Meal delivery once felt like a frivolity to many people. But a combination of increasing busyness and the limitations created by the coronavirus pandemic have grown the meal delivery space into a cherished necessity for millions of families.
A flood of competing services have attempted to capitalize on these trends. In fact, accordinging to CNBC, over 150 companies have serviced this $1.5 billion market.
How are so many different services surviving at the same time? First, it’s worth noting that some aren’t. Chef’d and Munchery are just two examples of well-known companies that failed to gain sustainable footing in the crowded space.
But other businesses are thriving, despite competition, thanks to the power of differentiation, which simply means demonstrating how your product is different than alternatives — while still appealing to many of the same underlying customer desires.
Here are 5 example “genres” of differentiation that have developed within the broader food delivery space.
The Reliable Early Movers
Services such as Blue Apron and Hello Fresh differentiated themselves by reaching prominence quickly. In doing so, thanks to comprehensive advertising strategies, they became household names that often come to mind when people consider the food delivery space. This has allowed them to develop reputations as safe, standard options for people who want to try a meal kit without getting too crazy.
The Low-Cost Leaders
One of the first subcategories to emerge in almost any industry is low-cost alternatives, and the meal delivery space is no exception. EveryPlate, owned by HelloFresh, offers meals for only $4.99 per serving. The Marley Spoon spinoff Dinnerly is another example of a meal kit differentiating itself based on price.
The Health-Conscious and Special Diet Options
While many services offer a few dietary options, such as a vegetarian menu, some meal kits take these opportunities a step further. For example, Green Chef has offered keto and paleo menus. And Sun Basket has released Mediterranean, pescatarian, and diabetes-friendly plans.
The Flexible Grocery Store Brands
One of the implied promises of meal delivery services is avoiding trips to the grocery store. And while that’s true to a point, many families still find themselves needing to make an in-person run at least once a week. Several brands have leveraged that fact to sell individual meal kits in stores, without requiring a subscription. Supermarkets are leading the charge. For example, Albertsons acquired Plated, Kroger
The Timesaving Prepared Meal Services
While meal kits are certainly more convenient than planning your own meals and rounding up all the necessary ingredients, there’s one step they don’t perform for you: cooking the food. A number of services have recognized this and differentiated themselves accordingly.
Freshly is one popular example of a service that delivers fully-prepared meals ready to heat and enjoy. Factor offers the same convenience for people who want to eat low-carb.
Companies in this genre have enjoyed surprising appeal among single customers, since they deliver meals in individual servings — unlike meal kits, which almost exclusively offer a minimum of two servings per meal.
What Can We Learn from This?
In 2018, CB Insights, a venture capital database, analyzed the post-mortems of over 100 failed startups, looking for trends of what might be sabotaging new businesses. The results were surprising. While predictable findings such as cash flow problems, competition, and poor timing all made the list, none of them were the most common challenge. Instead, the leading cause of failure was “no market need” — in essence, a lack of demand from customers.
As the meal delivery space exemplifies, one way to potentially avoid this obstacle is to launch products and companies in established industries, where demand has already been proven. Then, you can leverage the power of differentiation to create a brand that stands apart — and wins a share of the market.
It might not be the most creative route, but it tends to be more fun than total business failure.