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The Seven Important Things To Know About Food Delivery Marketplaces

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Woman receiving food delivery during the coronavirus pandemic

By Tim Scott

May 26, 2021

Customers expect restaurant delivery orders to be right - every time. If you’ve got a busy location, that’s going to be impossible to achieve; but when every small business is being compared to the efficiency of Amazon, you have to find a way to keep up.

The traditional way of offering food delivery was to hire your own drivers and maybe even have a fleet of vehicles. It’s still possible to do that, but the initial expense for management, staffing and vehicles is more than most restaurant owners want to take on.

Even managing orders over the phone is hard. Since the line is always ringing, it’s stressful for staff, annoying for dine-in customers and frustrating for anyone trying to get through. It’s a recipe for lots of mistakes and unhappy guests - everyone has been to a restaurant like that and it’s not a pleasant experience.

In the last few years, a number of food delivery aggregators have popped up online that seem to offer all the benefits restaurant owners want, without all the overhead and risks. These marketplaces will post your menu, take your orders, handle payments and send a driver to your restaurant to pick up food for delivery.

Sounds great, right?

What could possibly go wrong when you hand over most of your business functions to a third-party?

Here’s an insider’s perspective on the problems that come with so much convenience.

1 - You Won’t Develop a Database of Customers

There’s no free ride when you’re dependent on a middleman. When someone places an order through a food delivery marketplace, you don’t get their contact information. The marketplace keeps it and all communications are handled through their interface.

This may not seem like a big deal in the beginning, but it keeps you from having a free way to reach your customers. If you want to run a promotion, your only option is to buy ads in the food delivery marketplace.

If you have a way to build your own database of customers, you can email or text them any time there’s a deal you want them to know about. It’s much more efficient and effective to market to previous customers rather than buying ads every time you want to boost sales.

Food delivery, rider with bicycle delivering food

2 - They’ll Promote Competitor Offers to Your Clients

Food delivery aggregators aren’t loyal to anyone. When you look at their sites, they have thousands of restaurants listed and the ones at the top are paying for that position. Can you afford to do that? Few restaurants can.

What’s even worse is that you’re sending YOUR customers to these sites when you don’t have your own delivery service. When your customers land on their sites, they’re going to see promotions from your competitors before they see your menu.

A better option is to control your own online ordering system that includes a delivery option; it’s even better if you can add an app for your customers to download. That way, instead of looking at your competitors when they’re hungry, they’ll go straight into your app to place an order.

3 - You Lose on Fees

Food delivery marketplaces are not offering their services for free - they take a percentage of every order placed on their sites. When you add in credit card transaction fees, you’re losing a lot of money every time an order is placed through these services.

Again, a better way forward is to manage as many of your business functions as possible while automating as much as you can. It’s the only way you can be in control of what fees you pay.

Young girl is eating take out or delivery food at home

4 - You’ll Be Forced to Run Constant Promos

It’s impossible to stand out on food delivery aggregators with a basic listing; that means you have to pay for ads and run lots of discounts just to attempt to be seen. The only problem is that’s what everyone else is doing on the aggregator sites - it’s like a hamster in a hamster wheel.

You’re not going to get anywhere.

In fact, you’re really going backwards. It’s going to take a massive advertising budget to get noticed, which is going to eat into your profits. For the food delivery aggregators, it’s a great business to be in; all they have to do is build the marketplace and wait for restaurants to spend, spend, spend to get noticed.

It’s a raw deal for restaurants.

Business analytic with tablet pc and laptop computer

5 - Customers Blame You for Errors

Even though a restaurant may be using a food delivery marketplace for payments, delivery and online ordering, that doesn’t mean every customer will have a seamless experience. So, who handles complaints?

Not the marketplaces.

If a customer’s food arrives cold or the order is mixed up somehow, the aggregators stay silent. They’re not helpful even when the problem is their fault - they expect you to handle all the customer service and make sure your customer is happy in the end.

And if you don’t? Well, the marketplace is totally fine with you receiving negative ratings, which will further reduce your chances of getting any orders.

6 - There’s No Reason for Customers to Be Loyal

From a customer’s viewpoint, the food delivery marketplaces give them lots of options for food. They can browse menus from every type of restaurant they can imagine and place an order quickly. That doesn’t help you as a restaurant owner.

It’s not just the wide range of options that hurt loyalty - it’s all the promotions! Your customers are basically being trained to search for the best offer they can find every time they’re on the app. If you’re not giving them a discount, someone else always has one ready for them.

It’s a race to the bottom when it comes to prices and you’re only going to see a jump in business when you run a promo. It’s great having new customers, but they’re only ordering the one time, then they’re off looking for the next discount.

As you can see, this isn’t a sustainable way to run your restaurant.

7 - The Rules Can Change at Any Time

Even if you prefer the convenience a food delivery marketplace brings and even if you don’t mind running lots of ads to stay visible, that doesn’t mean the system is static. The marketplaces can increase fees, add new ones, discontinue services or anything else they want to do - any time they want!

You don’t want the success of your restaurant to be dependent on a third-party, especially one that you don’t have a personal relationship with. When you’re just a number to them, it’s easy to get left behind.

Take Control of Your Restaurant’s Destiny

What’s the best way to avoid becoming a victim of the food delivery marketplaces?

By now, you already know the answer.

You have to control as many functions of your business as possible.

WOWAPPS can make it happen.

In just a few days, we’ll set you up with a point-of-sale (POS) system that’s linked to your own branded app and website. Customers can order online, through the app, or in-person and everything can be managed on your end from one screen.

You’ll also automatically start building a list of customers that you can send texts and emails to - any time you want and however much you want - FOR FREE.

Did you know?

WOWAPPS online ordering offers a commission-free nationwide delivery service?

About WOWAPPS

WOWAPPS is an all-Australian tech company, dedicated to anticipating the ever-evolving needs of restaurants and their diners. We are committed to helping Australian Restaurants reap the rewards of additional revenue and brand advocacy, providing seamless customer experiences that are more delightful and convenient.

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