The third quarter of 2018 was a turning point for Foodora in France, since the company’s French top management announced that its activities would end on September 29th. What drove one of the largest European food delivery company to put an end to its service in France?
Foodora’s average number of orders per customer has remained among the lowest in the food delivery market. Foodora entered the French food delivery market in June 2015. Over the Q2 2016 — Q2 2018 period, Foodora customers lowered their quarterly order frequency by 15%. Meanwhile, some of its competitors grew their quarterly order frequencies by more than 70% (Deliveroo and Uber Eats). Overall, Foodora ranked 5th out of the 7 studied companies¹ in terms of order frequency.
The share of Foodora mono-platform customers, i.e. customers who ordered at Foodora exclusively, is among the lowest in the market: between February 2016 and July 2018, only 15% of Foodora customers had exclusively ordered at Foodora. Over the same period, customers who had either exclusively ordered at Just Eat, Deliveroo or Uber Eats represented 46% of all customers of all three companies. Among pure-players (over the same period, at Sushi Shop & Domino’s), 45% of their customers had placed online food delivery orders at one merchant only.
Foodora customers decreased their order frequency at Foodora over time (see graph above), while increasing their spend at other food delivery companies. Foodora customers who were newly acquired (2018) are the ones ordering the least at Foodora the year they were acquired on: only 20% of their orders were placed at Foodora during their first year, versus 26% for 2017 cohorts, and 28% for 2016 cohorts. Foodora struggled in terms of retention on its oldest customers over time, and competitors induced them to order always more.
In 2016, Foodora’s orders were almost equally distributed across the Parisian region and the rest of France, but over time the rest of France grew more rapidly and generated the largest share of orders (59% in 2018).
The Parisian outskirts never became a key area for Foodora, reaching a maximum of 5% of the total volume of orders, while Foodora’s main competitors² generated 14% of their 2018 volume (see graph above). The Parisian outskirts are also the area with the fastest volume growth: in 2017 and 2018, it ranked #1 in terms of volume growth (+ 958% in 2017, +57% in 2018); the rest of France grew less rapidly (+ 48% in 2018) and Paris’ volume of orders barely grew in 2018 (+5% vs 2017).
Overall, Foodora lost grounds in the two largest cities in which it was operating in 2018. The company lost 6 percentage points of market shares in Paris and Lyon between 2017 and 2018. But Foodora’s volume increased in cities like Strasbourg (+5pp) and Montpellier (+4pp), in which volumes are barely increasing overall.
Who won the hearts of Foodora customers?
Foodora fostered its customer acquisition with more discounts than its competitors: 53% of customers acquired in 2018 benefited from discounts on their first orders, down from 61% in 2016 and 58% in 2017 (see graph below). Over the years, Foodora’s main competitors have discounted first orders between 33% and 54%. Foodora set up an aggressive acquisition strategy, but did not succeed in implementing a successful retention one: heavy discounts did not translate to low churn rate.
Foodora 2017 customers used to spend only 26% of their food delivery expenses at Foodora in the second half of 2017, 27% at Uber Eats and 26% at Deliveroo. Over the following six months, Uber Eats won an additional 8 percentage points of share of wallet³, catching up with Deliveroo.
68% of Foodora-only⁴ customers who placed an order in Q1 2018 didn’t reorder after August 2018 (as of October 31st 2018). What about the remaining 32%? We’ll see in the coming months which food delivery company managed to attract former Foodora customers.
For more insights on how the two market leaders conquered Foodora customers, reach out to us!
(1) Studied merchants: Uber Eats, Deliveroo, Frichti, Just Eat, Foodora, Domino’s, Sushi Shop
(2) Deliveroo, Just Eat, Uber Eats
(3) The share of wallet is the revenue generated by a company on the selected merchant’s customer base, divided by the total revenue of all companies on the selected merchant’s customer base
(4) Foodora customers who never ordered at any other of the studied merchants online
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