Using e-commerce to purchase food still has strong growth potential in Canada, given the significant growth in both supply and demand during the pandemic in 2020, says Jeewani Fernando, provincial consumer market analyst with Alberta Agriculture and Forestry.

In another analysis, this one by the Statistics Research Department, the researchers found that the e-commerce market, where consumers and businesses can buy and sell products and services exclusively through electronic channels, has continued to rapidly develop in the past decade.  Retail sales fromworldwide electronic commerceare forecast to exceed seven trillion U.S. dollars in 2025.

Here at ‘MC’ Dispatch we have been experiencing the growth of e-commerce among Alberta business, and particularly so during and post pandemic.

1. The value of e-commerce in Canada

The value of e-commerce in Canada is expected to grow significantly in the coming years.  This is due to the increasing number of people who are turning to e-commerce to purchase food.  Going back to 2019, the value of e-commerce in Canada was predicted to reach $37.7 billion.  This was a significant increase from the $8.4 billion recorded in 2016. This growth was forecasted to increase in 2020 when the value of e-commerce and online sales was set to reach $52.9 billion.

For 2023, the value of e-commerce in Canada is expected to reach $89.4 billion.  These figures show that e-commerce is a very lucrative industry and is expected to grow significantly in the coming years.

2. E-commerce food market size and growth in Canada

These indicators show that the e-commerce market for food in Canada has continued to grow significantly and is expected to remain on the same trajectory over the next few years.  Alberta food retailers and food service providers should consider how they can capitalize on the growing demand for e-commerce food products in the market.

• The Canadian food delivery market is projected to reach $98 billion by 2027.(Source: Editor's Choice)
• Even before the onset of the pandemic, Canadian take-out was on the rise.  In 2019 alone, orders accounted for $4.7 billion ((Source: CTVNews)

3. Post-Pandemic Growth for Food Retailers

The use of e-commerce to purchase food still has strong growth potential in Canada, given the significant growth in both supply and demand during the pandemic in 2020. At ‘MC’ Dispatch, due to this growth in the use of e-commerce to purchase food, instead of laying off staff during the height of the pandemic, we hired more delivery drivers.

The insights out of this industry may help Alberta food retailers and food service providers to further and better manage their food product offerings in the future.

One of the sectors of the food industry that has taken root and is projected to grow as Canadians crave more convenience is the meal kit service.  Why?

According to Restobiz, many households are expanding their “recipe repertoires” as they simultaneously reduce the amount of time they spend cooking.

For some time now, the European meal kits sector has been a fast-paced environment and – like any high growth channel – it is attracting more competitors.  Unilever, the Anglo-Dutch consumer goods giant, for example, went on the playing field in 2017.

A key player in the expansion of the palate and increase of ‘disposable time’ for Canadians is HelloFresh.  Following its acquisition in 2018 of Canadian meal kit service Chefs Plate, HelloFresh Canada announced that the new dual-brand meal kit leader expects to own 60 per cent market share in Canada in 2019. The company also confirmed a revenue projection of $200 million for next year.

So the convenience food battle is alive and well.

4. The Newest Kid on The Block - Meal-Kit Deliveries

In a 2022 study, researchers looked at whether:

• Cooking from meal boxes helps reduce food waste.
• Are people better off outsourcing part of the cooking process with a subscription that sends pre-portioned ingredients in the exact quantities needed for each recipe?

With the help of a subscription meal box provider, who allowed the researchers to survey their customers, 914 households from six countries (the US, Canada, the UK, Germany, Belgium and the Netherlands) that subscribed to a meal box scheme during November and December 2019 participated.  The meal kit industry is expected to generate more than $33 million in revenue by 2026 in the U.S.

Our research suggests that the answer is yes.  We found that households wasted on average 38% less food when they prepared dinner using a meal box compared to when they bought the ingredients from a shop.  This was largely due to there being less food left in pots and pans after cooking with a meal box.

According to The Retail Insider, The biggest users of meal kits are Gen Z at 14.5%, followed by Millennials at 12.1%, Gen X at 7.9% and finally Baby Boomers, at a measly 3.2%. Amongst provinces, the highest usage rate right now is in British Columbia, at 10.4%, followed by Quebec at 9.3%, and Alberta at 9%. Ontario is at 8.4%, the national average.  The lowest rate in the country is in Manitoba, at 4.5%.

This trend started for many Canadians during the pandemic but seems set to become a lifestyle - at least for some.  According to one poll, 65% of respondents said they would continue to use meal-kit delivery in the next 12 months.

There are some analysts who say that the fad is waning as people return to ‘normal’ in-store shopping.  But tell that to the meal-kit companies that many local couriers are fielding calls from who are looking for more cost-effective and a competitive way to sustain the growth of the sub-sector.

A 2018 article raised the question of longevity for meal-kit businesses due to logistics and transportation issues: the current e-commerce subscription-centric business model is not working for many traditional players in the industry.  These companies are trying to offer meal kits for a reasonable price while delivering a variety of fresh ingredients from limited distribution points nationwide, which is a nearly impossible goal due to the high costs of shipping these specialized products.

Getting the meals to their ravenous cooks has been a challenge for many of these companies.

5. Partnership & Potential for Courier Services

While not the top-of-mind delivery method, what with Skip the Dishes, Door Dash and all the other fast-food delivery options, local courier companies have a window of opportunity here when it comes to this high-potential sub-sector.  Meal kit delivery is an in-demand delivery model, as people need to eat but more and more, many do not always feel like cooking, at least not from scratch.

In 2021, the Canadian meal kit delivery market generated a revenue of roughly 830 billion U.S. dollars.

With the projected growth in demand for food delivery, there will be competition from companies like Skip the Dishes, DoorDash and UberEats.  However, for now, these companies are more focussed on fast food and restaurant deliveries.  Those in the local courier services, can and must carve a niche.  Trying to break into the pizza delivery business is probably a non-starter.

‘MC’ Dispatch Courier and other local courier services have a great opportunity to capitalize on these emerging sub-sectors of the food industry.  We have seen an increasing number of requests for quotes from players in the meal kit business, grocery delivery and even for office lunch delivery services.

Whether it is with our business models, adaptation to technological advances and, most of all, improved customer services, courier companies are shifting and adjusting to the economic winds of change.  Innovation is one of courier services best friends, with particular emphasis on technology that helps to streamline operations, including route optimization software, self-served online booking apps and tracking tools for customers, and report generation that allows customers to analyze the performance, impact and value of the delivery service.

6. Conclusion

Barry O'Sullivan of Forbes Magazine, succinctly poses the questions that every business owner, including those of courier companies, must ask themselves.  Of his list, the one that we here at ‘MC’ Dispatch pose to our management and team overall is:

• What do we need to do now to make our business more resilient against future crises?

Opportunities for growth and expansion abound.  A post-pandemic world, or one that is transitioning and reforming its modus operandi holds huge potentials - not just for the players in meal kit delivery business but for those companies that can provide efficient, cost-effective support services.

A new frontier has opened - between groceries and meal-kit companies.  The numbers have been declining on the side of the meal kit delivery, as grocers have not only started to make their own meal kits but are delivering them.

The big players in the meal-kit business show little sign of retreat:

• Hello Fresh is the top meal kit delivery service in Canada - and they offer free delivery.
• Fresh Prep delivers their preps in select cities in British Columbia and Alberta.
• Offering free shipping for their family box, Chef’s Plate delivers to 8 provinces across Canada.
• Goodfood offers grocery delivery and weekly meal kit subscription service across Quebec, Ontario, Manitoba, Alberta, Saskatchewan, British Columbia, and the Maritimes.

Full disclosure, ‘MC’ Dispatch has had the opportunity to support Good Food with their deliveries over the last few years.

These are just a few of the meal kit services catering to homes across Canada.  They too are answering O’Sullivan’s question - What do we need to do now to make our business more resilient?

Time will tell.