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MKTG1501 E-Portfolio 1

Week 4 Topic: Market Environment – Foodora’s exit from the Australian Market Problem This week’s topic was centralized around the shift in growth of fast food delivery platforms. Changes in the way that people think and act force the food industry to morph and adapt to new trends globally. In a world where businesses are entering and exiting the market at extreme rates, food delivery companies such as Uber Eats, Menulog, Foodora and Deliveroo have become increasingly popular. During the workshop, certain businesses were discussed in terms of their successes and failures in the Australian market and compared their strategies.

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One of the companies discussed was the popular German food delivery platform, ‘Foodora’. Foodora entered the Australian market in 2015, when food delivery was beginning to boom. However, in just 3 years in 2018, Foodora had no choice but to cease operation in Australia following a lack of growth. What caused the fall of Foodora? What factors contributed to Foodora’s exit from the Australian market and what separated its strategies from competing businesses?

Theory Application To thoroughly analyse the following question, it will be important to assess Foodora’s market environment. For this we will be using the 5C’s analysis which incorporates Company, Customers, Collaborators, Context, and Competitors. This model is often used to provide a situational analysis of research problems (SMstudy, 2016). -

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Company o The company analysis incorporates the organization’s vision, strategies, capabilities, services, technology, and objectives. Can be used to find existing or potential problems with the business Customers o Having a thorough understanding of the needs of customers is a key part of this situational analysis. This involves understanding the target demographic, their behaviour, buying patterns, frequency of purchase, and purchase platforms. Competitors o Grasping the external environment in which a firm operates means knowing the strengths and weaknesses of competitors, their market share and preferred retail channels. Collaborators

MKTG1501 E-Portfolio 1 o

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Collaborators are non-customer stakeholders, such as business partners and suppliers. Having an understanding of the capabilities and capacity of partnered businesses allows for a better identification of business problems.

Climate o Climate analysis refers to the evaluation of more macro-environmental factors which affect the business. These factors include political, economic, technological and social scenarios.

In the case of Foodora’s closure in Australia, we can fit the scenarios into this model. The company goal is to offer food delivery to customers while continually expanding their business. Foodora was unique to other delivery services in that all of Foodora’s delivery staff were bicycle riders as opposed to uber eats cars and motorcycles, causing a discrepancy of delivery speed due to technological differences. In terms of customers, Foodora was established with an advantage over some of is competitors. Before opening services in Australia, Foodora was already a known service across the world. Despite this advantage, Foodora clearly lacked the customer care required, as shown by the excessive amounts of negative reviews, most of which were given due to order cancellations. This extreme low rating of 1.2 stars (Trustpilot.com) would cause a slow destruction of the customer base and sever relationships with partnered restaurants. Competitors such as Uber Eats, whom had access to motor vehicles, larger driver fleet, and customer base would make it almost impossible to compete against. One of the main problems as mentioned above was the use of bicycles only. Although riding a bicycle would mean less registration fees and costs, the increase in delivery time is detrimental to the food as a bicycle provides less stability and cools the food more. The collaborators of Foodora were the drivers and the partnered restaurants. These restaurants would be negatively affected by reviews from customers when the orders are cancelled. Moreover, the company was under fire for accussations of unfair dismissal, sham contracts, and mistreatment of their riders. Foodora was only able to pay $16000 out of the $5.5million owed to the riders. 2Foodora Metro advert

My own experience using the 5C’s As someone within the target demographic of modern food delivery services, I used to often find myself ordering from Menulog. Having an easy to access app and a wide range of partnered restaurants make it very easy to order fast food. However, as someone who also works in a restaurant partnered with Menulog, I can also say that the program they have to establish a good relationship with the restaurant is also fantastic. The interactions such as handing awards out for good performance and good food, to weekly generated infographics on the restaurant’s performance make them a very good and reliable partner. Menulog must charge a 15% commission from a part of every sale, meaning that a restaurant may not be able to generate enough of a revenue to break even from the costs. To counter this, many restaurant partners must raise the prices of the goods sold online by 15% to account for Menulog’s fee. Knowing this, it makes it very hard for me to still order delivery when I can drive instead and save both the delivery fee, and the marked-up prices.

MKTG1501 E-Portfolio 1

References 5C Analysis. (2016). Retrieved 21 April 2020, from https://www.smstudy.com/article/5c-analysis Delivery apps are altering food service providers’ operations | IBISWorld Industry Insider. (2020). Retrieved 21 April 2020, from https://www.ibisworld.com/industry-insider/analyst-insights/delivery-apps-are-altering-foodservice-providers-operations/ Stock images on EveryPixel. (2020). Retrieved 21 April 2020, from https://www.everypixel.com/image4503370246056948513...