The Two Tiers For Online Food Delivery Platform That Changes The Market Today
The rise in digital technology is reshaping the market. The business of delivering food items from the restaurant to the customers' doorstep is undergoing a rapid change because new online platforms race to capture the higher share in the market. Customers have a hectic schedule these days, prefer ordering food online at their homes.
There are two categories of online platforms to fill the void. The type is the aggregators that emerged fifteen years ago, and the second type is new delivery players that appeared a few years ago. The aggregators are the ones that are part of the traditional delivery method, which means taking orders from customers and routing them to the restaurants. The restaurants handle the delivery part. While the new delivery players are the ones who build their own logistics network, offer the traditional delivery services, and also provide delivery service to the restaurants who do not have their drivers.
Aggregators
Aggregators are the ones who follow the traditional approach of the food delivery platform. They have built a model that offers access to multiple restaurants and their information in a single online portal. By logging in, the consumers are allowed to directly compare the menus, reviews about the food and restaurant from the peers, and its prices. The restaurant handles the entire process of delivery by themselves. The aggregators collect a fixed margin on the amount of the order from every restaurant. No additional costs are charged to the consumer in order. Quite a good percentage of traditional delivery orders come from the customers online, and it is expected to increase in the future.
New Delivery Players
New delivery players offer all the services similar to the aggregators, which means they provide a single click portal where consumers can compare the menus, prices, and reviews of different restaurants and order food from them. The additional service provided by new delivery players is that they offer entire logistics for the restaurants. This means that any restaurant will not need a delivery app with brand name and drivers to offer delivery service to the customers. The white label food delivery apps get compensated with a fixed margin share on all orders from the restaurants and a flat delivery fee from the customers. New delivery players capture more than half of the food delivery business.
Wrapping Up
Both the aggregators and the new delivery players have attracted a massive database of customers. Rather than competing with a traditional approach focused by aggregators, new delivery players are expanding the overall market of food delivery. However, the lower end regular food delivery players might migrate to new delivery business because the restaurants carrying delivery by their own might find it most cost-effective to outsource the delivery service and logistics. Thus, new delivery players poses a potential threat of disruption to aggregators.