Nigeria’s food delivery market overflows with potential, but there’s just one little issue that needs to be solved         

The Issue 

Ordering food online has been made easy with mobile applications designed to do so. With a single tap on their mobile phones, customers can request meals from a wide array of restaurants in their geographical location, enabled by third-party payment systems. Restaurant-to-home delivery is only just an aspect. Supermarket groceries, also, have taken an online route. With the strain of the coronavirus pandemic, one of the biggest trends we saw is the boom in online grocery shopping. Names like Instacart, especially startups like Amazon Fresh, found market traction during lockdown, delivering orders on fresh foods and vegetables. 

While today’s on-demand food delivery services have risen due to an intermeshing of digital technology, we can find a prototype in traditional pizza delivery where customers make orders via phone. Pizza chains were one of the first businesses to cater to customers beyond direct, walk-in services, with many still practicing such model till today. As ride-hailing platforms became popular, Uber saw reasons to transport products other than human beings. First experimenting with convenience-store items, it took a bold step into the food delivery space with the launch of UberEats in 2015 and thus rivalling other competitors. 

High valuation and market share have given Uber a strong foothold in the transport industry, and as it continues to seek expansion globally, its food delivery service is yet to reach Nigeria. The food delivery market in Nigeria is a burgeoning one, and with Uber still to break in, rival taxi app Bolt is taking a leap for themselves. Back in March, Bolt announced that they will be launching a food delivery service and were looking for a Restaurant Sales Manager to help in establishing partnerships with local businesses. 

Like Uber, Bolt has a drive for expansion and has already launched its food delivery service, Bolt Food, in Europe. Estonia, to be precise, where the company is headquartered. With its intention to penetrate the Nigerian food delivery market, it would be rivalling Jumia Food, another huge player. Worldwide, the online food delivery market was valued at $23,539.40 million in 2018, and is expected to grow at a compound annual growth rate of 15.4% from 2019 to 2025. 

The Question 

Without a doubt, there’s a market for food delivery in Nigeria. According to the National Bureau of Statistics (NBS), residents in Lagos spent N830 billion ($2 billion) eating out in 2019, representing 34% of total food expenditure. This strongly indicates that Nigerians won’t mind if restaurant meals are delivered to them in good condition, and also at a reasonable delivery charge. One of Africa’s leading online retailers Jumia, since arriving in Nigeria in 2012, recognizes the food industry as relevant to the Nigerian economy. 

The company’s food-delivery program Jumia Food was launched a year after and it has seen steady patronage, an impressive growth rate of 30% (month-on-month) as recorded during the lockdown months, with demands for food and groceries skyrocketing. In January, the company extended its food delivery service to five more cities in Nigeria. According to Massimilliano Spalazzi, the Chief Executive Officer of Jumia Nigeria, the extension of Jumia Food to these additional cities is part of Jumia’s resolve to expand the growing popularity and thrilling experience of online fast food services to customers in all Nigerian states. 

“With today’s COVID-19  realities, the growing popularity of fast food, coupled with the growing trends for convenience, safety, and value for money, has opened up opportunities for the food market in Nigeria,” Spalazzi said. “As the leading online marketplace in Nigeria and Africa, it comes naturally to us to help drive the penetration of this service through our technology and reach of our logistics network. By doing this, we are also helping to explore the food segment of the Nigerian Agricultural sector which has the potential of making a huge contribution to the Nigerian economy.” 

Other players have joined the market like OFood, launched in 2019 and a subsidiary of Opera alongside its digital payment vertical Opay. Chopnownow and GoFood are also examples. While there’s still room for more competition, the operations of these food delivery platforms are blighted with issues, from late delivery, logistical failure, cancellation of consumer order to meals delivered in lukewarm state, we examine consumers’ perceptions of these pitfalls below. 

What The Streets Are Saying

Using our national focus group, 97.1% of respondents revealed that they had used a food delivery service, corroborating the aforementioned data on Nigerians and eating out. With hardly any surprise, 97% of respondents had patronized Jumia Food for meals and groceries, 9.1% said they had tried out Opay Food while 21.7% had ordered Domino’s Pizza online. 

On the issues plaguing the food delivery industry, 15.2% said that they were turned off by the false advertising on some delivery services. For better understanding, false advertising is when images of food displayed aren’t what they appear in real life. 18.2% of respondents have had lukewarm food delivered to them, not hot enough to be enjoyable, 15.2% of respondents complained about the difficulty in navigating food delivery apps, and this is known as bad UX experience which can range from slow-loading site to hidden navigation. 

12.4% of respondents brought attention to the lack of meal variety. Food delivery service platforms may not be aware of this information, as they keep rotating restaurant meals that they think qualifies as breakfast or lunch. Only 3% of respondents revealed that their orders were cancelled. 57.6% of respondents said that they had received late deliveries, which isn’t entirely surprising given how gridlocks have plagued the transport landscape in Nigeria. Maintenance of delivery vehicles and trucks also comes at a high cost, and sometimes they may be insufficient to meet up with the surge of online demands. 

Speed of delivery is one of the biggest variables in consumer satisfaction. If a consumer orders a meal of their choice and it takes longer than expected for it to be delivered, the consumer may feel inclined to patronise other services. The food delivery market has the potential for robust growth. If not now, we should see trends like high-end restaurants integrating their own in-house delivery infrastructure, or delivery platforms only catering to consumers on weekends and offering more wholesome services. The opportunities are there for the taking. 

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