A potted history of digital ordering

We talk frequently of the state of the current market and the future of the industry, but sometimes it’s interesting to look backwards through time. Here we look at the history of digital ordering.

According to nearly every analyst and industry expert in the field of food and hospitality, digital ordering, click and collect, along with online ordering and delivery are going to be the big trends of 2018 (in the UK, the food delivery market is said to be worth upwards of £3.6 billion). But this isn’t a new technology, not really. In other sectors, such as retail, it’s been around for a number of years. Now, our market is following a similar growth trajectory – and it’s one of the reasons we can be so sure of its future.

Let’s look back.

70 – 80s

Believe it or not, digital, specifically online, ordering first started in 1979 when Michael Aldrich connected a TV to a real-time transaction processing computer via a domestic telephone line. It would be a lie to say the idea caught on immediately, in fact there were only two consumer projects in the 1980s, a single Tesco and a Morrisons. Indeed, it would be another 15 years before the technology would reach a place that would give digital ordering real potential. And it would be another year after that before the first of the online ordering giants launched.

90 – 00s

Within the the history of digital ordering, we see 1995 as the dawn of the technology. It was then that Amazon.com launched its online shopping site, and then that eBay went live. Still, the ordering of food-to-go was a long way behind; Amazon’s retail business now accounts for 43% of US online sales but it didn’t launch its restaurant delivery service until 2015.

If 1995 was the dawn, then 2003 represented the 11.30 am Diet Coke break. While early food delivery companies like Webvan, HomeGrocer, and Kozmo closed, on-demand retail took off. It was then that iTunes launched and thousands flocked to order, pay and play any song at the touch of a button.  

From this time, consumers grew used to making virtual purchases for virtual delivery, and as they became more confident in the reliability and security of online and mobile ordering, so too did companies interested in offering the technology.

2007 – present

By 2007, ordering clothes and products online was increasingly common. Retailers and their customers jumped at the chance to avoid queues and busy high streets and online-only shops like ASOS were flourishing. Online retail sales in 2007 reached $175 billion, a 21% increase over 2006, Forrester Research said at the time. While the food-to-go market still dragged behind, change was around the corner.

In 2007 – the iPhone entered our lives, and one year later, the iTunes App Store.

With the iPhone and the App Store came opportunity. Suddenly developers could create apps that facilitated business operations, improving consumer marketing and enhancing company branding. Clothing stores jumped on the opportunity and soon people were scrolling and purchasing while walking down the high street.

Five years later, Just Eat, an existing food aggregator with an established online presence, launched its first mobile app in the App Store; an Android app followed in 2013, by which time the platform has achieved 1.3 million downloads.

There’s a lot of negative things we can say about the Just Eat model, but it should also be given credit as a trailblazer within the market. Because of Just Eat in the UK, and then Hungry House, restaurants began to explore mobile ordering. These companies also paved the way for other headline-grabbing aggregator services such as Deliveroo and UberEATS. Finally customers were realising that the convenience of online ordering wasn’t just about clothes, it could be about dinner and drinks as well.

It didn’t take long for the market to evolve and see potential beyond Just Eat and its commission-based, aggregator model. By late 2014 entrepreneurial companies with a vision for finding venues an alternative route to customer were stepping forward. One of those was Preoday. We carried the message that venues needn’t rely on an aggregator model, but instead could launch their own online and mobile ordering platforms, at a minimal cost, and benefit from added extras such as access to their customer data (thereby helping them make better marketing and business decisions).

So where is the market now?

Since 2014/5, venues have been stepping out on their own, launching their own branded apps and reaping the benefits of online and mobile pre-ordering. Starbucks claims 30% of its orders come through its mobile app, similar figures are touted by Dominos. These and other brands are effectively demonstrating the power of the owned app and no doubt, as we enter 2018, others will follow suit. True, the aggregator model may hold power over the market for now, but this change could mark the start of a power shift.

According to NPD Group data, the demand for home delivery of ready-to-eat food grew 10 times faster than for dining out. Yes, the digital ordering market for food-to-go has undoubtedly taken off, just as the online retail market did a decade ago. Technavio’s analysts forecast the global online on-demand food delivery services market to grow at a CAGR of 31.76% during the period 2017-2021.

Still, there is room for growth. Last year it was estimated that 6 out of 10 takeaway orders were still placed over the telephone with the rest placed online. As more venues encourage customers to place orders direct with them, through their own branded apps and web platforms, we doubt it will take long for that number to grow.

If you’re interested in adopting digital ordering now, or in the future, get in contact with Preoday. We’ll gladly take you through a free demonstration of our platform, and show what it can do for you and your business.