Tag: On-Demand Delivery

How to secure your online delivery business

Posted on by Jea Vanity

Online shopping has become a necessity for all growing businesses in this day and age. Customers are gradually becoming more comfortable buying things they need and want with just a click. Many customers are leaving behind traditional shopping methods. This has led business owners to turn to online delivery solutions built on websites and mobile apps. In 2020, thousands of businesses had to close their brick-and-mortar establishments and move their services online. While this effectively allowed organizations to continue operations, it also posed a new threat: cybercrime. When it comes to cybercrime and cyberattacks, all online businesses and e-commerce solutions are always on the edge. Irrespective of the size and scale, no business is immune to cyber risk.  

In the first quarter of 2020, there were 273% more data breaches than there were in the first quarter of 2019. The main reason for this is that many businesses shifted their focus towards becoming more digitally orientated, such as embracing online delivery.

Tips to Secure Your Online Delivery Business

In this era of increased cybercrime, it is imperative that online delivery business owners are aware of prevention techniques against cybercrime. This applies to all types of businesses, whether it is an online food delivery business, a medicine delivery business, or an online B2B delivery business. These four tips can better help to secure your online operations:

1. Know the cyber risks

First and foremost, you need to educate yourself on the nature of cyber risks so you know what to expect and how to protect against them. 

  1. Phishing attacks
    One of the most common cyber risks is phishing attacks. This is when hackers send you emails that pose as legitimate institutions to lure you into providing sensitive data, like your banking details or credit card number. These hackers use phishing emails to steal money from their victim’s accounts and even impersonate their digital identities. 
  2. Ransomware attack
    This is when hackers encrypt your data, making it impossible for you to read, and demand payment for the cipher or the key to unscrambling the data. Both of these cyber risks can easily be avoided by double-checking emails with suspicious links or attachments. You should also back up company data and ensure that your passwords and accounts are secure.
  3. Financial frauds
    Hackers tend to perform unauthorized transactions and clear the trail so that the business owner is unable to investigate. The hacker also at times requests fake refunds and returns. Fraud management systems are one way to detect and get protection against fraud. 

2. Secure tracking systems

Your online delivery business can benefit from tracking systems that inform customers of their product’s delivery time and status. However, such systems can be hijacked and manipulated by hackers. In many cases, this causes little more than disruptions to the delivery schedule. However, this vulnerability can lead to more dangerous situations. For example, cybercriminals can use stolen tracking data to intercept your delivery routes and steal goods. This not only leads to a loss of property, but it could also be dangerous for your employees. For a secure online platform for delivery businesses, check out VentureDive’s all-in-one application and delivery management software for online delivery businesses.

 It’s highly customizable and a cyber-secure option for business owners. You can also secure tracking systems by doing the following:

  1. Securing your servers and admin panel: Do not keep passwords that are easy to guess. Keep complex passwords and keep changing them every now and then. 
  2. Keeping strong firewalls: Firewall software and plugins are easily available for free or at a price. They automatically keep a check on your servers and blocks any new threats. Good firewalls even resolve new viruses or bugs that might attack your server.
  3. Using anti-virus and anti-malware software: Hackers can be easily stopped if your antivirus is up to date. They are also able to flag any malicious activity or transaction. 
  4. Frequently backing up your data: You can employ an automatic backup service so your data is being protected and backed up regularly. A system malfunction or cyber-attacks can easily wipe out your entire data for good. So it is wise to take all the precautionary measures. 
  5. Checking from time to time for any malicious activity: You can get special monitoring software that keeps track of data and activity in real-time. It also notifies you if a suspicious transaction occurs.
  6. Stay updated: Keep your antivirus software and plugins up to date. Hackers can detect if a system is using an outed version of security software.

3. Educate your employees

Robust cybersecurity measures are only valuable if your workforce is aware of potential cyber risks and how to mitigate them. People are the weakest link in cybersecurity, so you—or better yet, your cybersecurity team—must educate them on the dos and don’ts of conducting business online. This protects company data from all forms of cyber risks, particularly those that prey on human error, like phishing emails. A small act such as clicking on a malicious link can make you the victim of a cross-site request forgery or cross-site scripting attack.

With delivery businesses holding valuable personal information like addresses and bank details, it is important to hold workshops or distribute resources on the importance of cybersecurity to your workforce.

4. Consult with cybersecurity professionals

Basic cybersecurity measures might not be enough to protect your delivery business against hackers. As your business expands, consulting with professionals might be a necessary step forward. The increase in cybercrime in 2020 is one of the reasons why cybersecurity jobs are being created in droves—3.5 million in 2021 to be exact. With the sheer number of businesses migrating to some digital platform or another, there is huge pressure on the cybersecurity industry to respond.

Filling this gap, though, is a massive undertaking. This is why educational institutions have developed their cybersecurity certifications and degrees to have a strong business focus. This is helping the cybersecurity graduates of today be much more knowledgeable about the business landscape and the needs of growing businesses like delivery services. Mixing business with cybersecurity training has opened up the industry to more professionals. If your business is too small to have its own cybersecurity department, put your trust in outsourced experts who can set up strong defense and offense strategies against hackers and cybercriminals. This way, instead of hiring in-house resources, you can hire and manage QA teams and other cybersecurity experts to share the load.

Always Secure Your Online Business – Whether Big or Small

To sum up, the world of e-commerce fraud can seem complex. But keeping your cybersecurity up to date will only benefit your business and fight against fraud and viruses. Developing a cybersecurity plan for your online business is vital to the growth and success of your business. Though not every business can allocate resources for cybersecurity, small initiatives such as workshops can also assist in training your staff better. This will further help in eliminating a huge gap in your defense against hackers and criminals. You should take as many measures as your business demands. Your end goal should be to be able to create a website or app or develop custom software that your customers can absolutely trust. 

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How we did it: Optimizing on demand delivery for Munchies

Posted on by Muhammad Amir Khan

When it comes to delivering food to customers through an app, on-time delivery matters the most. Munchies, a Pakistani e-commerce snacking solution, was founded in 2019 by Unilever and VentureDive with the aim of delivering snacks instantly to customers using an app. The app would allow them to choose from a variety of snacks including ice cream, chips, chocolates, and more.

Being the only on-demand delivery app for snacks in Pakistan, Munchies got the attention of consumers quickly and began receiving a reasonable amount of orders daily. However, it had to face challenges with on-time delivery as well as updating the customer on an accurate Estimated Time of Arrival (ETA). In other words, the Estimated Time of Arrival (ETA) for Munchies was longer than expected.

Munchies’ on-demand delivery system

Similar to other on-demand delivery apps for the food industry, Munchies was designed to focus on customers, stores, and riders. Whenever a customer would place an order, a rider would be sent a request to accept the order. After a rider accepts the order, a store is shortlisted for picking up the order items. When all of the order items have been collected, the rider will be ready to depart for the drop-off location and deliver the order to the customer. The figure below shows the current dispatch system.

Problems with Munchies snack delivery workflow

While the on-demand delivery flow looked manageable, it had many unforeseen complexities. In a hypothetical situation, if an item is not available at the store, then the rider might need to ask the customer to either cancel that item or go to another store, which will result in an increased ETA. Similarly, the larger the basket size (number of items in an order) of an order, the larger the time to collect all these items. Another reason for altering the ETA could be the long lines at stores given the Covid-19 pandemic.

The current system that estimated the time of arrival was Google Maps, i.e., the Google Distance Matrix API, which simply estimated the time from order acceptance to arrival at the store and then from the store to the drop-off location of the customer. The total ETA is simply the sum of these two plus a fixed buffer of a few minutes. While Google is no doubt an efficient system to get ETAs, for Munchies, it just concentrated on the longitude and latitude of the rider, store, and customer’s dropoff location. It was not aware of the workings of Munchies and all the complexities discussed above.

The obstacle was that Google was providing an accurate ETA for the latitude and longitude pair, giving a time of 25 minutes, but because of the workings and structure of Munchies, an order would, almost all of the time, take longer than what Google had provided. All this was not leaving a good impression on the customer. Another reason for the longer ETA was that there were a lot of orders in some areas but only a few stores. This prompted the suggestion that some stores be added in order to reduce ETA and deliver faster.

VentureDive’s strategy to resolve the ETA prediction issue

In order to solve this obstacle, the data science team at VentureDive was put in charge of digging deeper and coming up with a viable solution.

After a thorough analysis of the data with respect to ETA, the team identified a number of key problems with using Google Maps. The main problem highlighted was that while Google is aware of the traffic conditions and the roads of the city, it knows nothing about the internal operations of Munchies. For example, there might be a specific area in the city that takes longer, or there might be some specific stores responsible for a longer ETA. The data of the orders at Munchies was being stored on a daily basis but Google does not consider any of the data recorded for predicting ETA except latitudes and longitudes.

The main purpose was to make use of the historical data we had at our disposal to predict the ETA. The team provided a solution that was simple but efficient. An in-house system (a prediction model) that will predict ETA for orders.

Benefits of accurate ETA prediction for on-demand delivery

The benefit of using this solution is that we will be using several more features to predict ETA than just latitude and longitude. The following are the features:

  1. Time & Location
    When an order is placed, we can tell our prediction system that the order is for this specific area or store respectively.
  2. Basket size
    We can also specify the basket size (the number of items in an order or even the rider information or vehicle type.
  3. Weather
    We can add weather data which, of course, has an impact on delivery time.  

The foremost benefit of having an in-house prediction system is that, since it will be using historical data, it will automatically take into account all those complexities that we discussed above. It was also cost-efficient and entirely under our control. We had the ability to make changes as needed, which Google Maps does not provide.

Building the ETA Prediction solution to enable on-time deliveries

Munchies’ on-demand delivery model was designed in such a way that cities are divided into service areas, and each service area has its own dedicated fleet of delivery that was instructed to remain near the restaurants to make delivery as quick as possible.

The team started by exploring the data and analyzing it specifically in terms of ETA. Data was already being collected from the app, so the data acquisition stage was relatively simple. In the analysis phase, the team’s research came up with some interesting insights. Three pieces of research highlighted that there were some areas in the city that were constantly taking longer than expected. Similarly, orders from some stores were also taking too long to deliver. The most fascinating find was the dispatch algorithm currently in use could be improved which would reduce the ETA.

After all the thorough research and solutions, now it was time to start building a machine learning model that would be trained on order data and then used to predict the ETA of future orders. In order to build this model, the team did processing on the data which included the:

  1. Feature Engineering
    The data had some timestamp features, so a month, day, week, hour, or even minute and seconds can be extracted from a single DateTime feature which can possibly add to the model’s performance and data analysis.
  1. Outliers Detection and Removal
    The real-world data is always disordered and comes with outliers, but not all machine learning models can handle them. Using statistical techniques, outliers were removed from the order data since it not only affects analysis but also the model’s performance as well.
  1. Missing Values
    Another problem with real-world data is that it contains some missing values. The same was the case with our data. Again, with the help of statistical techniques, the team solved the problem of missing values.
  2. Encoding
    There were some features that were categorical in nature. Since many machine learning models cannot process categorical data, these features needed to be converted into numerical form, and for this reason, encoding techniques were used.
  3. Drop Irrelevant Columns
    Not all the features are important for a machine learning model. Columns like timestamps, Ids, etc. So these features can be dropped.

Once the data was filtered, meaning it had no outliers, missing values, or categorical features, it was time to move toward the machine learning part, where the data was first split into training, testing, and validation sets. 

Overcoming the hurdles & challenges

One of the challenges in machine learning is choosing an appropriate machine learning algorithm. Since predicting ETA (continuous values) is a regression problem, we had to choose a regression algorithm. The most common choice was to go with XGBoost since it is widely used in the industry and usually outperforms other algorithms. Therefore, we tried three different algorithms, and XGBoost outperformed all other algorithms. We evaluated our models using regression metrics. A number of metrics could be used including RMSLE, RMSE, MAE, and R2 Score. We used some of these metrics for our case.

Initially, our models were not performing properly and there was an enormous error between the actual and the predicted values. This led to the hyperparameter tuning of models and which improved the results and reduced errors between the actual and predicted time of arrival.

One final step was to test the model in production. We deployed our model in production to see its comparison with the existing model. After months of comparison between the two, it turned out that an in-house solution was performing well in estimating arrival time by an adequate margin.

Conclusion

Long story short, with the help of data science and machine learning, our team was able to find the root cause of the problem. We provided viable solutions to the mobile app development team on how to reduce the ETA to enable timely, on-demand delivery of snacks and built an in-house model that started predicting accurate arrival times for orders. Ultimately we improved our customer experience in a cost-effective manner.

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Survive now, thrive later: Your guide to staying relevant during & post-COVID-19

Posted on by Saad Fazil

Out of the major victims of the COVID-19 pandemic are brick-and-mortar businesses. It may look increasingly grim but there is a silver lining. Once the smoke clears, and retail life begins anew, it’s going to look extremely different. Retailers who balked at the very thought of going ‘digital’ will now have no choice but to acquiesce. They will have to find a way to bridge the gap between their products & services and their consumers. On-demand delivery is the next logical step.

Are you digitally fit?

Most retailers already have a digital presence, usually involving social media pages on Facebook, Instagram, and so on. Pretty basic. Some might even have an online store and an on-demand plan, meaning that they work with FoodPanda, Uber, Careem, Amazon, eBay, and so on. A minute subset of them would have their own in-house delivery and e-commerce channels (website, mobile app, delivery network, etc.).

The lack of an online retail strategy during the COVID-19 pandemic is not an option. Businesses that were growing organically or with little effort focused on social media presence & marketing, before the pandemic, are not going to survive if they continue to follow the same strategy. They must become digitally fit by offering on-demand delivery services if they want to survive and thrive. Take a look at the food industry – pre-pandemic mature markets reported roughly 25% of sales through online food delivery. Michelin star chef, TJ Steele, redesigned his menu to focus on comfort food instead of his trademark complex dishes so that he could stay relevant. Jamie Oliver had to close down his business because of their no-delivery policy. Online delivery has become an essential part of e-commerce, retail, and food businesses, and the need for it has risen dramatically ever since the lockdown began.

The current situation

The world’s economy is taking a serious hit. It’s essential, now more than ever, to make it easy for consumers to access essential products, services, and goods, from the comfort of their homes, via on-demand delivery apps. Some examples include grocery delivery apps, pharmacy delivery services, laundry delivery, etc.

The kind of economic shock we’re talking about can exhibit three different types of trends, according to an article published in the Harvard Business Review:

Harvard Business Review |  What Coronavirus Could Mean for the Global Economy

The article further depicts Coronavirus to have a ‘V-shaped’ impact, which would be in line with all the prior epidemics, including the 2002 SARS, the 1968 H3N2 ‘Hong Kong’ flu, 1958 H2N2 ‘Asian’ flu, and the 1918 Spanish flu.

If what the evidence suggests is true, businesses should aim to get at least 40% of their sales online through the on-demand delivery of goods and services. While this may not be enough to keep them afloat, it will still pay out massively when the pandemic finally dies down and things settle into the new normal.

The road to digital transformation

If you are just beginning to build your business’s online presence, and automate your delivery services, here are the three most basic, yet important, things you should consider:

  1. Social media and the world wide web
    Whether you are aware of it or not, your business is most likely listed on Google and Google Maps. It might even have ratings and reviews. Similarly, your lack of presence on social media does not mean that people are not talking about you online. If you do not have a presence online, then set it up now. Start a page on Facebook and Instagram and you monitor your listings on Google Maps, Yelp, Foursquare, and the like. Building your social presence organically before you look into paid marketing.
  2. Delivery and e-commerce aggregators
    Ideally, you should be listed on delivery and e-commerce aggregators. They do charge a hefty commission ranging from 15-30% but because consumers use these channels, you have little choice but to be there. If your goods are more last-mile/on-demand (e.g. groceries, snacks, food), then you also need to work with on-demand aggregators (Uber Eats, Foodpanda, Cheetay, etc). If you are selling items that are not necessarily last-mile or local (electronics, for example) then you need to have a store on e-commerce aggregators (Daraz in Pakistan, for example).
  3. Create your own channel
    Look into developing your own mobile app or website & web apps for on-demand delivery, backed by in-house riders. Domino’s and Chipotle Grill in the US have done this exceptionally well. If you choose to create your own channel:
    • You can save on the commission to the aggregators
    • Build your own brand as opposed to being lost in a flood of other competing brands
    • Keep your existing customer relationships
    • Be in charge of your own destiny
    • Potential to make e-commerce a viable Business Unit on its own

This option is more difficult and costly but ultimately the most rewarding. It requires serious focus and investment and deep expertise in Design/User Experience, Growth hacking, and Operations/Delivery. If this is not something you know about or can manage then you can look into VentureDive’s white-label platform, IMPact Delivery. We understand that a technology platform is only the beginning. We are ready to help you in supporting functions, such as growth hacking and delivery operations. Reach out today so you too can survive and thrive!

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A comprehensive guide on last-mile delivery solution: Features, benefits, and future implications

Posted on by Ameer Hamza

The term ‘last mile’ was originally used in telecommunications to describe the difficulty of connecting end users’ homes and businesses to the main telecommunication network. This ‘last mile’ of telecommunication cable was going to be used by only one user, thereby not justifying the cost of installing and maintaining it.

As the world increasingly turns to e-commerce for shopping, the ‘last mile’ issue is one of the biggest and most expensive challenges for businesses.

What is last-mile delivery?

As soon as you check out from your shopping basket on any online shopping website, your product begins its long journey from a warehouse shelf to your doorstep. Here the ‘last mile’ represents the last leg/gap between the fulfillment center and you. Most businesses depend on a third party, like a shipping carrier, to handle their orders in the last mile. This last mile can be just a few meters to 100 kilometers or more. The key objective of last-mile delivery is to deliver your package as soon as possible and as safely as possible.

Challenges of last-mile delivery

Just like in telecommunications, the last mile is the most time-consuming and expensive part of the whole shipping process. If done correctly, it can convert users to loyal customers and save you a lot of time and money. The problem with last-mile deliveries is that not all of them are the same, some of them are pretty straightforward and usually involve a big truck carrying a large number of goods through a major road or highway. The complicated ones are those which require the delivery person to navigate through crowded streets, confusing alleyways, similar-looking buildings, and even large swathes of uninhabited rural areas to make singular deliveries.

Inefficiency is a major problem for last-mile deliveries as most of them require multiple stops with low drop sizes. The issue has been further compounded by the continuous rise of e-commerce, which has dramatically increased the number of parcels delivered each day, as well as raised customer expectations to include not just fast, but also free delivery.

The last mile of the entire supply chain adds up to about 30% of the cost and as free shipping becomes more commonplace, customers are less likely to be willing to pay a delivery fee, leaving retailers to shoulder the cost. Other challenges include:

Allocation & Address Issues

Destination grouping/management is a major issue for last-mile deliveries. Many retailers allocate jobs manually, which leads to human error, allowing shipments to get misallotted or missed out on a particular route. Additionally, bad and incorrect addresses and a lack of proper signage are also major concerns.

Dynamic Routes

If the delivery person is not changing routes based on conditions that prevail on that particular day, then they are further complicating the scope of last-mile delivery and timeline adherence for order fulfillment.

Delivery Density

There is a fine balance between managing the number of deliveries in a day within a particular area. Taking into account the size of shipments, and considering the following use cases, the delivery density problem quadruples in magnitude:

  • Low-Density Short Distances
  • Low-Density Long Distances
  • High-Density Short Distances
  • High-Density Long Distances

Transit unpredictability and lack of communication

While this is something retailers have no control over, the least they can do is to have a communications plan in place so that the delays are communicated to the respective stakeholders in a proactive manner.

Fulfillment timelines

Missed timelines can prove to be very expensive to retailers. In the case of food deliveries, some companies cannot charge customers for the delivery if the guaranteed timeline is missed. Not just that, it also causes damage in terms to the reputation of the brand.

How is last-mile delivery changing?

App-based delivery and the gig economy

As traditional delivery companies have started becoming inefficient, last-mile startups are on the rise, providing a cheaper, faster option. From food to large item delivery, crowdsourced delivery is becoming a viable and popular option.

Payment

Once the user selects what they require, they make a payment to Postmates. The payment includes the price of the product, the delivery fee, and service fee.

In-house delivery

Another new development is that businesses have started to hire their own drivers and trucks to cut down on costs, although this brings up a host of other issues.

Warehouses in major cities

Businesses are also adopting Amazon’s model of having fulfillment centers in high-ordering areas to improve efficiencies, allowing for rapid order fulfillment in major cities, including same-day delivery. Reducing the distance from the warehouse to the final destination costs less and can shorten delivery time to same-day or next-day delivery.

How can you boost your last-mile delivery?

Investing in a last-mile delivery solution that is feature-rich and can holistically transform your business by making your last-mile delivery more efficient than ever. Your custom mobile app can have features & benefits like:

  1. Route optimization
    Delivery route optimization is a crucial feature that can help in minimizing total delivery time by discovering the most efficient routes. It works by taking into account several factors like traffic, location, capacity, and time under consideration to come up with the most efficient routes. It also allows you to make last-minute changes or re-optimize by sending a real-time update to the driver. 
  2. Auto-dispatch
    This feature helps in efficiently managing your assignments and on-demand orders by assigning the right driver for the right task at the right time and thus minimizing the service time and labor costs.
  3. Bird’s eye view
    This feature allows you to get a bird’s eye view of all important aspects with the team, time, and status filtering. You can search using time, text, and status-based queries to quickly find the customers, drivers, and delivery tasks. 
  4. Proof of delivery
    This allows recipients to sign off on their goods through in-app signatures, photos, notes, and barcodes.
  5. Real-time status update
    This is an important feature that provides real-time status updates of the shipment to customers so that they know exactly when their goods would be delivered and by whom. They are also informed in case there’s any delay.
  6. Real-time visibility
    This helps you increase your fleet’s visibility by quickly being able to check where your vehicles are and how many of them are idling. It also helps in minimizing theft, spoilage, and pilferage. 
  7. Audit key metrics
    This feature allows you to visualize success rates, service times, on-time rates, distance traveled, feedback scores, and much more.
  8. Reports & analytics
    Gain detailed insight into your business through graphical and date reports.
  9. Delivery Flexibility
    A customized last-mile delivery solution will allow your customers to choose the time and location of delivery.
  10. Boost productivity
    The last-mile delivery solution can help you boost productivity by eliminating any unnecessary idling or unplanned diversions.

What is the future of last-mile delivery?

As e-commerce increases, time-critical deliveries will become paramount. Here are some ideas on what innovations will be necessary for last-mile delivery in the future:

Multiple Options

Companies must adapt to changing customer demands; home deliveries, same-day deliveries, time windows, delayed deliveries, alternative locations, unmanned pack-station at offices, neighborhood stores, and in public transport stations, customer-centric return processes for products and packaging, and just-in-time deliveries. There will be multiple touchpoints with customers in the future.

Robotisation

Robotisation will soon become an integral part of urban freight solutions. Unmanned deliveries by robots and drones, and unmanned pack-stations for pick-up and delivery at offices, stores, and public transport stations will become commonplace.

Smart planning, IoT, and reliance on ride-sharing

Since urban freight mostly involves finding an unloading zone, walking, and actual delivery, new transport planning, and scheduling systems will be developed using big data to forecast delivery routes and using real-time traffic information and availability of unloading zones for planning and scheduling. The reliance on ride-sharing will become commonplace as these social delivery networks will lead to innovation in urban freight.

Food for thought

Last-mile delivery is a major bottleneck for a lot of retailers. The solution is to shore up on last-mile delivery with a custom-made solution that is tailor-made for your organization, it will surely boost your last-mile delivery tracking and hence increase the profits.

Keep in mind the latest trends though, couple that with a last-mile delivery solution, and you are ready to take your business to new heights.

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How to build an on-demand delivery app like Postmates

Posted on by Ameer Hamza

Today’s connected consumer is extremely impatient and the on-demand economy caters to their every whim with a few taps and swipes. They can get whatever they want at exactly the time they want it. It’s not their fault and neither was it always like this but on-demand apps were a revolution in the digital world, transforming the way we avail services. Now, from ordering food to reserving a room to booking a taxi ride, on-demand apps are making spaces for every different customer interaction. The most popular on-demand apps are delivery apps like Postmates.

In this article, we’re going to talk about Postmates and how you too can capitalize on its popularity by making a Postmate alternative for your region.

What is Postmates?

Postmates is a US-based on-demand, 24/7, goods delivery platform. Its distinctive feature is that anybody can work as a courier (it resembles the Uber model, where anyone with a car can become a driver). Let’s say you want to buy something from a local store that does not offer home delivery, so you go on the Postmates app and find someone who can deliver it to your home, it’s that simple.

To become a courier for Postmates, all you have to do is fill out a simple form. Furthermore, it’s not necessary to own a car, since Postmates has multiple delivery options: from pedestrian couriers to van drivers.

One of the reasons an on-demand service like Postmates works is because it has a flexible working sphere, and fulfills all the orders very quickly and efficiently.  Another major reason is that since Postmates works on a partnership model, it partners with local merchants by connecting customers with services. 

What services does Postmates offer?

  1. Delivery
    Customers can order anything within the city and get it delivered for a nominal fee.
  2. Pickup
    This service allows customers to place an order and pick it up from the restaurant once their food is ready (they are notified when the food is ready).

Why does the Postmates business model work? 

Unlike other on-demand delivery services, Postmates sets itself apart in terms of the scope of services. It allows its users to get anything delivered to their doorstep, including food, grocery, or anything else. They have a massive network of merchant partners which makes it easy for their users to find the most relevant service or product for themselves.

Another major reason, Postmates is popular is because it delivers everything within 1 hour.

The Postmates model

The Postmates model comprises of 5 steps: 

  1. Browse – Users browse through a network of local merchants on the Postmates app and place an order.
  2. Payment – Once the user selects what they require, they make a payment to Postmates. The payment includes the price of the product, the delivery fee, and a service fee.
  3. Postmate Matching – Once the order and payment are confirmed, Postmate notifies the nearest Postmate about the order along with the delivery order. The Postmate buys the product and ensures that it is delivered in less than an hour.
  4. Postmates Tracking – The app allows users to track their orders through real-time notifications. They receive notifications when: The Postmate picks up their order and their location when they are on the way to deliver it to the user.
  5. Rate & Tip – Once the order is delivered, the user can rate and tip the Postmate.

Postmates sources of revenue

  1. Delivery Fee:
    Postmates charges different fees depending on where the user orders from. If the order is from a partnered merchant then it’s a lower flat fee. If it’s a non-partnered merchant then Postmate charges a higher variable fee. Postmate shares the delivery fee with the merchant on 4:1 ratio. 
  2. Service Fee:
    The service fee is a variable percentage-based fee applied to the purchase price of the products that a customer orders. It varies between 9%-19.99%.
  3. Small Cart Fee:
    If an order does not fulfill the minimum order, then Postmate charges a small cart fee. 
  4. Surge Pricing:
    Postmates charges a higher delivery fee during peak times.
  5. Postmates Unlimited:
    This is a monthly/annual subscription service. Members receive free delivery on orders from all merchants on the Postmates platform when the cart size is over a certain amount. 
  6. Commissions:
    The commission is charged on the pre-tax amount of the total product sold. The commission rate is decided between Postmates and its partner merchants. 
  7. Public API:
    Postmates has released its public API, which enables businesses to integrate this on-demand delivery service into their app. This allows Postmates to bring in extra revenue.

How to create your own on-demand delivery app

Creating an on-demand delivery app like Postmates is a complex process that will require a professional team of developers, but before you think about the development aspects of your app, you should consider doing some research and analysis of your regional market. To make your app successful, you’ll need to discover your niche. The more narrow your niche is, the more successful your app will be.

Step 1: Market Research

Your very first step should be to conduct market research and analyze any local competitors that are engaged in the same industry. Find how they started their businesses, the mistakes they made, and how they promoted their app.

Step 2: Find your USP (Unique Selling Point)

If you want your app to be unique and competitive, try listing down features that local competitors are missing. By finding your USP, you can make your app stand out and give users a clear idea of why they should choose your app over your competitors.

Step 3: Identify the technology and expertise you need

To create an on-demand app like Postmates, you need to have a specific team structure and technology. You’ll need Mobile App Developers, QA Engineers, Web Developers & Project Managers. While you can hire freelancers and get it made yourself, it will be cheaper, more efficient, and more reliable if you hire a mobile app development team from VentureDive. We are perfectly qualified and aware of the challenges in building your app.

Once you have identified all of the above, you can finally begin building your app. You should start with the MVP as this would allow you to enter the market as quickly as possible and with a low budget. Ideally, the MVP of a Postmates alternative must consist of a courier app and a customer app.

The customer-facing application should have the following features:

  1. Sign-up Feature – It should only ask for minimal relevant information from the users like their email ID, contact number, and password.
  2. Order Details – The customer should be able to view the complete details of his/her order.
  3. Tracking – This allows customers to track their orders and keep in touch with the delivery person via call or message.
  4. Location Services – After confirming their order, customers can add a delivery location for accurate delivery. 
  5. Payment Channels – Multiple channels must be present so customers can choose the option they prefer. 
  6. Order History – This feature allows customers to view their previous orders.
  7. Ratings and Feedback – This is a vital feature that will enable users to rate and review the kind of service received by them. 
  8. News – Using this feature, customers can stay updated with the latest new offerings, discounts, and products offered by your service.  

The courier application should have the following features:

  1. Registration – The process to register for couriers should be as simple as possible.
  2. Order Booking – Once a customer has placed an order, the same should be seen by the courier.
  3. Delivery Status – This allows the courier to check the exact status of the delivery.
  4. Order History – This allows the courier to check a customer’s past orders.

How much does a Postmates alternative cost?

Like any other on-demand app, the cost for building a delivery app like Postmates depends upon several factors.  You have to take into account:

  1. App Development
  2. UI/UX Design 
  3. Customization
  4. Managerial cost

While there is not a fixed rate for a Postmates alternative, however, if you want an accurate cost estimation, you can always contact us. Our team will always discuss the project with you and provide all the necessary details related to the project.

One of the benefits of working with VentureDive is that we have 8+ years of experience powering on-demand apps and services for startups and businesses worldwide. Our platform, Movanos Delivery Management Solution, is a robust and scalable technology engine, which can be leveraged to enable end-to-end E-commerce & delivery systems for on-demand businesses across industries. This means that your app need not be made from scratch, saving you cost as well as time to launch.

Launch your delivery business with our pre-built white-label solution

  1. White-label & customizable
    Get a fully branded and tailored app solution with custom features, integrations, and enhancements.
  2. Launch quickly
    Your business can start selling online in as little as 2 weeks.
  3. Cost-efficient
    Since we have already developed the base solution, complete with the Customer app, Delivery agent app, and Admin portal, it will cost you significantly less than building it all from scratch.
  4. User friendly
    Intuitive experiences for your customers & delivery agents, & simplified management for your business.
  5. Thought partnership
    We work closely with our clients from discovery to post-launch support to ensure maximum ROI.

Conclusion

Is it the right time to launch an on-demand delivery service? Our answer is a resounding yes, as the delivery market is continuing its explosive growth, and there are countless cities across the world without such services.

The cost of developing such a service is higher than the others as you need a minimum of two applications (for end-users & couriers). One of the major concerns for such a business is user acquisition and retention. The delivery business is only able to survive due to a large number of orders per day and couriers available to deliver goods quickly and accurately. If you are ready to face these challenges and want to start a very profitable business, then contact the VentureDive team for an accurate quote. 

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How to develop a grocery app like BigBasket

Posted on by Hassaan Siddiq

In this age of digital globalization, all spheres of life as we know it have changed. The COVID-19 pandemic forever altered our shopping attitudes. The rising demand for on-demand grocery has led to a drastic shift of market retailers and wholesalers from physical spaces to the digital web, where everything is just a click away. Apps like Big Basket are the future of grocery shopping, the next evolutionary step from conventional marketplaces.

If you want to launch an on-demand grocery app but don’t know how don’t fret. Here is all you need to know about developing a grocery app like BigBasket.

Understanding the BigBasket Grocery App

BigBasket is India’s biggest online grocery store and is responsible for pioneering, what many claims is the perfect business model for grocery shopping online. The company sells food products, like fruits, vegetables, beverages, and more than 10,000 other grocery items. Not to mention, they have more than 1,000 brands on their web and mobile shopfronts.

From the very start, they kept hitting the right chords, catering to customer preferences for a convenient and quick online grocery shopping experience. Their innovative app features enabled consumers to get their daily grocery items delivered to their doorsteps, without them having to make time from their hectic daily schedules.

Here are the top 5 features of the BigBasket App:

  • Wide range of grocery products
  • Smart basket features and easy checkouts
  • Intuitive user interface
  • Embedded secured payment gateways
  • Immediate confirmation of receipts of orders

How does a grocery app work?

In order for your grocery delivery solution to work seamlessly and provide the best user experience, it must include the following apps:

  1. Customer Ordering App
    Frontend app to be used by the users to order grocery items of their liking.
  1. Delivery Agent App
    Backend delivery app for delivery agents to successfully pick up ordered items from grocery stores, warehouses, or dark stores, and deliver them to customers.
  1. Admin dashboard and portal
    Admin portal to provide a bird’s eye view of the business operations to be used by vendors, grocery store merchants, or admins.

Is there a need for a similar online grocery app in your region?

The first step before you embark on app development, is identifying the need; who is it that you want to target or cater to with your grocery delivery app? People’s lives have gotten busy with shouldering the responsibility that comes with simultaneously playing several roles in life. Working men and women do not have the time to go grocery shopping after long shifts at the office and by the time they get free, the markets are closed.

Grocery delivery apps can help them navigate through their tough and erratic schedules. Not only do people want the flexibility to be able to order at short notice but also receive fresh products. This can be advanced further with the introduction of ‘Schedule Delivery’ whereby one can place their order in advance either by days, week(s), or even the next month.

To put things into perspective, the grocery business is a $1 trillion industry and Nielsen is forecasting that 70 percent of U.S. shoppers could be buying groceries online by as early as 2022.

What’s the rule of the digital jungle?

Quick. On-time. Hassle-free. People want quick turnarounds since they want to save time and money from the hassle of grocery shopping, bargaining, and the irregular pricing of commodities which varies from shop to shop. Grocery delivery apps remove the problems of traditional grocery shopping and provide timely delivery of a diverse range of products, which might not be available at the customer’s nearest store.

Other attractive benefits include:

  • Multiple payment methods
  • Real-time delivery tracking
  • Digital Wallet
  • Product categorization
  • Cool UI/UX with easy navigation

Remember to do your market research

Now that you have a general idea of what value your grocery app will be providing to your potential customers, it is always good to conduct market research to ensure that your app stands out. Here are a few questions you, perhaps, need to consider before developing your perfect online grocery app:

  1. Do similar grocery delivery apps already exist in the market?
  2. Who are your competitors and what mistakes (if any) are they making? 
  3. Does your app satisfy the customer’s needs?
  4. What is the location of your target audience?
  5. What features are going to make your app stand out?
  6. Have you missed out on any features? Or are you including costly features that the customer will most likely not use?

Having good market research would enable you to choose the right business model complemented by the features that fit your business needs. If you are looking to cut time and effort on the research part, it’s best to conduct remote design sprints for the idea that makes it easier for you to choose the best type of online grocery app you want to build. Now, what could be your options when it comes to the types of online grocery apps?

Types of online grocery apps

Each type of grocery app comes with its own functions catering to unique sets of business needs and target audiences. The most common grocery apps can be categorized into 4 types mentioned below:

AGGREGATORS

These stores integrate nearby grocery stores into one app platform. Customers can choose to order what they want from the listed options. All stores deliver with real-time tracking of delivery agents through the mobile app.

MARKETPLACES

Similar to aggregators in all respects, marketplaces differ in their delivery mechanisms. Here, the vendor is in charge of every online order, picking up groceries and delivering them to customers doorsteps.

SINGLE STORES

This app represents a single grocery store, which is responsible for updating online products, handling orders, delivery, payments, feedback, and app maintenance. This is usually a go-to option for small to medium stores.

GROCERY CHAINS

These largely consist of big wholesalers and retailers who have an online presence as well as mobile apps. They offer diverse product ranges in conjunction with warehouse facilities, managing orders, timely delivery, and feedback.

What is the best grocery business model for you?

Once you have identified your target market, you need to figure out what kind of online grocery business model you want. Each model has different functions and conducts business in different ways. This is a decision that only you can make based on the risks, returns, extent of control, and investment that best suits your needs. 

Warehouse model requires a larger space for stocking grocery essentials, moreover, warehouses are usually situated outside of the town. Storing perishable goods like grocery essentials can be challenging and costly. One of the main drawbacks of this model is that quick and flexible deliveries can be challenging to fulfill.

A recent model that grasps a lot of attention from grocery businesses is dark stores. Nearby smaller distribution centers have assigned staff to fulfill the delivery request and handover to the delivery agents, who can deliver the ordered essentials quickly and efficiently. This model enables businesses to offer same-day instant delivery of fresh grocery items while keeping operations streamlined.

Nonetheless, the most on-trend delivery model is the ship-from-the-store model, a convenient, cost-effective, and on-demand model. It enables businesses to onboard multiple grocery chains on their app, and the delivery agents, upon request of a customer, can deliver the product of their liking, from the stories they usually buy from, at their convenience. This model comes with lucrative benefits such as same-day delivery, customer engagement, warehousing grocery marts, and streamlined logistics.

Popular features to add to your grocery app

Same-day delivery service, real-time order tracking, and how quickly the feedback and requests are catered to, are all top features of popular on-demand grocery apps. Having convenient and time-saving features will help you retain customers and attract future ones.

  1. User registration: User sign-up/sign-in, profile management, forgot password, verify email and phone number
  2. Operational features: Product search, filter search, search suggestions, payment methods and gateways, coupons and discount codes, check out, wish list, shopping cart, counter for quantity
  3. Customer data: Location of the customer, address search, pin address
  4. Delivery notifications: Pick-up time slot, delivery agents’ tracking, delivery agents’ contact, express delivery, order cancellation
  5. Ratings and reviews: Feedback of multiple-scale services, delivery agents’ ratings, support and help, product quality rating, review and feedback

The features you choose for your app can become your main USPs, providing you with an edge against the incumbent market competitors. If anyone of these is compromised, the very purpose of a grocery app will be defeated. 

The development of a grocery delivery app like BigBasket is not that simple hence in order to develop a highly scalable grocery delivery app, it is necessary to know the tech and the resources that go into its development.

Technologies required to build an app like BigBasket

For any grocery app to be a success, it requires solid front and back-end technologies for it to be effective and scalable. The following are software development requirements that may aid you in deciding which technologies best serve your business needs:

  • App Platforms: iOS, Android, Web Apps
  • Backend: Python, .Net, Java, Node.js
  • Frontend: Angular, ReactJS
  • 3rd Party Apps: Google Maps
  • Push Notifications: APN, Twilio, Firebase
  • SMS, Voice, and Phone Verification: Twilio, Nexmo, Sinch
  • Cloud Environment: AWS
  • Payments: Braintree and PayPal, E-Wallets, Stripe
  • Real-Time Analytics: Spark Streaming, Apache Flink
  • Mandrill: Relevant to emails
  • Database: Cassandra, MongoDB
  • Traffic Analytics: Flurry, Google Analytics

Having the tech part figured out for the app is essential to understand the development cost as well as the required tools to enhance the grocery app’s functionality. 

How much does it cost to make an app like BigBasket?

There is a multitude of factors involved which contribute to the final cost of the app. The cost of developing a grocery service app depends on what you want your app to be, hence you control the cost. You will have to decide the scale of your grocery app whether you want a website, an application, or both. Costing is also compounded by the time constraints of finalizing the details of the project, developing the app, and testing it, which is time-consuming, depending on the complexities of the app. The longer it takes to develop the app, the costlier it gets, whereas, chances of compromised quality also exist if you want the time reduced. Once the app is launched, there are maintenance and running costs. Thus, time, quality, and cost have to be weighed out. You need to find the right balance between the two.  

Another better way to get your grocery app developed with instant deployment, without having to pay for development is the SAAS approach. It involves using an off-the-shelf white label on-demand delivery solution, that would work on a pay-as-you-go model. These solutions require zero deployment costs, as software companies earn a fixed cut on every delivery. 

If you want your online grocery app to go live within 2 weeks, we can give you that with our top-of-the-line On-demand delivery management solutions.

What’s next?

Now what you have to do is conduct analysis and research of the opportunities and challenges that exist in this sector and find the right balanced solution between trends, business strategies, and technologies. All of this might be daunting initially, however, you only need to follow the guidelines provided and everything will automatically fall into place. It’s essential to not be intimidated by the adjustments you may have to make to your strategies and app because we do not live in a homogeneous world. As you may have heard, those who do not evolve, get left behind – so buckle up for an exciting journey.

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How much does it cost to create an on-demand delivery app

Posted on by Hassaan Siddiq

If you are thinking of launching an on-demand delivery app, one of the most important questions you have must be how much would it cost? The truth is that there is no “one size fits all” budget when it comes to the app development cost. The cost to develop the app depends on a number of factors, all of which I will cover in this blog. The right amount of investment depends on the business demands, model, USPs, and ultimately, the complexity of the app.

Before we dive into the app development cost metrics, let’s take a moment to fully understand the on-demand delivery space – starting with defining what an on-demand delivery business is, its functions, applications and use cases, etc.

What is on-demand delivery?

Unlike the old times, where you had to step out to have the cuisine of your choice or buy a product, an on-demand delivery app brings your preferred items to your home. This model enables businesses to act as a mediator, connecting buyers with sellers. When a customer wants a product or service, he/she can find a related service provider, order what they need through the app, and pay for it instantly or at the time of the delivery. A small service fee is charged on every order made through the app by the service provider.

The on-demand delivery model was pioneered by Uber; ever since its inception the adoption of Uber-esque business model has been vastly taken up and experimented with across different industries. Uber successfully merged convenience with quality. The value proposition it offered was centered around accessibility, urging other businesses to hop on the on-demand delivery bandwagon. Soon, from food delivery and transportation to entertainment, the on-demand economy had its roots pierced into every sector one could imagine.

Why is on-demand delivery so popular?

As we become more accustomed to search engines spawning results within seconds, instant gratification is inevitable. We expect the same when it comes to products and services. 

That’s where on-demand delivery apps come in handy. Everything is just a click away! You get cab or beauty services right at your doorstep within minutes, that too with real-time tracking. Recently, on-demand delivery apps have become an essential part of our lives. 

How does an on-demand delivery app work?

The on-demand delivery app works as aggregators of products, services and entertainment options. You can select a service you want from the app, be it taxi, grocery, food or medicine; it serves you exactly what you desire. Once you have ordered the product or service, the provider will get it delivered to your doorstep. Upon receiving the order you either prepay through payment integrations such as Apple Pay, online banking, or cash. Moreover, you can provide instant feedback to the service right from the app.

Each of these functions is deployable as an added feature but comes with a cost. In the next section, I will be explaining the importance and cost of on-demand delivery app features set to help on-demand delivery businesses make informed decisions about the key features complementing their business model.

Key features of an on-demand delivery app

Once you finalize the idea for your delivery business, you are in a better position to set realistic KPIs for the development of the app. Ideally, you should monitor these three KPIs which are correlated to the development cost of the app.

  1. User acquisition
  2. User retention
  3. Transportation and delivery cost

Moreover, from the point of view of businesses, developing an on-demand delivery app solution – which includes the customer app, the delivery agent app and the admin and operations portal – will be extremely fruitful. Improved employee satisfaction, business scalability, independent contractors working part-time and instant feedback from customers are just a few examples of the benefits achievable while others are listed in detail below.

The Customer App provides a wide array of features, including real-time tracking along with status updates, the ability for customers to connect with agents, multiple payment gateways, push notifications, ratings, and reviews, and promo codes. Customers usually deem the following as the most important:

  • Mobile-first user experience
  • Fast delivery of products or services
  • Cheaper prices than traditional service providers or sellers
  • Frictionless payments system
  • Real-time tracking

The Delivery Agent pp benefits businesses through auto-delivery dispatch, route optimization, and navigation, service details, tracking each agents’ earnings, modifying order statuses, and managing cash flow and receipts.

The Admin and Ops Portal gives a holistic view of the business and allows companies to manage their agents by GPS tracking and performance appraisals via analytics ensuring efficient resource allocation.

Knowing the value addition each feature brings to the app, you will be in a better position to choose the ones that best fit your business model and budget.

Types of on-demand delivery apps

On-demand delivery apps can be categorised under three segments based on vendor – client relations: Customer to Customer (C2C), Business to Customer (B2C) and Business to Business (B2B).

As per the US Census Bureau, the benefits of an on-demand app have already started to reflect in the global spending pattern. The on-demand service and product economy are attracting more than 22.4 million consumers annually and $57.6 billion in spending with food, grocery, healthcare and logistics in a prime position to benefit the most.

Source: National Tech Readiness Survey, 2015


Food and Grocery Delivery:

Food and grocery are the most in-demand sectors for on-demand delivery. As food cravings and hunger are human instincts, providing convenience and a wider product mix can help capture major market share and customer loyalty. It is no surprise that the On-demand delivery market is on course to grow at a CAGR of 27.9% and reach $16,605 million by 2023. 

The most prominent on-demand apps within this sector are InstaCart, Postmates, UberEats, GrubHub, and DoorDash.

Healthcare: 

The ease of on-demand appointments for doctors, lab tests, and prescription orders are gaining traction from on-demand healthcare apps. As we prepare ourselves for the new normal post-COVID-19, one thing is for certain that the surge in demand for telehealth is going to be massive. There are a plethora of business channels you can tap into with digital healthcare.

Transportation and Logistics:

This is the most controversial sector yet but increasingly popular. Contentious due to the difficulties and hardships faced by companies like UberRush and Shyp however quite famous due to the successes of apps like Uber and Careem. It provides an opportunity for incumbent businesses and start-ups to find reliable transportation providers and users through coupons for cheaper and convenient travel.

Having covered all the prerequisites involved in defining the development cost, you can now work towards creating one for yourself. It is time to focus on the real question “The cost of the on-demand delivery app”. 

The cost of building an on-demand delivery app

Now down to why you have read this far: how much does it cost? The development cost of an on-demand delivery app depends on multiple factors such as the features, the country of development, team size, deadlines, MVP features, and the chosen platform. To get a better idea, it is important to understand how companies assign a cost to app development. Let’s take a step back, and think from a developer’s perspective.

How do software companies calculate the cost?  

Amongst multiple approaches adopted by companies to calculate the cost, the most common one stands to be:

(Fixed hourly cost) * (Hourly effort that goes into the development of the app)

This approach is dependent upon multiple factors such as the country from which the app is being developed, the complexity of the app, features and the number of hours required by the development team. For instance, a company in the USA charges $X per hour, and others in Pakistan charge $Y.  A simple app with minimum features requires 340 hours of development, whereas a complex app requires around 1500 hours.  

Average hours for developing an on-demand delivery app

Which takes us to the next point i.e. how do these app development companies define hourly rates? Let’s crack the hidden secrets.

Factors impacting the hourly rate

  1. Location
    The development of the app is more expensive in the USA than in Pakistan depending on the quality and experience of the company.
  2. Platforms
    Android or iOS, each platform requires different skills and development costs which can be further affected by the type of app – native app or hybrid app.
  3. Features
    Complex apps require a versatile set of features as compared to simpler apps that could be developed with just a few features. For estimating the cost of the app, it is vital to know the exact features you want in your app – whether you want to add location-based services, integrate a payment gateway, incorporate streaming, support multiple languages, allow ads, enable live chat, etc
  4. Integrations
    You need to define if the app requires integration with an ERP or CRM. If it does, then it will add to the development cost.
  5. Design
    It is the most integral and expensive component of the development. User experience-driven apps definitely standout but they come with a price tag. The visual intricacy leads to more effort, both from the back-end and front-end, hence leading to the app being costly.
  6. Team & experience
    The experience of the development team determines the quality of the app. The more experience the team has in developing great apps, the more they usually tend to charge.

Other factors affecting the cost

  1. Maintenance cost
    Make sure you have a maintenance cost agreement post-release so that your on-demand delivery app is future proof against any new updates by the operating systems which could leave your app redundant if not handled properly.
  2. Infrastructure cost
    This involves consideration towards the server selections, database selections, or major integrations with ERP or CRM all of these will add up to the cost of the app.

All these factors define the number of hours that go into the development of the app eventually impacting the cost. However, there are ways to bring this cost down.

The most effective ways to cut down cost

  1. MVP (Minimum Viable Product)
    Start with a limited set of features by defining your core competencies and build on them. Apps like Amazon, Uber, and Roadies all started as MVP with a limited set of features and gradually augmented. 
  2. SAAS Approach
    The SAAS subscription-based model is lucrative for businesses looking for instant deployment. In a SAAS environment, the service providers will host the app for you and run the maintenance and updates against a minimum set fee to avail of the service or product. These models enable businesses to use off-the-shelf white-labeled delivery management solutions that work on a pay as you go framework. These solutions require zero deployment cost of the delivery management app, as their monetization model works on charging a fixed percentage per delivery. Therefore, the cost of an on-demand delivery app is dependent on the monthly order quantum.

Summary

Here are some guidelines to give you that extra nudge to build a successful on-demand delivery app:

  • Do your research
  • Start local
  • Market
  • Prioritize customer loyalty
  • Incentivize delivery agents
  • Be careful what you wish for- stay realistic

If you’ve read so far, we can safely assume you agree that this is the year to launch an on-demand delivery startup. Using that business idea of yours, showcase your entrepreneurial skills, and kick start your on-demand delivery business today!

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The changing market of food delivery businesses

Posted on by Saad Fazil

Getting your favorite food delivered with a single tap, especially in the times of COVID, has exploded the growth of many food delivery platforms such as Grab, Uber Eats, and DoorDash. 

Despite the uptick in demand, the food delivery business model remains highly fragmented and at least at this time a money-losing proposition. There are quite a few challenges that the food delivery industry faces

  • Network effects are limited to a given geographic area. Cross geographic network effects are minimal at best.
  • Most users are not loyal and switch to a competing provider in search of a better promotion or an offer, better user experience, or quality of the service. In other words, switching costs are very low.
  • Unit economics are tough. Riders do not make enough money, vendors run huge losses on promotions, and users do not seem convinced they need to pay the premium and would rather hunt for a promo.
  • The business model seems to have exploited a weakness in labor laws allowing them to “hire” riders without the need to add them to the companies’ payroll. Uber and Lyft are facing legal challenges in California that threaten to shut them down.  

In the end, companies that overcome most of the challenges above will thrive. Uber and Doordash have already started to offer rundles — a bundle of offerings, such as rides and food delivery in the case of Uber, and grocery and food delivery by Doordash along with monthly subscriptions. These rundles can be somewhat effective at increasing network effects and customer loyalty.

Despite these initiatives, we will see more mergers and acquisitions in the space as different food delivery providers join hands to minimize the crazy spend on promotions. It is hard to track investments, mergers, and relationships between companies and investors. We have tried to map out the intricate landscape of food delivery business models across the globe. We welcome readers to help us fill in any gaps.

Here’s a quick snapshot of what the food delivery industry looks like, worldwide:

food delivery infographics
Infographic on the leading food delivery brands of 2020

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