating from the recent US sell-off in tech stocks.
3. Checkout.com gets $40bn valuation
Payments company Checkout.com has raised $1bn in a funding round that makes it the UK’s most valuable private tech company. The London-based group overtook Revolut in almost tripling its valuation to $40bn in just a year.
4. Tesla sales record, Rivian falls short
Tesla sold nearly 71,000 China-made vehicles in December, the highest monthly rate since it started manufacturing in Shanghai in 2019. Electric commercial vehicle maker Rivian produced just 1,015 vehicles in the whole of 2021, instead of a planned 1,200, but Lex says it is still on the right road.
5. AI predicts Covid variants
A new early warning system can predict the highest-risk coronavirus variants simply from their genetic code, alerting health authorities and vaccine developers to the potential risks months before they spread. The artificial intelligence-based program, developed by BioNTech, the German biotech group, and north African AI start-up InstaDeep, identified more than 90 per cent of variants of concern, including Omicron, on average two months before their designation by the World Health Organization.
Tech tools — Sony’s PlayStation VR2
Sony kept the wraps on the actual device, but the PlayStation console maker unveiled at CES last week the specifications of its next-generation virtual reality headset. The VR2 will offer 4K HDR and a 110-degree field of view on an OLED display with a resolution of 2000×2040 per eye and smooth frame rates of 90/120Hz. Eye-tracking software will be upgraded and there is an internal motor that can make the headset vibrate in reaction to gaming effects, heightening the immersive experience. No details yet on pricing or a launch date.
