Food Fight: 8DOL Vs. Deliveroo

‘You can’t have an aircraft which flies at the speed of sound, carries 500 passengers and lands on an aircraft carrier. Operations are just the same’ (Prof. Wickham Skinner).


8DOL
Launched in 2013, 8dol.com’s mobile apps provides one-hour delivery of fast-moving consumer goods and other products to university students’ dormitories and local office buildings (Yue. J, 2016,). Boasting 28 minute delivery, over 450 items, and over 3 million users, 8DOL promises to deliver supermarket items to your door in just 28 minutes. (Daily Echo, 2018). 8DOL is turning over £500million+ a year in it’s home country China and “has become the world’s largest student grocery app” (Daily Echo, 2018).
Scalability:
The company claims to cover over 2,000 universities in 50 cities in China, as well as up to 1,000 office buildings and convenience stores. (Yue. J, 2016,).
This model has proved successful in China and 8dol believe it will be in the UK with plans of expansion to 10 other cities across the country in 2019. 8DOL opened in Bournemouth in September 2018, and in Southampton in January 2019. (Yue. J, 2016,).

MARKET ANALYSIS
Carsten Hirschberg, Senior Partner at McKinsey predicts that the market for new delivery will reach over €20 billion by 2025 (Hirschberg et al., 2016). The food delivery sector is currently valued at $11 billion—primarily concentrated in pizza—but analysts say most food delivery demand is still unmet and the market has a $210 billion potential. (Morgan Stanley, 2016).

PERFEORMANCE OBJECTIVES

• 8DOL are able to compete on price by charging a minimal £1 delivery fee, against the £2.50 Deliveroo charge.
• By employing only cyclists and not drivers, 8DOL can minimise costs even further. By reducing cost across the entire value chain, businesses can maximise competitive advantage (Russell and Taylor, 2011, p.19)
• Speed has become the main source of competitive advantage as consumers become more impatient as a result of next and same day delivery offered by the likes of Amazon (Russell and Taylor, 2011, p.19). Although 8DOL claim to make deliveries in 28 minutes, of our collective experience and those of others, this has not been the case.
• Quality - “To compete on quality companies must  reduce waste, minimize defective products” and simultaneously satisfy their customers (Russell and Taylor, 2011, p.21). 8DOL as a service does not create waste other than time spent in traffic. Defective products will be picked out of orders in the packing stage however this does not prevent faults in transport. 
• Flexibility - The ability to respond quickly to consumer/market needs provides a significant competitive advantage (Russell and Taylor, 2011). 8DOL manages this fluctuation in consumption by holding large stock and displaying on the app when stock is low. By targeting students, 8DOL is able to predict which items students most need in an “emergency”. This provides an opportunity for 8DOL to establish itself as a reliable delivery service before expanding to more cities (Russell and Taylor, 2011, p.21)

COMPETITIVE ANALYSIS
There is a gap in the market for the service 8DOL provides as they have no direct competition. Supermarket chains like Tesco who offer home delivery cannot promise to deliver in under half an hour. Although some Deliveroo orders may arrive in 30 minutes you are limited to ordering only food or drink. 8DOL offer the user the choice of different categories of essential items.
Currently in the UK, customers are served by Deliveroo, UberEats and JustEat. So what is 8DOLs competitive advantage and why do they believe their success in China will ensue to the UK?

“Its founders say students are put off conventional supermarket delivery because next day delivery is not fast enough. The supermarket services also tend to have a minimum spend of at least £25 and charge around £4.99 for delivery” (Daily Echo, 2018). The position of an organisation and operations in the four dimensions is determined by the demand of the market it is serving. To analyse the operation process of 8DOL we must take the perspective that the company is the manufacturer in this instance.

Volume
High volume is better able to satisfy a higher level of demand since the production process divided into jobs and is highly repetitive and faster due to specialized activities. Each worker carries out a highly specialized role, e.g. packaging, delivery, operations etc. with each of these easily replaced by automated technology. The app is an automated ordering process which negates human contact. However there is varying time difference between order made and order fulfilled.

Variety
8DOL offers customers a wider range of products X and is flexible to demand. Users orders are unique making 8DOL flexible and must boast dependable delivery matching the customer’s requirements. Variety and volume possess a negative correlation, the higher the variety the lower the volume of the products or services.
As each order is personalized, there are no standard items.

Variation
8DOL are highly flexible and in touch with demand as they offer products used primarily by students consumables most likely needed when empty. Variation in demand of produce will remain relatively consistent, however the variation in quantity will fluctuate heavily. The demand for these products varies making it difficult to anticipate demand.

Visibility (customer contact)
Visibility pertains to how the user receives the end product and how much engagement they had throughout the production process. 8DOL has low visibility unlike most services, however it does offer its customers the ability to track their order to the extent of when it has left and wen it will be delivered. Jiangsu Longliqi says it’s plans to cooperate with 8dol.com is to observe an satisfy the demand trends of China’s youth. (Chinamoneynetwork, 2016). The market demands short lead time, but is in reality this is variable  due to traffic. low contact with customers so savings can be made on training staff. By reducing the customer contact, significant reductions in expenditure can be made.

8DOL is high volume, high variety, high variation, low visibility


Deliveroo

Volume
Like 8DOL, Deliveroo delivers a high volume of customer orders. Each employeee has a specific job to do. despite being more labour intensive (with more employees in more locations), Deliveroo maintin a low unit cost and a high profit msargin to remain competititve.

Variety
Deliveroo offers more variety in terms of food and drink, whereas 8DOL offers a wide range of consumables. Demand peaks around the evenings and weekends making demand predicable t a degree. The advantage of Deliveroo over 8DOL is that they only manage the delivery of the products not the selection process and holding costs of stock.
Deliveroo compiles more items than 8DOL, therefore offering a wider variety of options.

Variation
Extremely flexible as each order is made-to-order. The variation in demand for drivers/riders will remain consistent for Deliveroo as they are able to anticipate the peak delivery times, however the variation in demand will increase over time as more driver are needed to respond to the growing market.

Visibility
As with 8DOL, Deliveroo has low visibility. The customer only has contact with the company is with the driver when food is delivered or a customer service member when an order is incorrect. Deliveroo offers the user the ability to track their order in real-time, offering a more immersive customer experience.

Deliveroo is high volume, high variety, high variation, low visibility, with each aspect more extreme than 8DOL’s.

A number of significant oppurtunities and threats lie in the future of the food delivery sector. Each impacting in varying degrees. These are:

Platform-to-Consumer Delivery
Due to the nature of the new delivery businesses, there is an inherent threat created for traditional restaurants; a service that is cost efficient. Although there is a significant opportunity created by these new delivery players, by entering the market as a competitor they also widen the market for traditional restaurants to utilise their logistics and mobile app, increasing the number of orders received (Hirschberg et al., 2016).

Key players are experimenting who drones, robots and autonomous vehicles to deliver food, the strongest example is Domino’s America’s DRU (Blumtritt, 2018).

To stay competitive:
These services focus on niche value propositions such as extra quick delivery of everything, specialty meals delivery, free delivery, and real-time tracking. These options just scratch the surface of what is possible for offering a quick, convenient, and appetizing options that can keep up with the new consumer demand (KPMG, 2016).

Keep in mind:

• Once customers sign up, they tend to develop loyalty quickly with 80% staying with their initial choice, so it is key that you are their first choice. 
• Delivery time is the main differentiating factor with ideal wait time <30 minutes. This can be facilitated by limiting delivery radius. 
• Home orders make up the majority of orders (82%), with workplace order equalling 16% and 74% of orders are placed on weekends (Hirschberg et al., 2016).

Christopher, M. (2011) stated that competition is no longer between stand-alone companies, but rather supply chain against supply chain.

Reference:

Blumtritt.C , 2018  eServices Report 2018, Online Food Delivery, Statista Digital Market Outlook
https://statistacloudfront.s3.amazonaws.com/download/pdf/OnlineFoodDelivery_Preview.pdf

Bumblauskas, Daniel & Bumblauskas, Paul & Sapkota, Kishor. (2016). Is demand chain management the new supply chain management? Will the demand channel trump the supply channel?
Christopher, M. (2011) Logistics & Supply Chain Management, 4th Edition

Daily Echo (2018) "Cloud" supermarket 8DOL will deliver within 28 minutes
https://www.bournemouthecho.co.uk/news/16585845.cloud-supermarket-8dol-will-deliver-within-28-minutes/

D’Aveni. R (2015) The 3-D Printing Revolution Harvard Business Review May

Hirschberg. C, Alexander Rajko, Thomas Schumacher, and Martin Wrulich 2016) The changing market for food delivery https://www.mckinsey.com/industries/high-tech/our-insights/the-changing-market-for-food-delivery

KPMG 2016 “An appetite for change: Key trends driving innovation in the restaurant industry”
https://kpmglearninghub.com/2016/07/19/an-appetite-for-change-key-trends-driving-innovation-in-the-restaurant-industry/

Morgan Stanley, 2016, The pizza paradigm for online food delivery) https://www.morganstanley.com/ideas/pizza-paradigm-for-online-food-delivery

Russell, R. and Taylor, B. (2011). Operations management. 5th ed. New-York: Wiley.

Skinner. W

Yue. J, 2016 Jiangsu Longliqi Group Leads $30M Series B+ In 8dol.Com  
Https://www.chinamoneynetwork.com/2016/03/04/jiangsu-longliqi-group-leads-30m-series-b-in-8dol-com