You may hate em, but you got to live with em: Why food business owners need to embrace online food aggregators even more
Lockdown has seen a surge in the amount online orders & online food aggregators have enabled a lot of businesses stay afloat during the period. But the general sentiment of food business owners is that they are not big fan of the commission model by these aggregators.
My own interactions had conversations by food business owners who said,” Most of the orders come from Just eat but its a sword pierced everytime an order comes through them cos they eat into our profits”. I also came across this image from a service provider on how online food aggregators eat of your profits & I sort of thought I should lay down the facts.
While i know these comparisons have been drawn for a reference perspective, I’d like to dive into the other side of the conversation.
For full disclosure, we are not in the online food aggregation business but more of an offset or draw similarities with the business model.
So if you think that having your online food delivery website or app is going to save you money or the commissions that you otherwise loose out, then let me start by telling you that is not going to happen!
Online food aggregators bring to the table a very important & expensive commodity — new customers & repeat customers.
There is a cost associated with acquiring new customers & another cost associated with getting existing customers to keep buying from us.
Acquiring customers can be quite expensive
So you have your own online ordering setup, what’s next? You need to get customer to use them. So for marketing(offline/online) you will need to hire someone a full time resource or an agency to do the production,writing & planning for you. Say you got someone to do it for 1000 €, per month or even 500€, per month( i charge 3000€, by the way) and then you need buy media/ads every month. Say you all-in-all you will end up spending at least 1000€, per month on an average for a small food business to make some business sense or bring some orders.
So going back to the image paying €,1000 + your time for possible sales you might get or €,1000 as commissions for sales you get for sure — where do you want to put your money?
Getting existing customers to buy requires effort/money as well
Now the argument might be, having customers on your on website means once you acquire them you don’t need spend more in marketing — wrong !
Getting existing customers to buy also requires effort & money. To draw some perspective, look at the screenshot of FB ads of a food business client I have worked on. This food business client delivers across ROI. The 0.61 per purchase are the cost of ads shown to existing customers & the other is new customers. Now these numbers are not like a standard figure to go with it but you get the idea!
Once you have existing customers, you need to communicate with them across emails or sms or social media & keep them hooked to keep buying which means spending money & time.
Now in an ideal world, having your own website is the best way to go forward. But given the state of affairs & how volatile the current market is food business owners need to piggy bank on the resources these food aggregators can offer.
But yes there are ways of increasing your income with existing resources. You can find some ideas on increasing your revenue pots here.
I’d like to hear your thoughts on the posts discussed above. Do you think food aggregators are eating out from your profits or actually putting money on the table?
