Chicken-egg dilemma for food delivery startups: how to compete against main apps in same platform?

Claudio Beck
Jan 13 · 4 min read
Uber Eats uses an eco-friendly delivery system for customers nearby.

Uber Eats is, nowadays, the leader of food delivering apps in both Android and IOS platforms. This may be true in the US and some other countries, but it´s far from reality on others. As a Brazilian guy, I´ll explore the startup strategy from the point of view of the country I live in since geography plays an important role in delivering business models.

Rappi is another delivery app that grew straightaway in fast numbers by offering anything delivered, even cash money. You can ask Rappi to deliver from food to jewelry across the city in just a matter of minutes. This was a differentiation that played a major role in Rappi growth.

Rappi delivery became bigger thanUber Eats in Brazil.

So, let´s try to figure out how a new entrant would start off in this tight and super aggressive scenario.

The chicken-egg dilemma

Suppliers don´t want another app to take care of.
Suppliers don´t want another monthly fee to pay for.
Suppliers won´t believe in an app with no users.

Users don´t want to install just another app to consume disk space or bandwidth on their smartphones.
Users don´t want the same what other apps already offer for the same price.
Users won´t believe in an app with no suppliers.

Possible chicken-egg dilemma solutions

Facing this particular scenario, we could provide some secure, yet innovative, steps to solve this dilemma:

  1. Local, curated options.
    (co-op approach)
    Some users just want to support local suppliers, or, sometimes, to eat something that tastes familiar. For this reason, local, small and family-run businesses would be encouraged to join the new app and offered as first option to users based on their location.
  2. Partnering with influencers.
    (marquee approach)

    Bringing in top influencers to give advice, tips, and hints on what to eat and how much to order could be a good step into breaking the dilemma as influencers would certainly bring in loads of users. Imagine top chefs giving their opinions on particularly dishes or restaurants, maybe offering hints and tips to better choose your next meal based on season such as winter, summer, etc., diet such as low carb, mass gain, weight loss, vegan, etc. or even specific thematic festivals such as Halloween, Christmas, Carnival, Easter and so on. Influencers could be from famous faces from TV to YouTubers and could be from chefs to restaurant critiques.
  3. Eat to be a supplier.
    (produce and consume at the same time approach)

    In order to keep your business listed inside the app, your whole crew must consume, at least, once in a week, or on a specific percentage or demand, at other restaurants also listed within the app. This generates immediate consumers for the supplier's database and provides a growing environment, whilst letting competitors taste their rival´s products without any shame. Even if you don´t consider traffic from regular users, there still would be consuming users (the suppliers themselves) that must order from the app to be part of this platform.
  4. Learn to cook what you ordered.
    (utility approach)

    More than a delivering app, we could add value by inserting educational purposes as well. Each order you place using the app grants you access to learn recipes on how to cook exactly what you are ordering. So you get to know all the ingredients (except secret formulas) and how to make it on your home. It´s not considered to be a faulty or concurrent addon against suppliers since the time, effort and ingredients need to be planned ahead in order to make the meal that is being ordered. Plus, it is required a certain amount of talent as well.
  5. Give it for free.
    (pre-invest approach)

    Of course, the most direct way to bring in users and suppliers to the platform would also be the most expensive: give away credits. Cut off suppliers' charges in the beginning, cut off the delivery charges on the first orders and even give an extra meal for new users or most loyal ones. Besides advertising, money would be invested in this give away strategy in order to generate word of mouth and spontaneous media among influencers.

These are some of the key strategic points I would line up in order to solve the chicken-egg dilemma and help bring in users and suppliers to form a prosperous platform environment while competing against well-established competitors.

By Claudio Beck

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