How Deliveroo works Business model explained

Are you currently planning to start an on-demand delivery business? While doing research, you probably came across platforms like Deliveroo.

How exactly did their business model become so successful and competitive to other large platforms, such as Uber Eats.

The business model followed by: Deliveroo.

As of 2021, Deliveroo had 7.6 million users and worked with 160,000 restaurants.

The platform works by providing customers with a Deliveroo App available on IOS and Android.

Deliveroo uses the customer's postcode to find a great restaurant within the local area to deliver to the customer's address.

In the second step, Deliveroo facilitates the communication between the customer and the restaurant.

Once the order is placed, the application sends push notifications that inform the customer about their order status. Once the order is prepared, the Deliveroo rider picks it up from the restaurant and delivers it to the customer's doorstep.

Deliveroo also makes it possible to order up to 24 hours in advance if you need a food delivery for a specific time.

What features make this delivery app attractive to restaurant owners and customers?

Technology

One of the main features of this application so popular is the technology and software used to complete orders.

Deliveroo uses predictive technology called the 'frank' algorithm that has successfully reduced the delivery time by 20%.

In addition to that, the ordering process is concise and smooth, giving the customers a variety of options to edit carts, reorder their favorite dishes, and use various payment options.

For restaurants, the technology is also beneficial from the management standpoint. 

The operating system makes it easy to receive and process orders. The restaurant does not have to worry about the delivery time, as it is up to the Deliveroo employee to be there and deliver on time. 

Therefore, any potential complaints addressed to the restaurant also go through the application, and the restaurant does not have to be responsible directly.  

Affordable pricing

Regardless of your budget, you can be assured that you will find something within your price range. 

Deliveroo offers a wide variety of products for different occasions and budgets, whether a fancy dinner or a quick lunch at work. 

This also allows restaurants of different profiles to be a part of the platform.  

Convenience

The convenience factor is one of the most significant advantages of Deliveroo. 

It is a convenience of Ordering, payment, quick delivery, and a wide selection of products for the customer. 

On the other hand, convenience is about getting rid of the delivery in the supply chain for the restaurant. 

The restaurants are willing to pay hefty commissions for the most significant factor is that Deliveroo provides drivers, and the restaurant does not need to deal with additional employee costs and potential customer complaints. 

Branding

With so many users, Deliveroo became very recognizable internationally. For customers, this equals reliability and access to many reviews that are available online. 

The branding creates a sense of trust, and the customers are not worried about sharing their credit card information or address with the app.

Similarly, restaurant owners see it as an opportunity to gain more customers since they have immediate access to their information. By being on the platform, the restaurant is seen as reliable. 

What is the limitation to third-party apps? 

Commission fees 

The commission costs are, without a doubt, the most significant source of anxiety when working with third-party platforms. 

Nowadays, the fees might be as high as 25%-30%, making the partnership almost unprofitable unless the restaurant raises its prices dramatically. 

The applications collected additional service and delivery fees and the usual delivery fees. In that situation, the estimated total cost of a meal rises to almost double what it would have been at the restaurant. 

The advantage of having your platform is that you can set your prices without worrying about your clients being put off by the high cost.

Lack of customization 

Another disadvantage of sites like Deliveroo is that each delivery comes with the site's branding. Your restaurant's level of customization is relatively limited, and it does not adequately represent your brand uniquely. 

It seems more like a set presentation for each restaurant, emphasizing the most frequently ordered meals rather than the overall ambiance.

Having your platform allows you to completely customize the style and photos, allowing guests to get the entire experience of your restaurant.

Why should you start your platform? 

As previously mentioned, third-party platforms such as Deliveroo can teach us a lot. 

However, nothing prevents you from creating your platform with equivalent features that are equally interesting to clients.

The only thing you'll need is appropriate software. Look for a company like Ordering that can set up your website and application in less than a week, fully customize it to your brand, and provide an efficient delivery system without charging you a fortune in commission costs.

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