Food delivery is a tough business to get right. It’s very easy for customers to migrate from one app to another and there is a long list of potential pain points. Many analysts have looked at the industry from different angles and commented that it is incredibly difficult to turn a profit in this business.
Let’s just list some of the reasons why. Although not comprehensive, these are just a few of the challenges faced by any new entrant to the food delivery sector:
- Expectations on delivery time are always reducing
- Customer preferences on service and how the app works are always changing
- The requirement to follow strict food quality control and safety standards
- The cost of the labour needed to deliver the food
- The cost and complexity of retaining experienced labour
- The constantly changing competition
- The threat of a major new player entering the market
- The macro economy – are people confident enough to order food?
That is a long list of challenges, but these are all fair points. Executives studying the food delivery landscape and mulling the possibility of taking on the likes of Deliveroo, Uber Eats, DoorDash, or GrubHub for example, may want to consider how their service can stand out from the competition. The CEO of Delivery Hero recently apologised for the declining value of his company on Twitter and was praised for his honesty about the competition!
To get food delivery right, there are a few golden rules:
Keep it simple: The app must be easy to use. It has to be clear and simple and very easy to search and find what is needed.
Know your customer: Most customers make repeat orders from a few favourite places, so get to know what the customer likes and make repeat orders simple. Even consider some special offers based on frequent customer orders to help them decide that their regular Friday order needs to keep on being a Friday regular.
Deliver a great experience: most orders don’t require intervention – the order is placed and then it is delivered. However, when things do go wrong it is essential that the customer support process is able to quickly deal with any issues because the requirement to call on a customer server helpline will already be creating friction in the overall delivery process.
This is really it. Distinguishing one food delivery service from another is actually quite difficult because it is a very commoditised service. If you order a product from a website then do you worry about whether DHL or Fedex is managing the delivery? Most customers just assume that it will be delivered on time, as promised.
This is the main challenge for food delivery. It’s very easy for customers to have 4 or 5 apps on their phone – the switching costs are extremely low, so these three rules are absolutely vital for success – especially the focus on customer experience.
Every app can go for a simple design. Every app can create special offers and make it easy to repeat regular orders, but you can stand out by thinking carefully about how your customer service process can set you apart from the competition.
If you can ensure that customers are handled quickly, smoothly, and without creating friction then you can ensure that those repeat orders come via your app. If the process of asking for help is difficult, then the app can be deleted in seconds.
Let me know what you think about these issues of pain points and competition in food delivery. Please contact me via firstname.lastname@example.org or get in touch with me directly via my LinkedIn.
CC Photo by Rowan Freeman