Meal-Kit Delivery Services – The New-age food trend and the logistics behind it

Meal Kit Delivery Services

In today’s fast-paced world, people love to cook but can’t stand the prep and cleanup. They want to eat inventive meals that are home-cooked. They do not have the time to shop and run to grocery stores owing to the COVID-19 situation, but still want nutritious meals. Meal kit delivery services has given answers to all their constraints and dilemmas. 

U.S. customers spent around $100 million on meal kits for the month ending April 11, which is nearly double the sales during the same period in 2019.- Nielsen Data 

Meal kit delivery has made a strong comeback after the COVID-19 outbreak. The growth in meal kit delivery services is partly due to millennials’ increased interest in cooking at home and awareness of food trends. 

What are meal kit delivery services?

Meal kit delivery is a Subscription-based Business Model where companies send ready-to-cook fresh ingredients for recipes that customers can make at home. 

For many consumers, ready-to-cook meals may be a simple way to get food on the table. But the supply chain behind this meal delivery business model is time-pressured and complex. 

Companies involved in meal-kit deliveries invest more in seamless logistics. Their logistics involves functions like sourcing ingredients, portioning the meals, packaging them, and timely deliveries. 

Behind the Scenes: Challenges in the Logistics of Meal Kit Delivery Services 

In-store meal kits generated $154.6 million in sales, posting growth of more than 26% year-over-year. Nielsen Report, 2017

80 percent of our beloved customers would love to see a meal kit service option in the store. And guess what was more surprising was that 85% of our customers that were already subscribing to meal kits wanted to see meal kits in the store. – Albertson Research, 2018

Today, meal kit companies are looking to partner with grocery stores to broaden their market reach. This is because customers prefer to see their meal kits available in stores. These challenges have increased logistics pressures for meal kit companies to make cost-efficient home deliveries. 

Maintaining delivery windows 

Time is a crucial factor in meal kit delivery services. Traffic congestion, parking, road closures, and vehicle breakdowns, etc. impact the delivery schedule. Consumers expect ready-to-cook food to be delivered within their preferred time windows. It is a huge challenge to meet the delivery deadlines with different on-ground constraints. 

How Locus is managing customer-preferred time windows for its clients. Download WhitePaper Now!

Customer retention

Today, the meal kit delivery market is getting saturated with competitors, making it challenging for meal-kit companies to retain their subscribers. The continually changing preferences of customers make it challenging to maintain a sustainable customer base. Hence, meal-kit companies should be adaptive and receptive to consumer changes. 

Threatening last-mile delivery costs 

One of the biggest hurdles for meal-kit delivery companies is the last-mile delivery cost. They have to handle the requests from ‘hangry’ customers. Increasing the labor force to deal with this challenge has costs associated with it, like idling costs, fuel costs, maintenance costs, and so on. 

Flexibility 

Meal-kit delivery companies have to deal with different customer preferences for delivery. Some customers may demand an urgent delivery; some may want their deliveries postponed. Hence, meal delivery companies have the challenge of effectively and efficiently dealing with customized delivery requests. 

How consumers expect to alter their spending on meal kit delivery due to coronavirus in the United States as of March 2020?

Consumer Expectation on Meal Kit Delivery Services Trends

Source: statista[dot]com

Most Americans did not plan on changing their purchasing behavior towards meal kit deliveries as a result of the coronavirus outbreak. Sixty-two percent of respondents said that they did not plan to buy more or less, while 10 percent stated that they would be less likely to purchase a meal kit. – Statista, March 2020. 

How can a delivery optimization software solve last-mile challenges in meal kit delivery?

Industry analysts estimate that between 20 and 30 percent of the price of a meal kit is spent just getting it to your house. – Washington Post, 2017

Meal kit delivery attracts more costs compared to other cooked food deliveries. Many meal delivery companies lose customers and leave the market because they can’t handle the costs. The best way to manage the last-mile challenges in meal delivery is by using delivery logistics software.

Here’s how it solves the  last-mile challenges:

Top reasons why a former meal kit company customer decided to discontinue

Source: L.E.K. 2016 Millennial Retail and Travel Survey. In Q56, respondents were asked, “What are the primary reasons you do not plan to continue purchasing from meal kit companies? Select up to 3 responses.” Respondents have to have selected “I have purchased from a meal kit company, but am unlikely to continue”in a previous question

Dynamic route planning 

As orders are added in real-time, meal delivery companies have additional responsibility to ensure timely deliveries. Some customers may want their deliveries quicker, or a few may postpone it to later, or new orders may be added. Mismanaging these deliveries can lead to failed or missed deliveries. 

Last-mile delivery software enables meal delivery companies to accommodate new real-time orders to the delivery schedule. It allows fleet managers to assign these deliveries to available drivers so that deliveries are not delayed. Also, it quickly reloads new routes for drivers without disturbing their on-time delivery schedules. 

The last-mile delivery solution’s dynamic route planning feature enables meal kit companies to ensure flexible and efficient deliveries. 

Gaining Real-time visibility

When it comes to meal kit deliveries, companies should be good at getting ahead of delivery issues. They must communicate with customers before they make a WISMO (Where is my order?) call. Meal delivery businesses have time-sensitive issues, so accurate data and real-time visibility are crucial for solving these issues. 

Real-time fleet tracking software enables meal delivery companies to obtain valuable insights on upcoming deliveries and past deliveries. It helps fleet managers to check if there are delivery metrics that reflect customers’ complaints and resolve them. Also, it provides alerts and notifications so that customers don’t miss out on deliveries. 

Enables effective dispatch planning

On-demand services are increasing due to the coronavirus pandemic. So, real-time task assignment has become more complex. Improper allocation of delivery agents leads to higher cancellation and rescheduling rates, thereby affecting customer satisfaction.

A dispatch software enables on-demand dispatch automation based on different parameters like drivers’ skill sets, location, preference, vehicle capacity, availability, etc. It allows effective resource utilization by increasing the number of tasks per day and reducing idle time. Also, it helps logistics managers to track service deviations leading to better decision-making. 

Handling high order density areas 

If there are many orders in a small area, it is necessary to draw up territories. Else, multiple riders end up going to the same vicinity reducing operational efficiency.

A territory-based routing software helps fleet managers allocate orders to drivers familiar with the vicinity. It takes riders’ expertise in a particular area or territory and assigns orders on that basis. Also, it supports dynamic scheduling with limited on-ground resources thereby reducing the last-mile delivery costs. 

Improved location intelligence 

Location intelligence is an essential part of logistics optimization. There are chances that the address provided isn’t very accurate. Dealing with such flawed data is a challenge. 

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A geocoder processes an extensive list of addresses, cleaning it for incorrect zip code, spelling mistakes, and so on. It converts improper addresses into proper geographical coordinates, leaving no room for error. It fulfills all address verification and validation requirements quickly. 

Ensures safe deliveries 

Although the majority of the global population stays at home, the world runs through logistics. Today, the meal delivery industry is executing contactless deliveries considering workers’ and customers’ health. 

Electronic Proof of Delivery software captures data of completed deliveries and reflects it in the system. With this solution, delivery agents can quickly validate completed deliveries with zero physical contacts. It helps them reduce unnecessary paperwork, thereby paving the way for productive and safe deliveries. 

Save Time, Money, and Customers with Locus Meal Kit Delivery Software

The market size of global meal kit delivery services is expected to raise USD 19.92 billion by 2027, expanding at a CAGR of 12.8% over the forecast period. – Grand View Research, Inc, June 4, 2020.

Meal delivery companies should focus on establishing an efficient supply chain. They must integrate technology and software in the last-mile to enhance operational efficiency. 

Locus’ delivery logistics software enables fleet managers to plan optimal routes for the best delivery experience. It helps meal delivery companies club their orders based on location, preference, priority orders, delivery time slots, etc. thereby maximizing SLA adherence. It executes better on-demand dispatch automation taking into account both business and skill-based constraints.

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Buying PatternsConsumer BehaviorDelivery ComplexitiesDelivery FulfilmentDelivery Optimization SoftwareElectronic Proof of DeliveryFood Delivery Supply ChainInterurban Delivery RoutesRoute Planning Software