Delivery services to Corona: A lot of work, high costs, no profit

Delivery services to Corona: A lot of work, high costs, no profit

Someone must have had a particularly large appetite: a customer from Frankfurt am Main ordered food from the Lieferando delivery service almost 1,000 times last year – the messengers with food or snacks rang the doorbell up to three times a day. Another user was also happy to reach into his wallet: within just twelve months he put around 1,200 euros on the table for food deliveries. Lieferando and Co. like having such customers – but of course they are the exception.

The toothbrush with the pizza

While delivery services saw strong demand and growing business during Corona, the excitement around the industry has now subsided post-pandemic. Since restaurants and cafes have reopened, many customers prefer the on-site dining experience to eating out of a cardboard box.

It’s no wonder that some in the industry have recently been delivering not only hamburgers, pizza and tiramisu, but also mobile phone charging cables, toothbrushes and selected perfumes – cooperation with specialist electronics stores and drugstore chains make it possible.

Only one makes a profit

“From my point of view, this idea came about because people are desperately looking for something that can really make money in the long term,” says Johannes Hesche from ACATIS Investment and Capital Management Company. Because so far no company has answered the central question: How do you even make money with delivery in the long term?

“It’s a tough business, and so far the only delivery service that I know of anywhere in the world that really makes a real profit is the Chinese Meituan,” says Hesche. The Beijing-based company has been offering various services in around 1,000 Chinese cities since 2010 and has been quite successful in combining food delivery services with the sale of cinema tickets, travel bookings and car-sharing offers. All other competitors are in the red.

It’s an open secret that you can’t earn much just by delivering food, even if the big players in the industry keep presenting it differently and spreading optimistic forecasts. This also applies to the delivery service Delivery Hero, which was once listed in the German stock index and which has now been looked at in the books. The bottom line is that there are only losses here.

No service for all of Germany

As in the entire industry, there are many reasons for this: the order amounts are small; nevertheless, the costs for transport, storage, marketing and delivery have to be factored in. There is also only a limited group of users, says Jörg Funder from the Worms University of Applied Sciences: “In fact, these delivery services are only of importance in the metropolitan areas, where they offer a certain convenience for the customer, who does not have to leave the house again.”

A nationwide service for the whole of Germany is far too expensive and therefore uninteresting for the delivery services. The services “only appeal to a certain clientele – mainly younger customers or single people in one-person households,” says Funder. A large part of the population is therefore not reached.

Bad reputation makes recruiting difficult

It’s also difficult to find staff – because the delivery services have produced a lot of negative headlines in the past because their drivers were poorly paid and sometimes exploited with shackle contracts. The situation is said to have improved, the companies claim.

Nevertheless, the delivery business remains a tough job, says ACATIS analyst Hesche: “There are certainly people who can really use these jobs. I’m thinking of students and someone who has a short-term job and wants to do it for a while.” Such an activity can help get things going, and that is not reprehensible, as companies are often accused of. But “tackling something like this as a career will be very difficult to implement in the long run,” says Hesche. Delivering food under time pressure in wind and weather is not a nice job.

The framework conditions are therefore problematic, the success of the industry is uncertain – and it is anyone’s guess whether the figures will ever be in the black. It doesn’t help much that the industry leader Lieferando, for example, has researched the market very well and knows exactly what Germans prefer to order: cheeseburgers, French fries and pizza margherita.


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