Co-founder and CEO of onfleet†
Many retailers and local restaurants are looking to expand their business in an economic environment of inflation, staff shortages and supply chain problems. But while job numbers are returning and many people are going back to the office, some pandemic habits have not changed.
Consumers are now used to door-to-door delivery. They expect fast delivery and are willing to pay for the convenience. According to the 2022 State of the restaurant industry report, “54% of adults say buying takeaway or delivery food is essential to the way they live.” At the same time, 80% of restaurant operators say using technology in the restaurant provides a competitive advantage, and many plan to increase their investments.
Delivery was a lifesaver for small businesses during the pandemic, but today these businesses want to capitalize on the relationships they’ve built with customers while minimizing fees and fuel costs. One option is for companies to offer delivery in-house, where they can control their costs and use their own employees to provide an exceptional experience.
Retailers looking to deliver can use the following tips to succeed in this new environment.
Meet customers where they are.
In my work I have found that people are willing to pay extra for the convenience of delivery. We’ve found that customers are happy to pay more for faster, more efficient delivery. Few people will say no to free delivery, but for products that are consumed immediately, people are willing to pay a few dollars extra.
Big-box retailers offer hourly delivery, and smaller businesses must match that convenience to stay competitive. Consumers (and restaurants) are getting tired of the 15%-30% commissions charged by third-party delivery apps. The key is to find out what consumers want and get it fast.
Streamline operations and expand partnerships†
Moving delivery in-house can help you reach new customers; look for solutions that provide better routing, tracking, delivery management, and customer notifications than third-party delivery services.
While third-party delivery services can provide an easy stepping stone to delivery, it often comes at the cost of visibility and awareness. If a customer calls asking for a delivery, it may be difficult for you to communicate with the delivery company. As a notorious example of the miscommunication that can arise, a third-party service recently offered a promotion for free lunch delivery; the overwhelming response and chaos for restaurants led one outlet to compare it to the poorly planned Fire Festival† Restaurants had little control over the process, but still got a lot of blame from the customers.
At the same time, consumers complain about unclear costs that can add $10 or more to the price of a meal. Finding a way to provide consumers with transparency (and hopefully lower costs) will help them feel better about ordering from your establishment and may increase deliveries.
With one company my company works with, they were able to focus on making sure their meals were handled with care and delivered fresh when they switched from a third-party app. They were also able to strategically expand their business because they could see where their customers lived and ordered.
Use tools and data so you can focus on the product.
Business owners can spend more time creating a great product when they use tools to manage their operations. Gas prices have been rising for several years and are reaching record levels. Businesses can reduce fuel costs by using route optimization software.
Consumers want more information about their delivery in transit, including real-time updates. Companies want to know exactly where their drivers are so they can prepare the next order. A robust delivery platform gives everyone more certainty that the delivery is on its way.
Some of the key features to look for in a platform include:
Transparency: As consumers become more price-conscious, third-party delivery charges become less attractive and more confusing. Restaurants often have to pay a base rate of 15% per delivery charge to the app and twice as much for better search results. Most restaurants increase the price of individual items to recoup these app costs. By taking more control in-house, you can offer fixed, predetermined prices that consumers can rely on over time.
Communication: Make it easy for drivers to ask questions and for dispatchers to provide drivers with updates. A company needs to have a real-time overview of every vehicle in its fleet so that it can immediately respond to customers or adjust routes. Communication is key.
Integrations and User Interface: No system can do everything, so make sure the services you use can share data between POS, order management, and even HR systems. Look for systems that provide open APIs so that different software systems can talk to each other. Also, drivers don’t have time to scroll through multiple menus to register a delivery or get their next job. They need a simple user interface that highlights the important details down the road.
Sustainability and efficiency: Even for a small mom-and-pop operation, consumers still want to know that the companies they support care about their environmental impact. Look for a platform that offers the ability to track and offset carbon emissions from deliveries. At the same time, any routing software should make deliveries more efficient, reducing expensive fuel costs.
Analysis: This is where technology can really improve a business. By looking at where, when and what you get a complete picture of each order. You can then adapt personnel, locations or products to demand while providing deep customer insights.
A growing sector
Looking ahead, I can only see home delivery growing. Consumers have learned to count on convenience, and we’re not going back, especially with increasingly busy schedules. With this shift, we have the opportunity for more businesses to provide real-time updates, utilize carbon offsets, and save money through in-house delivery. I know that companies that own their last mile have the potential for tremendous growth.
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