Adrian Peter Tse
Jan 15, 2016

What the demand for on-demand food says about consumers

HONG KONG - On-demand services, enabled by mobile and Internet of Things (IoT) technologies, have the potential to impact many industries and marketing plans. In Hong Kong, food and restaurant brands are at the forefront of this change.

Delivery Republic on a delivery run
Delivery Republic on a delivery run

In 2015 there was a lot of discussion about smart cities that would be enabled by IoT tech and on-demand services. In Hong Kong, for example, Infiniti launched an IoT startup accelerator program to spark innovation in this area. Similarly, agencies talked about how on-demand services could be a new way to create utility for consumers, rather than serve ads.

While for the most part, on-demand services are still in their infancy, George Kee, founder and CEO of Delivery Republic, believes that on-demand food delivery is gaining traction in Hong Kong because of early-adopters in the food and restaurant sector as well as a change in the consumer mindset.

“People want their merchandise faster and faster,” said Kee. "I think food is on the top of that list because of people's fast-paced, busy lifestyles. From a restaurant perspective, rent prices are also high and space is limited. On-demand delivery is a way for restaurants to reach a bigger customer base." 

Unlike platforms such as FoodPanda and Delivery.com, which essentially aggregate restaurant brands so that users can conveniently order online, Kee said Delivery Republic is a technology-driven “B2B on-demand logistics company” that aims to be the “DHL and FedEx of on-demand delivery services.” Recently, Deliveroo, another on-demand restaurant delivery service that operates in 12 countries expanded to Hong Kong as well.

Delivery Republic has 150 food and restaurant clients, which includes platforms like Foodpanda and delivery.com, small and large restaurants, and chains like KFC. Kee said that Delivery Republic is also increasingly servicing on-demand grocery brands and startups, such as HonestBee and Jousun. Campaign recently interviewed HonestBee about its launch in Hong Kong.

George Kee, founder and CEO, Delivery Republic
 

WATCH: The rise of on-demand in Hong Kong

In this video, George Kee, founder and CEO of Delivery Republic, talks to Campaign Asia-Pacific about on-demand delivery, the importance of staying independent, and why large restaurant brands don't use "food delivery platforms" like Foodpanda.  

"In some cases, restaurants saw a drop in on-demand sales after using a food delivery platform because their customers we're being remarketed to competitors," said Kee. 


“We’re basically the logistical backbone to these brands and we're actually the ones that execute the delivery,” said Kee.

With about 100 vehicles and drivers, Delivery Republic also has its own app and proprietary technology and algorithm that allows for more “efficient location-based on-demand delivery”, connecting its drivers and vehicles to pick up and delivery locations.

Kee added that Delivery Republic has created APIs so that platforms like FoodPanda or even restaurants can add Delivery Republic’s technology to their sites or apps. “Their users and customers can the monitor the progress of their delivery and offer customer service,” Kee added.  

According to Marco Lau, assistant marketing manager at California Pizza Kitchen Hong Kong, 70 per cent of the brand’s competitors are using a delivery app service like Foodpanda.

“From a customer point of view, these services are more user-friendly and efficient,” said Lau. “Our main concern on using a delivery app was the inability to control the orders and being overwhelmed in the kitchen. We believe if we disappoint our customer once, we will lose this customer forever.”

In terms of customer relationship management (CRM), Lau said close communication with the delivery app provider, the customer and use of real-time tracking and analytics are all  important to delivering the service to customers.  

Lau added that California Pizza Kitchen saw a 15 per cent increase in sales after using on-demand delivery, when compared with the same period in previous year.

Screenshots of the Delivery Republic app

Delivery Republic charges its clients a flat rate on a per-order basis. “Clients prefer this because if they get an order that is $100 or $1000, we still charge the same rate,” he said. “There’s no ‘surge pricing’ or signup fee either and we only charge when an order is made.”

However, the cost of running on-demand food delivery isn’t low, and investing in vehicles can have the effect of “diminishing returns”, as the cost of each vehicle begins to reduce the profit margin of each delivery.

“We invest in our own vehicles to be able to guarantee a service to clients and also to manage our own brand image,” said Kee. “To manage costs we use a hybrid approach. So it’s not 100 percent of our own fleet. We outsource and use a shared fleet as well.”

In addition, with the help of data, Delivery Republic also optimises its resources and costs against peak delivery times and periods that are less busy.

“With technology we can make it more feasible for ourselves and the clients we serve,” said Kee.

In the future, Kee believes that on-demand services will extend to other industries and offerings, even though there are many challenges to face. For example, Kee said it’s very hard to find drivers in Hong Kong willing to do this kind of delivery and that finding good tech talent is also difficult.

“We had to look hard to find the right engineers and IT talent and also come up with really attractive remuneration packages," he said. "But I think now, everyone in the company believe in the vision we're trying to achieve."

“We’re trying to create an infrastructure and platform so that in the future all kinds of merchants and brands can engage and transact with their on-demand customers.”

 

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