In today’s fliting economy, finding secure investment opportunities with a reasonable return on investment is challenging. Many industries are barely managing to keep their heads out of the water, and former options people used to run to, like crypto, have all but dried up.
However, despite the challenging conditions, the delivery industry’s performance was excellent and might be your next best investment alternative.
According to studies, the food delivery sector alone in the US grew to $26 billion in 2020 from $20 billion a year prior. Furthermore, large retailers such as amazon have experienced greater demand for their fast delivery services and are even facing a shortage in delivery personnel. Join us as we unravel delivery companies and try to figure out if they are ideal investment opportunities.
What is the Delivery Industry?
The delivery industry comprises companies that specialise in moving goods from their point of sale to the end consumer or customer by ship, air, or road. Customers usually pay a flat delivery fee with their orders, and the retailer handles the rest of the delivery process and ensures that packages get to their rightful owners.
On the other hand, delivery companies take possession and the responsibility of transporting the packages from the retailer’s premises to the customer’s location and earn a fee from the retailer. And even though the customers pay for the delivery, their contract is with the retailer.
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How Large is the Delivery Industry?
The world is a totally different place from what it used to be just a few years back. Today everything is on the internet, and people prioritise convenience more. This has meant that more and more people are making purchases online than in person and expecting them to be delivered to their doorsteps as fast as possible.
Therefore, the delivery industry in Europe and places like the US has grown two-fold, and it’s worth a staggering $151.6 billion in 2022, with an additional 4.6% expected increase. In addition, different market segments have started to emerge in the last few years with the rapid growth of delivery services such as food and medication.
Multiple publicly traded food delivery companies are competing in different regions of the world, and the industry has never been this ripe. Furthermore, food delivery apps are helping delivery companies capitalise on their markets and helping drive more business than traditional retail.
Major Players in the Industry
- DHL- this is the largest delivery company in the world and offers its services to almost all countries. It’s based in Germany and has over half a million employees globally. The company is valued at £47.38 billion, and a share goes for $38.10, and according to the IMF, it will experience a 3.9% growth rate in 2023.
- FedEx- this is a delivery services provider offering online merchants with global customers a way to get products to them. It has a market cap of $45.71 billion, with total dividends paid in the fiscal year 2022 equaling $3 per share. It recently acquired TNT, a Dutch delivery company, to help it consolidate its business in Europe, which is something to consider in 2023.
- GrubHub- is an American food delivery company with a mobile food delivery platform. Just Eat Takeaway acquired it in 2021, which only boosted its 20 million users, 115,000 restaurants, and 3,200 cities. Its market cap also grew to $7.13 billion in 2022 from $6.88 billion a year prior.
- Uber Eats- is a subsidiary of the ride-sharing app Uber and delivers meals to people’s homes. It was launched in 2014 and has since received approval to deliver medical marijuana products in Canada earlier this year. Furthermore, the delivery company has been doing well, with $8.3 billion in revenue in 2021 and experiencing a yearly growth rate of 72%.
Should you Invest in Delivery Companies?
The world is getting more digitised, and consumers trust online retail services and the capability of delivery companies to deliver things to them. Furthermore, in times of crisis like the lockdown period, delivery companies proved to be essential and a critical industry to watch out for. It will also continue to grow as more businesses move their services online in search of broader markets.
As such, consider investing in delivery companies as they hold the potential to make good returns over the coming decades.