SpendSmart™ Report: Digital services continued to soar in 2018

SpendSmart™ Report: Digital services continued to soar in 2018

Our newly-released 2018 SpendSmart™ Report highlights how expectations for personalization and convenience are extending far beyond the consumer world, and becoming a necessity for business. Digital service brands Amazon, Uber, and Lyft held three of the top six spots for the most expensed vendors of 2018—where five years ago you’d only recognize a few of those names.

Every quarter since 2013, we have tracked T&E spend via the millions of expenses that flow through the Certify system. Once a year, we access the annual data—which in 2018 totaled more than $3.3 billion in business expenses. In the 2018 Year in Review SpendSmart Report which was released today in tandem with the fourth quarter report for 2018, several key trends emerge.

As organizations shift from traditional business vendors to digital-first brands, this is changing expectations for companies and their traveling employees.

Here are three key points from the reports:

  1. 1. Travel and expense continues to change
The Global Business Travel Association (GBTA) estimates trip-related spending to reach $355b by 2022—with four percent growth in North America alone. And while the familiar business expense categories of meals, hotels, fuel, and tolls all saw a slight increase in average cost in 2018 according to our data—airfare, ride hailing, and car rentals saw an overall decrease in costs.

Certify data shows that the average general expense cost decreased from $104 in 2017 to just $79 in 2018. This could signal a number of factors: businesses may be controlling their T&E spend more effectively via their use of automated software; digital-first, disruptive brands could be offering competitive rates and services; or category costs are simply in flux.

Starbucks kept its position as the most expensed restaurant, taking 23% of all expense receipts in the “meal” category—proving just how much businesses and their traveling employees rely on their favorite place for coffee and a bite to eat. Meal-related spending makes up 17% of expenses in 2018—the largest category of them all—so it’s important that finance teams review their own benchmarks against this often-overlooked category of T&E spend.

The e-commerce giant Amazon nearly surpassed Starbucks as the second most expensed vendor of 2018, missing the mark by only 0.1% of receipts and landing in third place. Nonetheless, it’s seen a steady climb since 2016 when Amazon came in as fifth most expensed vendor, and fourth overall in 2017. Amazon unveiled their latest initiative in the fall of 2017, Amazon Business Prime, which will cater to businesses by offering competitive B2B pricing with unlimited free shipping among other benefits.

  1. 2. Lyft is moving up rank
Uber has controlled the ride hailing category since it first eclipsed yellow cabs in our 2015 SpendSmart™ Report, and has held onto its position in 2018 with 73% of all expense receipts for the category, and an average expense of $25.88.

However, Uber’s top marks didn’t extend into average user ratings. Rival ride hailing company Lyft overshadowed their user ratings with 4.7 stars compared to Uber’s 4.5 stars. Both brands still had better ratings than taxis (4.0), who have struggled to keep up by adding features familiar to ride hailing users. This proves that making a comeback in the business world isn’t as simple as adding an app to a service.

Lyft made our top ten most expensed vendors list for the first time this year, joining industry heavyweights Amazon, Delta, Starbucks, and Uber. While Lyft only had 19% of receipts for the ride hailing category, the brand was able to grab 3% of all expense receipts at an average cost of $24.64. This is significant when you note that Lyft only had 0.42% of all expense receipts in 2016.

As both brands continue to shape their offerings for both consumers and businesses, it will be interesting to watch this dynamic unfold in our 2019 reports.

  1. 3. Businesses gravitate to digital services
The convenience and simplicity of food delivery app services are growing in preference by businesses. The category saw a massive 118% growth compared with 2017. Chicago-based Grubhub, which has held a near monopoly in the category since it emerged in 2013, is continuing to lead with nearly 36% of expense receipts and an average cost of $64.26.

While Grubhub wasn’t able to keep rank in user ratings, Seamless—one of the brands Grubhub owns in its portfolio— took the lead in user ratings with 4.8 stars, just beating out competitor Uber Eats with 4.7 stars.

The increase in food delivery app expenses highlights just how important convenience is for employees both in and outside of the office. Starbucks recently launched a delivery service in partnership with Uber Eats, adding to this trend.

While the T&E industry is always changing, the signal is clear: Adapt to the needs of your customers and deliver on your promise—or your customers will look elsewhere.

How does travel and expense at your company compare with our benchmarks? Find out if your spending is in line with industry averages by downloading our Q4 2018 and 2018 Year in Review SpendSmart™ reports here.