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September 11, 2015

Case study: on-demand meal delivery

Cover image: Munchery

A Radical Innovation

According to Scott Stanford, co-founder of Sherpa Ventures who is involved in investment of companies including Facebook, Uber, and LinkedIn, food delivery startups are attracting consumer and investor attention. “When you introduce something like Uber or Munchery, you change the paradigm with not only how that service or product is consumed, but how it is provided,” Stanford explained. “If you can change the underlying economics of that delivery platform or that value chain, it puts you in a really interesting position from a financial perspective” (Soper, 2014). On demand meal delivery is a radical innovation changing the way people eat, shop, and connect with family. The purpose of this study is to examine the process of innovation and the diffusion of on-demand meal delivery services, including the exploration of its antecedent, drivers, adoption attributes, and type of adopters.

Food retailers and restaurants have been trying to find ways to solve the problem of growing consumer needs: lack of time, lack of skill, and lack of desire to prepare food (Larson, 1998). Many food retailers perceive fully- or partially-prepared foods as major opportunities for sales growth, but a recent financial review at 10 large supermarket chains found that the average store’s prepared food operation was losing money (Larson, 1998). Many major grocery stores started to offer customers online grocery shopping and delivery services five years ago, but that did not go well either (Konrad, 2015). Restaurant delivery services have been around for decades, but they have not been bringing any breakthrough (Jennings, 2015). The new wave of on-demand meal delivery service is rapidly changing the landscape (Konrad, 2015).

On-Demand Meal Delivery: An Innovation

An innovation is an idea, practice, or object that is perceived as new by an individual or other unit of adoption (Rogers, 1983, p. 12). On-demand meal delivery services are invading the $683 billion US restaurant industry with considerable success (Jaconi, 2015). They are new practices that have expanded a restaurant’s potential customer base far beyond the physical location (Jaconi, 2015). There are three major types of on-demand meal delivery services:

Restaurant Delivery

Have on-demand meals delivered from restaurants ordering from a website or mobile app.

Meal Delivery

In-house chefs create dishes and get delivered on-demand or schedule delivery in advance.

Meal Kit Delivery

Delivering meal kit with Ingredients portioned to right amount, ready to cook with recipes provided.

 

Development of Innovation

Large-scale technological innovations are “the function of the interaction of heterogeneous elements as these are shaped and assimilated into a network” (Law, 1987, p. 113). The process is termed “heterogeneous engineering” (Law, 1987). By not limiting ourselves to one particular perspective (economics, technical, politics, social), we can have a better understanding of how all these elements combine to shape the development of an innovation (Cressman, 2009, p. 8).

Social

Changing society has a big impact in shaping this innovation (Konrad, 2015). With increased women in the workforce (Fromm, 2015), their busy schedule had led them to rethink convenient meal preparation options. It is challenging to create a healthy dinner for the family in the evening while keeping great variations. They are looking for convenient ways to provide their family with the right nutrition to fulfill a healthy lifestyle (Fromm, 2015).

Technical

“The internet makes human desires more easily attainable,” said Ev William, the co-founder of Twitter, “In other words, it offers convenience. Convenience on the internet is basically achieved by two things: speed, and cognitive ease. If you study what the really big things on the internet are, you realize they are masters at making things fast and not making people think” (Jaconi, 2015). 70% of Americans now own smartphones and the average person checks their phone every six minutes, about 150 times a day (On-Demand Economy, 2014). Immediate access to messaging, e-mail, media, and other online functionality through smartphones has generated a sense of entitlement to fast, simple, and efficient experiences, setting the stage of instant gratification. With the use of websites or mobile apps, consumers can spontaneously browse menus based on their location to decide what they want to eat. Improved logistics systems include sophisticated algorithms that determine the best routes and provide estimated delivery times depending on varying conditions as well as tracking capabilities (Jaconi, 2015). Ordering and payment is all done online or through mobile apps, including tips (Jaconi, 2015). Without handling cash or credit cards, delivery time can be greatly reduced.

Economic

173 millions of people live in the United States’ top 50 metropolitan areas, representing roughly 55% of the population (The On-Demand Economy, 2014). The growing density of US cities increases the number of people who have easy access to on-demand services. Concentrated, tech-savvy populations provide a higher volume of transactions in a smaller service area that easily allows for on-demand services to deliver top-notch response time (The On-Demand Economy, 2014).

According to a Freelancer’s Union/Elance oDesk Study released in 2014, 53 millions of Americans work as freelancers. More than half of American freelancers have turned to self-employment by choice rather than necessity because they value the quality of life improvement and flexibility (The On-Demand Economy, 2014). Freelancers find freedom in on-demand companies like TaskRabbit, where freelancers can make up to $60,000 a year while setting their own schedules (The On-Demand Economy, 2014).

Innovation Drivers

Large grocery chains entered the delivery service years ago, however, their online shopping and delivery services were not a huge success (Konrad, 2015). Better, more affordable services were in demand that really tailored to what families need (Konrad, 2015).

Social Groups

Millennials, the generation born between 1982 and 2001, have the biggest spending and impact in consumer food (Hoffman, 2012). They make up nearly 25% of the population, which is over 1 trillion dollars in buying power, outspending the Baby Boomers (Zacharias, 2015). Companies are shifting their focus to this social group as the millennials are changing the food system.
According to Fromm (2015), Millennials are a generation of influencers. They are more conscious of food health than past generations, as well as more invested in finding food adventures (Fromm, 2015). They are more spontaneous and adventurous than previous generations in their interactions with food and commensality-style dining (Fromm, Vodicka, 2012).

Out of one in four Milliennials are already parents, meaning they are influencing what their families eat and are contributing to the eating patterns and habits that will guide the next generation of consumers (Fromm, 2015). Young Millennials parents embrace the Internet as their key information source (Fromm, 2015). They recognize their food choices have a very real impact on society and the environment (Zacharias, 2015). The drive to purchase local reflects their desire to help support local communities, business, farmers, and economy (Fromm, 2015).

Adoption of Innovation

According to Rogers (1983, p. 16) in Diffusion of Innovations, past research has indicated five qualities that are the most important characteristics of innovations in explaining the rate of adoption. By having greater observability, trialability, complexity, compatibility, and relative advantage perceived by individuals, the innovation will be adopted more rapidly than other innovations (Rogers, 1983, p. 16-17). The latter two attributes, compatibility and relative advantage, are particularly important in explaining an innovation’s rate of adoption (Rogers, 1983, p. 17).

Observability

Observability is the degree to which the results of an innovation are visible to others. The easier it is for individuals to see the results, the more likely they are to adopt them (Roger, 1983, p. 258).

Although some pre-cooked meal and restaurant delivery services are limited to certain locations, meal kit delivery is available nationwide. Even the usage and consumption of service occur at home and are not necessary at a public place, the observability of this innovation is still considered high as consumers leverage the social media to make the products visible to others.

Trialability

Trialability is the degree to which an innovation may be experimented with on a limited basis. New ideas that can be tried on the installment plan are generally adopted more rapidly than innovations that are not divisible (Roger, 1983, p. 258).

In order to use the meal delivery service, consumers will need to have access to the Internet via a computer or smartphone as well as the ability to make a payment online. Consumers do not need to be present to accept the delivery, but he/she will need to provide a physical address for delivery. With no commitment and no fee (“Blue Apron”, n.d.), consumers have total control on the trialability as long as he/she is technically capable.

Opinion leaders
Opinion leaders are individuals who lead in influencing others’ opinions (Rogers, 1983, p. 300). They are recognized by their followers as trustworthy experts. Many writers, reporters, and bloggers have been publishing positive news and articles regarding this on-demand meal delivery innovation, allowing it to have greater exposure via mass communication channels. Companies would sponsor popular food bloggers like Jordon Alexis on Oh Happy Day to try out their service and write a positive blog post on the experience, making their products visible to potential customers (Alexis, 2014).

Complexity

Complexity is the degree to which an innovation is perceived as relatively difficult to understand and use. Some innovations are clear in their meaning to potential adopters while others are not (Rogers, 1983, p. 257).

The menu for meal and meal kit delivery has a limited selection per selected service areas by zip codes. Consumers order from the menu, and meals will be delivered within 20-40 minutes from the time the order is place (“Munchery,” n.d.). As long as consumers understand the ordering process on a mobile app or on a web page, hot meals can be ready in minutes at a few clicks of a button(“SpoonRocket”, n.d.)

Compatibility

Compatibility is the degree to which an innovation is perceived as consistent with the existing values, past experiences, and needs of potential adopters (Rogers, 1983, p. 240).

The perception of need depends on the lifestyle and cultural view of the individuals or families. While convenience and speed for meals are ideal for some people, it may not be as important for others. Some of the offerings on the menu may not suit the tastes depending on one’s cultural preferences. Some potential adopters are used to traditional methods of dining and may not recognize that they have a need until they become aware of this new idea.

Opportunities for Adoption
Location-based – Many meal delivery services like Plated promoted produce and meat from family-owned farms local to the service area. Beside the locally source food, companies can alter their menus and offerings based on the taste of geography and demography based on the area. For example, for an area with higher Asian population, the menu can have a variety of Asian-inspired selections, catering to their taste and encouraging adoption. For an area with higher population with young children, the menu can consist of kid-friendly options to satisfy the need of these potential adopters.

 

Relative Advantages

Relative advantage is the degree to which an innovation is perceived as being better than the idea it supersedes (Rogers, 1983, p. 229).

Relative advantage for this innovation is based on subjective judgement. With Linas Matkasse being the forerunner and leader in Europe (Konrad, 2015) along with several similar startups demonstrated success in India (Mok, 2015), it becomes evident that such innovation can be successful in the food industry. However, with many competitors rising up, not all of the players in the market will be winners. Those who succeed may be the ones with the most advanced and efficient technology (Soper, 2014).

Even though customers are finding this new innovation as an affordable service with great relevance to families (Konrad, 2015), this innovation is considered a small segment within the food and restaurant industry. Technomic forecast that the meal kit segment alone will reach $3 billion to $5 billion in the next decade (Kruse & Thorn, 2015). The annual restaurant industry sales is estimated as $709.2 billion, which means a massive meal kit industry of $3 billion would put it at less than half of 1 percent of total foodservice sales (Kruse & Thorn, 2015). It will require much more to overtake the restaurant industry.

Change Agent
The chefs at Munchery, a San Francisco-based meal delivery startup, have an average of 17-20 years of culinary experience. They had worked for some of the biggest names in the country. By leaving famous restaurants, these chefs want to make a bigger impact by reach more people with their food. As the change agents, they present to new alternatives to fine foods without paying high price. Customers are assured with high quality food and ingredients (Kosoff, 2015).
Change Agent
The Purple Carrot, a Boston-based meal kit delivery startup, recently recruited celebrated food writer Mark Bittman from New York Times. As company’s “chief innovation officer,” Bittman’s experience with recipe development can attract people from various culinary levels (Sciacca, 2015). As the change agent, an individual who influences clients’ innovation-decisions in a direction deemed desirable by a change agency, Bittman’s new strategy hopes to seek motivations in the clients’ interest in this innovation.
Artificial Intelligence
Mark Zuckerburg, founder and CEO of Facebook, had recently posted about Facebook’s artificial intelligence research. Their AI can now look at a photo, figure out what’s in it and help explain it to you (“Facebook”, 2015). They believe that AI has the potential of helping computers better understand the world, so they can be more helpful to people (“Facebook”, 2015).Imagine this technology being used in the on-demand meal delivery innovation. When a customer sees a picture of a dish he/she likes on Facebook or Instragram, he/she can simply click a button. The type of dish will be analyzed and available restaurants and deliveries will be displayed to the customer. With a few more clicks, customer can order a dish instantly based on what he/she discovered on social media.Or better yet, this all can be done via the use of a smartphone. On-demand meal delivery services simply embed such feature in their apps. When customer snaps a picture of dish, the app knows instantly what is it, which restaurants around the customer can make it, and who will be able to deliver to customer at the intended time. Customers no longer need to scroll through pages of menu. With the use of AI, dinner is ready within a few taps.

Type of Adopters

Innovators & Early Adopters

Innovators of these on-demand meal delivery services were obsessed with venturesomeness. They strived and played a gatekeeping role in the flow of new innovation. Most of these innovators chose urban areas like San Francisco and New York to start up their new ventures. They understood well that they are where the early adopters populated.

The early adopters of on-demand meal delivery are tech-savvy, middle America young families. They are eager to use new on-demand services (Kokalitcheva, 2015); they are also have other priorities and busy schedule in life that drives them to consider adopting a new idea earlier than others.

Early Majority, Late Majority, Laggards

Many of the on-demand meal delivery services are still capturing early adopters and early majority, depending where they are in the market. In order to reach out beyond early adopters, these services will need to go out of the popular urban areas and become more accessible. Some of the meal kit services like Blue Apron provide subscription that delivers nationwide. Its infrastructure enables them to reach out to other type of adopters.

Evolution

Unintended Consequences

Munchery in its early days was set up like eBay: the chefs were the sellers, and people would go online and look at the menus and buy the food (Kosoff, 2015). This early business model sounds great, but it failed to scale. Most chefs could only managed to provide 50-100 meals a day. Their kitchens were not capable of high volume of orders. They also did not do well with marketing and delivery. “When I started, they were experiencing a lot of growing pains–getting tons of orders–and weren’t really prepared for it,” said Diane Davidson, who worked as an independent contractor chef for most of 2013 before leaving to become a personal chef because she found Munchery’s volume too labor-intensive (Kosoff, 2015).

Weak Signals

Investors believe that with the amount of people eating everyday and the new demand for having items arrive at your door within minutes, there is room for many players in the food delivery space (Soper, 2014). Since meal delivery service is a low-margin business and increasing numbers of competitors coming into the space (Soper, 2014), there will be winners and losers. Companies who can master the delivery system and most efficient technology can come out on top (Soper, 2014). Being able to scale quickly is also a key (Jennings, 2015).

Many are speculating that this innovation is just another “bubble” or a short-term trend. It may eventually burst like the dot-com era. Instead of being mainstream and replacing our ways of ordering food, it may just become one of the many ways of ordering some types of food.

Conclusion

Although on-demand meal delivery service are proved to be an innovation and give tremendous confidence to their investors, the road ahead of it is still uncertain. Difficulties in technology and scaling of business affect the rate of adoption. Millennials are the main influencers shaping the needs of this innovation. It will not be long before we can see where this innovation is headed.

References

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August 5, 2015

Intel Smart Chip

Yesterday I was at an Intel-sponsored event where they had booths demonstrating their newest and finest wearable technologies. As I walked by, a baby doll in a carseat buckled down with a blue plastic object caught my attention.

I was told this is a device that can sync with your smart phone and tell whether your child is inside the car or not. I puzzled, so I asked more. What were the use cases they were trying to tackle with this invention? Was it for security purpose? Thinking about child abduction.

Credit: iQ by Intel

The main use case this device is marketed on is to prevent child hot car deaths. It is priced around $100 and estimated to be out in the market by end of the year.

It is wonderful for Intel to spend the time and resources to research, develop, and market something that is trying to solve a concerning issue in the society.

What I was worried on is our crazy lifestyle as working parents overwhelmed so much, enough that someone decided to invent something to try to solve the problem. We are so busy being connected and occupied. Even after a car ride, we need our smart phone to remind us that we left our child in the car? Or we need things to tell us the temperature of our child. The entire picture in my mind is just so sad.

So I asked some mommies around and see who would find this $100 device helpful and important for their family.

Some honest responses was that it would be nice if Intel could work with car seat manufacturers to incorporate the chip within the car seat. These mommies believe that families who are willing to pay the extra bucks are less likley the people who would leave their babies in the car.

 

 

June 24, 2015

Everyday Design Decision: Changing Station

As a new mom, one thing I spent a lot of time doing with my baby beside feeding and putting her to sleep is: changing diapers and those dirty baby clothes. What I learned is that all those product advertising and Pinterest posts regarding beautiful baby nursery were helpless to me. After spending months in sleep-deprived mode, it is evident that the changing area in your baby’s nursery is about getting the job done fast, safe, and minimal mess if all possible.

How do I help my everyday task a better experience through design? These are several things of my solution I would like to highlight:

  • Almost everyone I know use those cushioned changing pad with soft fabric cover. Accidents do happen occasionally especially when baby is a newborn. With fabric and cushioned changing pad, that’s additional clean-up and laundry work. I chose this plastic changing pad, so I could just quickly wipe down any mess in less than a minute. Done.
  • Diaper change is a boring activity to babies. Your plain ceiling is not enough to entertain them. I keep a toy hanging down near my baby’s face, so she can be still while I get the job done.
  • Those little hands and body are so fast in action. I keep things that are not safe for baby to play with away from the changing pad (light, ointments, medicines, etc.) and allow some safe items to be closer (cloth diaper, cream, etc.).
  • Diapers smell. Obviously. There are so many diaper pails out there advertised that they can get rid of the smell. They are expensive and waste of space. More practical solution is keep your trash small with lid and take out the trash every other day. Place the trash can conveniently closer to your workspace. No chance to leave trash around the table for baby to put in the mouth or to step on (Oh yes, you don’t want that to happen).
  • This whole area of changing station is actually on top of a large sturdy dresser. Fresh clean clothes are just right there.

To illustrate these better, here is a picture of my baby’s changing area:

October 2, 2014

Our New Office

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October 2, 2014

New Product Redesign

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged.Read More

October 2, 2014

How to Have The Best Vacation

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October 2, 2014

Mauris interdum dictum sollicitudin

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s Read More

February 5, 2014

Kitchen Remodel

We planned, designed, and executed a kitchen remodel from Fall 2013, and it was finally finished in 2014 before spring time! Will post some more before and after photos later.

January 15, 2013

HP Brand Digital Workshop

As the new HP brand rolls out, there are increasing numbers of digital assets, templates, and guidance added frequently. Digital Experience workshop was introduced as part of the overall HP Brand strategy workshops around the world. We put together training materials and references for these workshops. I was very fortunate to be the expert/instructor for the workshops in Beijing and Singapore in January 2013.

 

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