You can now order food through Google Maps (GOOG)

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An update to the Google Maps mobile app has brought the capability to place orders with an on-demand meal delivery service from local restaurants, reports 9to5Mac.

If consumers search for a restaurant on Google Maps that works with a partnered delivery service, like Grubhub, they will see a new "Place an order" option in the establishment's description. This could prove to be a significant boon for on-demand meal delivery services by raising visibility among Google Maps' over 1 billion users.

The ordering capability within Google Maps can help boost order volume for on-demand meal delivery services. As of 2015, about $210 billion worth of food is ordered for delivery or takeout on an annual basis in the US, according to Morgan Stanley Research. Just $11 billion of that is online delivery, and within that subsection, nonpizza online deliveries are worth just $4 billion in annual order volume. This means that the market is underpenetrated but massive.

The Google Maps update can help drive up orders by pushing its massive user base toward on-demand services. Moreover, the tool brings a heightened convenience that can increase engagement among existing users, while also potentially attracting new ones. The feature is limited by availability, but considering the presence of numerous on-demand meal delivery services in major populous cities, these types of companies could see an influx in orders and active users.

Driving up traffic to these sites is vital as meal delivery funding declines. Funding for meal delivery companies is expected to drop severely in 2016. Meal delivery startups around the world raised nearly $4 billion in funding in 2015, according to CB Insights. But this total is expected to reach only $918 million by the end of this year.

This deceleration in funding is likely due to increasing market saturation as new entrants attempt to gain a share of this highly valuable market. As investors become more selective, Google Maps could prove to be a vital tool for existing players that are looking to boost performance and prove their worth to venture capital firms.

Pizza chains have long dominated meal delivery, but digital platforms are now enabling the entire restaurant industry to plug into online delivery. In the dominant on-demand meal delivery model, platforms like Grubhub serve as a middleman that connect people to food using the scalability of the internet.

Although some industry leaders are processing hundreds of millions, even billions, in annual food sales volume already, they're a drop in the bucket in terms of the total addressable market (TAM) for food delivery, which is valued at $210 billion, according to Morgan Stanley Research estimates.

Companies are adopting diverse business models in the market to deliver these meals; some, like Postmates, are focused on the logistics of delivering food, while end-to-end providers like Sprig cook, facilitate ordering, and deliver the food themselves. Ultimately, order-focused platforms like Grubhub/Seamless and Eat24 appear to hold the strongest positions in the market. The former controlled an estimated 59% of total order volume in 2015, while Eat24 held an estimated 7% share. Moreover, Grubhub/Seamless could pose a threat to the logistics companies DoorDash and Postmates if it pushes further into proprietary delivery services, especially in markets its competitors haven't expanded to yet.

Despite varying advantages and disadvantages, all stakeholders will have to navigate some challenges in the market, including cooling deal volume, consumer resistance to delivery fees, potential industry consolidation, and downward pressure on take rates, which measure the revenue a company actually earns out of the volume they process.

Evan Bakker, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report for on-demand meal delivery that sizes the market for on-demand meal delivery, outlines the main business models, assesses which key players are in the best and worst position in the market, and also analyzes the underlying risks that all stakeholders will have to navigate.

Here are some of the key takeaways:

• There is a massive unfulfilled market opportunity. As of 2015, about $210 billion worth of food is ordered for delivery or takeout on an annual basis in the US, according to Morgan Stanley Research. But two of the industry leaders, Grubhub/Seamless and Eat24, generated a combined $2.6 billion in food sales last year. This means the market is underpenetrated but massive, which will incentivize continued competition and, potentially, an influx of new entrants. 
• There are three main business models that companies adopt. The dominant business model so far has been platform aggregators whose primary function is to support online orders. These include Grubhub/Seamless and Eat24, which control a combined 66% share of the market so far. Other models include delivery-focused logistics models and full-service models in which companies cook the food themselves. 
• There are a number of risks that all players in the ecosystem will have to navigate. SpoonRocket, a once promising full-service delivery provider, shut down earlier this year in the face of insufficient capital and intensified competition. This, along with cooling deal volume, could signal upcoming consolidation in the industry. Other risk factors include consumer resistance to delivery fees and lowering take rates, which measure the revenue a company actually earns out of the volume they process. 

In full, the report:

• Overviews the on-demand meal delivery market and quantifies the opportunity for expansion. 
• Explains the three main business models meal delivery companies adopt.
• Runs through the main competitors in the market and assesses which are in the best position to succeed.
• Identifies the underlying market risks and how they might disproportionately affect certain types of competitors.

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