The Shadow
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The Shadow

What kind of benefits do brands
realize when they shift to or just add
first-party ordering?

With online ordering gathering pace, it’s the customers who are having the ultimate last say. In this regard, third-party delivery companies have made things quite simple with a plethora of choices available in terms of choices, cuisines, and service categories, which are available at the fingertips, literally. It is just a matter of a few clicks on an app and voila!

In the case of restaurants, however, more moolah is ensured on the basis of the number of online orders placed on the brand’s platform instead of a third-party aggregator. It is quite often that a substantial number of brands lack in terms of manpower, vehicles, or basic infrastructure needed to cater to first-party ordering and it is due to this reason that most of them depend on third-party companies.

Moreover, customers have become accustomed to placing online ordering on third-party delivery apps and it is by default they tend to go to such aggregators for meeting any kind of urgent need, be it ordering a large food parcel or even a beverage.

It goes without saying that online ordering is here to stay and evolve over a period of time, here is why:

· The online food delivery industry generates more than $26.5 billion.

· By 2024, online food delivery services project to be a $32 billion industry.

· Online ordering is growing 300% faster than in-house dining.

· 60% of restaurant operators say that offering delivery has generated incremental sales.

· 31% of American consumers use third-party food delivery services at least twice a week

· 70% of consumers would prefer to order directly from a restaurant rather than use a third-party service.

· 59% of millennial restaurant orders are for takeout or delivery.

However, it would be a different ballgame if restaurateurs are able to cater to their customers through the first-party channels, which would prove to be a win-win for both in the long run.

What do restaurant operators have to say about first-party ordering?

Restaurant operators vouch that their brands have experienced a substantial jump in terms of digital sales, however, those made through the first-party platforms have been on a different trajectory altogether. This is why:

High Convenience:

It’s the convenience factor that is providing a nudge to overall digital sales, industry experts agree. If numbers are anything to go by, then a few restaurants are gathering steam through their first-party ordering platform notching almost five-times year-on-year, much ahead of the third-party delivery growth numbers. Restaurant owners, however, point out that most of their patrons kickstart their food delivery experience with third-party apps, they would continue to build their presence parallelly to cater to new customers.

Financial Benefits:

It is no guesswork that retaining online ordering in-house is beneficial in terms of financial aspect as brands can keep commission fees (normally of 30%), which they have to dole out for every third-party order. Also, a particular food joint, eatery, or restaurant is able to have direct access to a customer and gather first-hand information on their experience. These are huge advantages, as food margins are already slim.

The pandemic has been a game-changer for most businesses and the food delivery industry remains no exception. If the cost factors are to be considered, these third-party solutions prove to be relatively high. Piggybacking on technology disruption, it is now very much possible to come up with your own solution at a comparatively lesser cost.

· Gives More Control over Operations:

Shifting or adding to first-party ordering enables restaurant operators to manage their own menu on the fly, change prices, push out marketing promotions whenever they want towards their patrons, and more. 43% of restaurant professionals believe third-party apps interfere with a direct relationship that they build with their customers. When you build your own exclusive online ordering platform, you have limitless customization, growth, and scalability possibilities.

Interact Directly with Customers:

In the initial stage of the pandemic, most restaurant operators were struggling to stay afloat in business due to the government-imposed lockdowns restricting in-house dining options. Most of them were able to tide of the challenging phase through catering to customers placing online orders on renowned third-party vendors. This way, a restaurant owner will be able to directly cater to their customers.

It is also a matter of gaining an edge over the competition, restaurant operators will have to look in this direction. They will need to prioritize those new tech solutions, which remain customized in accordance with overall operations.

What is Expected In the Future?

Most restaurant operators, however, remain in wait and watch mode as they try to analyze the inclination of their customers, who were first introduced to a particular food joint based on their experience on a third-party app. There is no doubt that third-party delivery providers tremendously aid as a customer acquisition tool. A middle path could be reached where it can work in tandem with a customized in-house app developed by a restaurant.

While it may be easier for some of the renowned brands to balance the act between both third and first-party ordering, many of the smaller players have long continued to rely on the comforts of a third-party delivery option. They are likely to be missing the bigger picture in terms of monetary gains if they continue to play in the field according to the old rules. Take the case of pizza delivery, wherein most large players have already sunk their teeth into technology to develop in-house online ordering and delivery apps. This has been the case much before the pandemic.

However, it is time that these small-time players can start thinking big in terms of some technology-driven changes when it comes to introducing first-party ordering. The benefits would be immense in terms of gaining insights that too first-hand when it comes to customer experience and data. This would prove beneficial for everyone in the long run as these players would become capable of addressing the concerns of their customers in a more direct way. If these players work out the maths, it would prove to be more economical, no doubt.

Here are instances of some of the restaurants for whom first-party ordering changed the game:

· The Modern Pearl, a renowned food hall in Texas, grew its delivery sales by 346% through first-party ordering. Having full control over the ordering process changed everything and allowed Modern Pearl to discover a whole new revenue stream.

· Tomlinson Brands, a virtual food company, saw phenomenal results when it added first-party offerings to its third-party offerings. They increased their average monthly revenue by about $32,000 by receiving and shipping more orders faster.

· Tartine Bakery’s 8+ locations in California adopted first-party order and pay, thus now taking advantage of the unique customization options. By using the data they collected, targeted marketing campaigns brought back customers, and soon they noticed their delivery check sizes had almost doubled.

Ending Note

It quite often happens that third-party associated leads to a kind of disconnection with a customer, besides there could be issues related to payments that could crop up. So, taking the initiative to make a move towards developing a first-party delivery option holds the key.

Moreover, using their own customized app and website ordering like Restolabs, a player could extend more facilities to a customer in terms of offering loyalty rewards, personalized communication, and exclusive first access. This would thus help them build more effective relationships in terms of customer loyalty in the bargain.

Brands in the food industry can look forward to introducing better offers that remain lucrative enough for a customer to make the switch to their in-house customized app in a more organic manner. For the restaurant operators, the world can be their playground, indeed.

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Sonal Mishra

Sonal Mishra

Writer | Digital Marketer | Entrepreneur. Good food and a Good Book keep me sane!

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