Responding to Fourth Industrial Revolution: An Analysis on Online Food Delivery Business in Bangladesh

Salma Akther

A

bstract

The aim of this study is to analyze the present online food delivery mechanism in Bangladesh in relation to fourth industrial revolution (4IR). The review of literature shows that many online food delivery companies are now depends high-intensive automated operating system to run their business. This study utilized the secondary data. A detail explanation of current market situation provides the opportunity to find possible solution approach to run their business.Additionally, this study has developed an implementation plan. Each implementation plan is organized with result orientation which can helps to take the right business decision for each company to achieve their expected return from investment.

Keywords

Fourth Industrial Revolution, Smart app, value creation.

Introduction

Due to technological revolution and spectacular shift in lifestyle patterns in Bangladesh, online food business operations are now in the apogee. Daily life and professional life are interrelated. Fourth industrial revolutionary system can minimize the restrictions and brings a balanced life. We are now stand in front of such conversion that are totally unlikely compare to the past historical background of mankind. This phenomenon requires cohesive and inclusive response with due consideration of fourth industrial revolution (4IR) in every aspect. Food accessibility are not painstaking task anymore. Through the internet of things and internet of system, people can maximize expectation regarding food choice. Online food delivery systems are now using drones to robot system to provide their services. Acceptability rate are high due to this driverless food delivery concept into customers doorstep (Bruce, 2016). To provide more satisfaction to all the stakeholders of online food delivery business, this research designed to explore the current situation of industry with implementation plan which may have potentials to further research to attain long term goal.

Objectives

Online food delivery services companies are not running their business without challenges and competition. Also, familiarization with this online food delivery system still infrequent in Bangladesh. In general, this paper explores present phenomenon for greater understanding of different dimension of this industry. Specifically, this paper examines the market responding capability in regard to 4IR and develop an implementation plan with possible results by which individual organization can make alternative approach to capture larger customer pool.

Methodology

This study conducted by descriptive research. To get appropriate result, it has chosen secondary data resources which are concentrated on online food delivery services website, related journals, newspaper, books and so on. Afterwards the data are analyzed to make a reasonable concluding remark for the whole industry.

Literature Review

Chang, Chou and Lo (2014) has mentioned that individual customers personal characteristics can influence online food buying process. Individual buying behavior shape the group buying behavior. Therefore, this group of buyers’ retake intention of online food delivery services greatly influence on respective firm performance.

Customer loyalty towards online food delivery services depends on different indicator like food quality, time-driven services etc. The study conducted on Indonesian online food delivery services supports the parameter. The researcher highlighted the e-service impact on the form performance (Suhartanto et al., 2009). However still there is a research gap to explore the preparation of online food services from the platform of 4IR.

One study conducted on Malaysian online food delivery services which focused on operational efficiency

measures of firms. Based on empirical research, it is indicated how customer order can influence by trustworthy websites, and service responsiveness of individual company (Zulkarnain et al.,2015). This research creates further scope to explore different dimension of 4IR which are involved in organizational performance.

The study conducted in Jordan in online food services identified factors that are significantly affect the customers satisfaction of e-based food business. A proposed role model are developed for tracking, rating and reviewing online food delivery system which can be used to achieve their organizational goal (Alalwan, 2020). Although, this research has lacks in depth connection of current consequences of 4IR

Situation Analysis

Macro Environment analysis

To analyze the situation of whole online food delivery industry it is required to understand the macro-environment concept properly. Target segments, customers demand and communication strategy with customers are the primary factors of macro-environment analysis.

The estimated population was 163.05 million till to 2019, whereas at 2013 it was 156.5 million in Bangladesh. It is clearly indicating that population growth rate is growing (World Bank Group, 2019). Rural lifestyle dramatically shifts with urban lifestyle creates the keen interest for high-end products. Presence of digitized product offerings and increasing tech-savvy people are supportive evidence to future growth to 75% (138 million users) by 2025 (Mahmud, 2018). Economic and sociocultural environment are more vital factors alongside the environmental, technological, political and legal factors (table 1) are critical to evaluate online meal delivery kit industry in Bangladesh. Overall GDP of Bangladesh has been increasing for the past 10years.It is also anticipated that the growth rate will continuously rising from 6% (2015) to 8% by the year 2019/2020 alongside purchasing power continuously increasing (World Bank Group, 2019).It has the exploring possibility of online food services. However, cost of raw materials, labor, and transportation in Bangladesh increased as well. Multiculturalism society proved high potentiality of online food services here. Active and healthy lifestyle, work-life balance are crucial factors for modern people. Consumption style are changing; therefore, people more tend to spend rather to saving. The societal scenario has now demanded personalized services for food choice. Capacity increase then necessary for the firms to fulfill customers expectation.

Table 1 Macro Environment Analysis

Economic Environment:

Evidently, the last 10 years to till date, Bangladesh has confirmed their growth performance in almost all sector. The increased economic performance and high concentrated disposable income are acting as a highest motivation to explore the healthy life with healthy foods (Hossain,2010)

D e m o g r a p h i c Environment:

The fundamental reasons of growing online food takers are the increased population in Bangladesh for decades (Islam, 2019)

Natural Environment:

Still Bangladesh is in initial phase to adapt with organic food consumption. Due to the health safety, people are now more willing to take additive free and sustainable food for them (Ahmed & Rahman, 2015)

S o c i o c u l t u r a l Environment:

Although Bangladesh known as a homogeneous country similarly it consists diversified cultural people. Multiculturism influence the people to choose their product. Increased percentage of youth people and large number of working professionals are wants to save their time. Furthermore, nowadays active and fit lifestyles are in high demand list of society’s people. To achieve better performance in work and professional life people are reasonably demand the online meal delivery kits (Muntasir, 2019).

T e c h n o l o g i c a l Environment:

Technological innovation facilitated the online food delivery companies in Bangladesh. Food making process time are minimized through mechanized services (Sarker, 2018).

P o l i t i c a l - l e g a l Environment:

Online food delivery business in Bangladesh could be influenced by the rules and regulations set by Governmental body and other stakeholder. To ensure food safety, alteration of rules are required to minimize the health risk (Muntasir, 2019).

Note: Adapted from Marketing Management Analysis, Planning, Implementation and Control (p.147) by Kotler.P, 1999, Prentice-Hall of India.1997 Prentice-Hall.

Industry Analysis

Firstly, the ingredient suppliers are providing fresh, high-quality foods and vegetables. Basically, the ingredients are provided by local suppliers. The bargaining power of the supplier is high due to high dependency on high -quality ingredient. Therefore, the bargain power of suppliers are positively related to the quality appeal by online food delivery system. Switch on probability of consumers are easy which results high bargaining power of buyer. Compare to other food company, the online meal delivery company has lower number of customers pool, so to capture the satisfaction of each customer online food delivery service provider needs to ensure their value-based services. Entry barrier is medium and future barrier potentials are high. Internet facilities and increasing level of smart phone usage create the opportunity for new entrant in this industry. Also, there are threat of substitutes as some companies are offer food delivery services with cheap cost which are convenient for many people in Bangladesh.

The dominant competitors in online food delivery system in Bangladesh is Pathao Food regarding order receiving each day (hold 42 % market share), whereas Foodpanda holds 32% and HungryNaki presenting 8% and Shohoz foods continue with 8% market share respectively. Pathao food is the key role player in this market with largest consumer transaction pool and greater number of restaurant affiliation (Munastir, 2019).

Market Segmentation

Customers fundamental motives and behavioral mechanisms must be noticed from the corner of different market segments. Inconvenient situations like traveling obstacles, time consuming factors are some of the basic reasons for inclination of online food delivery services (Yeo, Goh and Rezaei, 2017). The market segmentation of aforementioned 4 online food delivery company in Bangladesh based on segmentations as benefits sought, usage rate, price sensitivity and lifestyle. The most significant factor is the benefit sought to diagnosis the relationship between the respective company’s product and customers. Price sensitivity defines the point-of-purchase behavior of grocery shoppers. Lifestyle patterns are different for everyone, which results different choice patterns for each product segment. Among the 4 online food delivery company, Pathao food provide the most convenient, cheap good quality ingredients in their food offerings, their product usage rates are high as they hold the highest market share in online food business. Mostly urban and family-oriented people are in their customer pool. Uber eats is famous around the world. As the economy of Bangladesh is now in booming situation, people are now more sophisticated and variety seeker, and Uber eats perfectly pointing on this issue, arranged premium quality product with low prices. However, still Uber eats are underrated in terms of usage of their product. Foodpanda and HungryNaki are running their business by offering healthy and locally made fresh product for their customer respectively. This two (Foodpanda and HungryNaki) companies are moderately influence the customers regarding the usage rate and price offerings of their product.

Market Position Analysis

Online food delivery companies must offer the diversified product offerings as well as act as a time saver for their customer (Pigatto et al., 2017). These two factors are helps to firm to take a distinctive position in the online food delivery market. In terms of market position, Pathao offers high-quality of ingredients compare to other competitors, but they possess a very low product variance. Pathao food value proposition defines that they are focused on urban inhabitants. These urban inhabitants has high inclinations on recipe variation, healthy food requirement in their daily life. However, they have time limitations for grocery from stores or physical outlet. Pathao food capture this target customer and ensures a convenient and healthy meal box for them.

Implementation plan according to 4IR

4IR can helps to advance current service level of online food delivery company which results distinctiveness in the market. Combined initiatives of 3 phases, (figure 1 -Supervising and detecting the service places, analyzing the data in the decision-making stage, regulate the factors using smart app technology) with application of technology can produce fruitful result for individual food delivery company(Montresor, 2016).

Regulation of factors Supervising and Detecting the Service Places

Big Data,

The Internet of things

Blockchain, Wearable Internet Analysing data

Figure 1: Three phase initiative program. Adapted from World Economic Forum, Industry Agenda, Fourth Industrial revolution. Source: www.weforum.org.

Supervising and detecting the service places can ensure the maximum level of services to the customer, minimize the possibility of failure to meet the customer order by establishment of tracking customer order system and provide instant solution for system failure.

Analyzing the data in the decision-making stage includes the data from supervising stage which can define the food delivery service requirement. The individual company can collect, synchronized and evaluate the data as big data at this phase which can ensure proper utilization of resources and take specific decisions. The collected information could further useful to examine market trend according to client preferences and results optimum level of performance in this industry.

Regulate the factors using smart app technology has taken into the 3rd phase in this process. The decided service place form the previous phase needs input for ensuring the services to the client. Proper tracking methods of drivers, root mapping applications are necessary to reach the food delivery services on time in required places.

Minimize staff handling difficulties, maintenance of food quality and freshness, limiting the waiting time of consumers are the driving forces to carry the operations of online meal kit delivery services under the concept of 4th industrial revolution. With consideration of velocity, scope and system impacts of 4th industrial revolution, the online food delivery companies can experience the exponential growth in every aspect of their business. These technological change mechanisms can transform the whole operating system. The following implementation plan illustrate in what way the respective company could respond according to 4th industrial revolution:

Plan 1: Order-based method

Three interactive body like client, restaurant, management are role player to implement successfully order taking method. Restaurants/home food makers are key role player in this system, respective food delivery company just respond to take the order from client. By taking the help from the IT, these three players could actively involve by using similar mobile app mechanism which can support the whole team (client, restaurant/home food makers, management) at a time. The following table A indicates the individual responsibility to run the app. However, online food delivery company is unable to track the restaurants/home food makers activities. In the one hand, it could minimize the food making cost for the respective food delivery company but incur huge cost as probable goodwill crisis can emerge for no control over restaurants.

Table A

Order-based Method

Client

-Receiving information -Order generation, administering, -Notify restaurants

Management

-Active order platform -Effortless payment operation -Plotting service root in app

Home-based food maker/Restaurants

-Acknowledgement or cancellation of order -Oder explanations -Users background (non-compulsory) -Reporting time

Note. Adapted from IDLC Finance Limited Monthly Business Review 2018. Source: https://idlc.com/

Plan 2: Incorporation of order-supply method

In this method (Table B) the food delivery company should take more protective measures as this method requires active and combined participation to complete the whole process. At this stage, app mechanism should develop with added feature which could ensure expected profitability. However, there must be some obstacles to run this method. With due care of challenges, the system could introduce place to place service pattern. This method can boost up the revenue generation as well as each stake holders can be benefitted according their aspect.

Table B

Order-supply Method

Client

-Receiving information -Order generation, administering, -Notify restaurants -Leveling, Tracing, -Order placing with computer-generated support

Drivers

--Acknowledgement or cancellation of order -Users background (non-compulsory) -Reporting time -Map-reading - Security coding -Bank particulars

Management

-Active order platform -Effortless payment operation -Plotting service root in app for driver -Active driver tracking platform

Home-based food maker/Restaurants

Acknowledgement or cancellation of order -Oder explanations -Users background (non-compulsory) -Reporting time

Plan 3: Food delivery by cloud-based method

Without physical presence of the company is one of the significant features of the cloud system operation. In this system individual food delivery company can run their business according to the specific requirement. Minimum resource requirement is advantageous for this business operation, however, each food delivery company could face the location disadvantages, as all the respective location sometimes cannot be controlled under their regular surveillance. Mobile app mechanism needs to merge the app services of management and restaurant owner to avoid any kind of inconvenience for customer services. This added feature could help to ensure the personified services and greater control over the all factors related to food delivery services directly toward customer. Table C represents all responsibility of respective body.

Table C

Cloud-based method

Client

-Receiving information -Order generation, administering, -Notify restaurants - Tracing, -Order placing with computer-generated support - Social media partner

Drivers

-Acknowledgement or cancellation of order -Users background (non-compulsory) -Reporting time Map-reading - Security coding -Bank particulars

Restaurant Proprietor. (Management)

Acknowledgement or cancellation of order -Oder explanations -Users background (non-compulsory) -Reporting time Active order platform -Effortless payment operation -Plotting service root in app for driver -Active driver tracking platform Note. Adapted from IDLC Finance Limited Monthly Business Review 2018. Source: https://idlc.com/

Possible results of implementation plan

The above implementation plan supports the client to making their choices about food description by using the mobile app mechanism. Client can assess and rate each online food delivery company. The mobile app technology could provide the well-situated payment method for their client by which client can make safe transaction for getting their services. Furthermore, the time -driven option of mobile app mechanism could ensure the on-time services in all aspects like registration detail for food buying and payment methods etc.

Conclusion

Fourth industrial revolution becomes more widespread and Bangladesh can’t avoid their impact on each industrial sector. Online food delivery business is one of the driving force and income generation source in today’s market in Bangladesh. It is now crucial to examine for each company’s business models whether fitting with the requirement of 4IR or not. Meeting customer demand and application of 4IR dimension in respective business model can generate gross revenue which helps to achieve the economical solvency in Bangladesh. Therefore, it is proved that automation in business is essential issue in this field. The proposed implementation plan with results in this study may ensures further growth in this sector. However, still we need to explore the problems and corrective measures of different problem regarding online food delivery services and from this research platform further advance level research can be arranged to eliminate present ambiguities.

» About the Author

Assistant Professor Department of Management Studies Jagannath University