Online food and groceries delivery platforms generated US$103 million last year, a figure that is projected to grow annually at a rate of more than 19% – according to a study by the Competition Authority of Kenya (CAK).
- The study found that Glovo is the most popular online food delivery platform with 33% of users, followed by Jumia Food (23%), Uber Eats (21%), Bolt Food (16%), and Yum Deliveries (2%).
- Glovo also dominated in the delivery of groceries with 46% in user preference, followed by Jumia raking in 35%.
- Retailers prefer Jumia (31.8%) and Jumia Food (25%) followed by Glovo at 25% and Uber Eats at 12.5%.
The regulator estimated that, as of 2023, about 9% of Kenyans were shopping online and that the figure would rise to 16% by 2027, representing 10.6 million customers. At 40%, consumers between ages 21 to 30 are the predominant customers of online food and grocery delivery platforms in major urban centers. Mobile money platforms like M-Pesa and Airtel Money accounted for 94% of preferred payment methods.
“Online food and grocery platforms are characterized by commoditization, constant promotional efforts by the platforms, minimal switching barriers, and low or no cost of multiple platforms onboard, which enables consumer multihoming behavior,” the CAK said in the report titled Online Food and Groceries Delivery Platforms Market Study.
Some consumers complained that food and grocery delivery platforms are still mired with delay problems, with 32.9% agreeing that it was a concern. Other issues included diminished product expectation, poor customer service, and tampered quality of goods ordered. 30% of customers said that they had ordered goods replaced as compensation, with 10% receiving a refund as redress.
“Further, it was established that some platforms redirect consumer complaints to be handled from their headquarters domiciled outside Kenya. This implies that consumer complaints are likely to take longer to be resolved hence costlier and time-consuming,” the study reported.
Retailers and Couriers
“The study found that 91.7% of retailers are not restricted on the number of platforms they can sell their products through. Only 8.3% of retailers felt they were restricted,” the report stated.
About 66.7% of retailers in the study said they are responsible for setting prices, meaning that delivery costs are accrued by the customer but the cost of the item purchased was a shop-standard price. However, 11.1% of the retailers reported that prices of the goods were set by the delivery platforms who charged commissions and delivery costs on the retail’s menu prices. Other considerations like taxes and desire for higher profit margins were not significant to the prices set in online platforms.
“Based on the analysis, the study finds that online food and grocery delivery platforms do not have market power over retailers who sell their products through online platforms,” the CAK states in the study.
Couriers from Bolt Food led in the preference category with 30%, followed by Jumia Food And Uber Eats which tie at 20%. The rising prominence of courier services in food delivery platforms is due to the urgency need it serves. Although limited in the size and weight of packages they can deliver, motorcycles can easily beat traffic snarl-ups.
Riders who work for couriers had some dissatisfaction with the exclusivity agreements they were required to sign with the platforms they work for. According to them, the agreements limit them to meagre earnings and fewer opportunities for diversification.
“The study finds that platforms had more power over couriers concerning exclusive agreements, unfair contract terms, and frequent change of contracts,” the report concluded.
