| You nailed it — the primary value of these marketplaces is the consumer facing ordering technology, not the fact that it’s a marketplace. This is an excerpt of a recent article that explains my thinking on it a bit better. There is little (or even negative) value for restaurants from marketplaces in this industry. In many industries marketplaces like this make sense. Typically, they make sense when discovery is very important, when there is little repeat usage of the discovered service or when there are multiple disparate services involved. Travel is a good example here: it makes good sense for a consumer to use a marketplace to discover a hotel and a car rental company when they book a trip to a city they’ve never been to and likely won’t go to again for a few years. And it makes sense for a hotel to list on a marketplace as it’s impractical for them to market directly to consumers from around the world in the off chance that they will visit the city the hotel is in. There are very different dynamics at play in hospitality. People tend to order from two or three takeaways in rotation as opposed to discovering a new one each time they order. They also tend to order from one located physically close to them, and they usually can be efficiently marketed to by this takeaway directly, both via offline methods such as walking past the store each day, getting flyers in the door, and online via search and brand marketing. It is also rare that a consumer needs to make multiple purchases from separate services to order their food (they don’t, for example, usually need to order a taxi to collect the food after ordering it). The value that restaurants get from joining a marketplace is the consumer-facing online ordering technology that they get access to, but not from the fact that they are getting it from a marketplace. There is a lot of negative value for a restaurant in joining a marketplace (i.e., it causes them harm) as they end up sending their existing customer base away to a 3rd party who is incentivised to move the consumers away from that restaurant and over to one who will pay the marketplace more for the orders. Disclaimer: I’m cofounder of flipdish.com that provides direct ordering tech to restaurants. |
You’re mistaken. The primary value is the logistics of dealing with drivers. A restaurant supplying its own drivers will always be at a disadvantage to Door Dash/Uber Eats etc because they can never utilize their drivers as efficiently as the big delivery companies. During peak hours, a restaurant may receive a surge of orders that they do not have the drivers to handle. During off-peak hours, on the other hand, they may not have any orders at all so any drivers they employ will be sitting idle, on call.
The marketplace for restaurants that everyone talks about is not the hard one to build. The hard one is the marketplace for drivers. If I’m a restaurant then there’s very little value to me in an app that takes orders but does not provide drivers.