Few industries have been as positively impacted by the COVID crisis as order ahead. People forced to be at home still have fundamental needs for food, toiletries, and other basic necessities. But restrictions on their ability to go into restaurants and stores had limited their ability to dine out or shop. Order ahead companies stepped in to help people access those services -- through the power of selection, convenience, and a great customer experience. And it was all powered by the essential workers who didn’t simply facilitate this process, but likely saved innumerable lives with their actions.
Now as the pandemic has begun to ease its grip, consumers that tried order-ahead services for the first time are accustomed to the convenience of the service. Anecdotally, there appears to be no drop-off in demand. People order their food or goods and enjoy the fact that they don’t need to travel to a location, wait on their order, stand in line to pay, and get home.
Order ahead is not a new way of accessing a restaurant or other deliverable. Merchants like Starbucks have built a massive following for their app by allowing customers to pre-order even complex drinks and have them ready by the time they arrive. But what about other restaurants and service providers? Let’s take a look at the data!
How the Data Can Help Us Understand the Market
Order ahead is a broad category and can mean anything from food and other items for delivery to ordering goods for pickup. In this analysis, we have chosen a cross-section of merchants representing different industries and geographies. While these customers are different, they all rely on delivery or order ahead to serve their customer.
Spreedly’s Payments Orchestration allows digital businesses to connect to any payment service. That means that we have an unique perspective on transaction data around the world and across gateways and payment service providers (PSPs). We compile and analyze the data regularly to help our customers better understand the market. And the Spreedly Vantage blog series dive into the data to give you an additional perspective.
The Order Ahead Trend is Not Slowing Down
The North American order ahead industry is massive -- and still largely untapped. Over the course of the pandemic, we saw order ahead transactions steadily increasing. Even now when we look at recent data, we can see rising volumes of transactions. In fact, transaction volume increased between January 2021 and February 2021 by a staggering 15%. For that level to increase by that much in such a short period of time is testament to the power of this industry.
Consumers Are Growing More Comfortable with Order Ahead
How are consumers using these services? There are many variables involved here, so it is important not to overreach on the conclusions. But one hypothesis is that you might expect transaction size would increase over time as customers become more accustomed to a service and move from experimenting with it to using it for more of their purchasing. You could also hypothesize that ticket size might decrease as a result of more frequent purchases due to the convenience of order ahead. Though that might be true for delivery services, we suspect it is less likely for order ahead given that the purchasing dynamic for something like a restaurant is different than delivery of, say, groceries.
If we look at the data, we can see that in fact the average spending per transaction has increased significantly. The transaction size is up 16% on tickets managed by Spreedly between February 2020 and February 2021. That does suggest that more people are moving out of the experimentation phase into the standard usage phase. That’s an encouraging sign for the long-term sustainability of the industry.
It could also reflect an expansion into higher priced restaurants up from the base of the corporate fast food and quick service chains.
Regional Growth Also High
Spreedly has a particularly large client base in Latin America where we serve numerous leading order ahead platforms who are gaining substantial momentum and growth. We’ve seen a massive growth of 200% in volume between February 2020 and February 2021. Some analysts view this kind of growth as an indicator that digital commerce is gaining more of a foothold among consumers that had not previously been transacting online.
The Net Net
Order ahead has become a new necessity in the market. Consumers that have experimented with it appear to be sufficiently satisfied with the experience that they are expanding their purchase sizes. That likely reflects increased loyalty to the approach and offers an alternative that complements delivery models.