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I was reading an article about food delivery market and I came across with a term "upstream" and I don't get what that word means. The article says:

Look upstream. China’s online food delivery market is already worth USD 34 billion, with 296 million people using the service in 2018. But instead of engaging in the cash-burning battle currently being waged by delivery platforms Meituan and Ele.me, Panda Selected saw an opportunity to play upstream and think about the challenges that online food delivery poses to restaurants. So ask yourself: what new industry-specific trends are playing out in your industry? How are they creating new challenges for upstream businesses? Can you innovate to serve those players?

Are the upstream businesses those that are trying "to catch a wave" and play on a current trend or is it something else? I didn't find any suitable definition of the term "upstream busines" on the Internet.

19

Metaphorically goods flow from primary producers (eg farms) to manufacturers, to wholesale, to retail (eg supermarkets) to customers.

Consider Farm -> Dairy -> Supermarket (and follow the milk stream/flow) The Farm and the Dairy are upstream of the Supermarket. The Farm is upstream and the Supermarket downstream of the Dairy. Both the Dairy and the Supermarket are downstream of the Farm

Playing "Upstream" means doing business with companies near the start of the list: ie working with producers and manufacturers and wholesalers (and delivering to restaurants), rather than delivering (from restaurants) to the final customers.

Upstream and downstream are relative terms. So the dairy is downstream of the farm, but upstream from the supermarket.

  • I think you have missed explicitly defining the simple "upstream" of business that take your product further. So upstream of the supermarket are the consumers (or is upstream from the supermarket the farmer)? – WendyG Mar 20 at 15:40
  • @WendyG. Consider Farm -> Dairy -> Supermarket (and follow the milk stream/flow) The Farm and the Dairy are upstream of the Supermarket. The Farm is upstream and the Supermarket downstream of the Dairy. Both the Dairy and the Supermarket are downstream of the Farm – Flydog57 Mar 20 at 15:56
  • @Flydog57 that needs to be edited into your answer :) – WendyG Mar 20 at 16:00
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    @WendyG: Sorry, it's not my answer. That would be up to JamesK. – Flydog57 Mar 20 at 16:05
  • "Playing "Upstream" means doing business with companies near the start of the list" Maybe in this context but 'upstream' and 'downstream' are relative terms. This phrase implies an absolute meaning. – JimmyJames Mar 20 at 18:17
1

If I'm standing next to a stream, watching the water flowing through it, then I'm watching the water flow from upstream to downstream.

If I'm observing a complex chain of businesses, where goods (water) pass in a particular path (stream) through them (e.g. seed -> farm -> distributor -> market -> consumer), then there is a flow in a particular direction, through that "stream" of businesses. It is still flowing from upstream to downstream.

1

Meituan and Ele.me are competing for customers to buy food using their services from restaurants. Panda Selected is instead marketing to the restaurants rather than their customers. This puts them one step upstream, just as a company selling services to restaurant supply companies would be yet another step upstream.

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