Dive Brief:
- Meal kit makers, the purveyors of high-end ingredients and recipes that make cooking easier, spend about 20-30% of the total cost on shipping alone, The Washington Post reported Wednesday.
- As a result of high prices—the same ingredients are generally available for $4 per person rather than $10 if purchased directly—roughly 42% of customers give up the service, according to Datassential.
- Most companies quit the business because of associated costs and continually seek to adjust pricing based on bulk shipping discounts. Amazon's acquisition of Whole Foods is expected to add to market disruption.
Dive Insight:
The logistics of delivering food are extraordinarily demanding, especially in high density areas where complexities are more common than not, and deliverers face obstacles like malfunctioning service elevators, hand to hand delivery, broken building buzzers, and cranky doormen.
Timing is a major factor for any delivery service provider. Apps and smartphones help, as does up to the minute planning, such as with a company like Peapod, which allocates between 8-20 minutes per customer visit, depending on whether the buyer lives in an urban or suburban environment. Parking, traffic, events such as parades or road closures all impact a deliverer's schedule.
Increasingly, however, last-mile delivery logistics, particularly when it comes to food, are believed to be manageable, as evidenced by investments in the millions by major players such as UPS and Unilever. The UPS investment is particularly notable, due to its own logistics expertise. Meal kit makers and their deliverers may come and go as the market matures, but success is possible: it simply requires that every single detail comes together, on time and for the perfect price.
