FOR STARTUPS TO ENTERPRISES
The Definitive Guide to starting an On-Demand Delivery Business
THE IMPORTANCE OF ON-DEMAND DELIVERY APPLICATIONS
Words like ‘Uberization’ rock the trends in the context of the on-demand delivery business. Startup tech companies like Uber Technologies have set a primary example for aspiring entrepreneurs – anyone can come forth with a solid business idea and without capital investment.
The clamor around the ‘on-demand’ economy has been widely discussed and written about. We are witnessing a revolution in the on-demand industry of delivery aggregators and full-service delivery. Popular brands like Zomato, Grofers, DoorDash, Instacart, GrubHub, Uber EATS, and more have become household names in the US, Asia, and worldwide.
Multi-fold growth in this sector doesn’t even amaze anyone, given the exponential growth of customer acquisition. The proven business idea of delivering goods & services at a peaceful rate of convenience using only a fingertip has both the “wow” and “X” factor.
Fast & easy deliveries of food items, grocery items, or services allow people to save their valuable time. Imagine driving out to a nearby supermarket (spending time & fuel), scouring through the racks of products (spending a good amount of time), standing in queues (spending an additional amount of time), and driving back to home (spending more time & fuel) gets solved in a matter of minutes with on-demand delivery orders – saving time, efforts, and money.
Some, guessing at the lethargy it adds to human lives, haven’t configured it properly. This accelerated process of ordering has only reduced a little burden off the backs of people, who wouldn’t personally visit the supermarket or store due to unavoidable engagements. It’s not that people have completely stopped coming out of their homes.
Coming to the economic aspect of this business, the on-demand delivery business holds a large platter of operating cutting-edge technology, 24×7 customer service, marketing, and logistics. Handling these costs & balancing with profits require able administrators and those who manage to pull it out well can draw outstanding results.
The user journey for an on-demand delivery app determines the fate of a business. Therefore, this creates a challenging yet rewarding opportunity for aspiring individuals or companies.
INTRODUCTION TO HYPERLOCAL ON-DEMAND DELIVERY MODEL
3.5 billion Smartphone users in India, China, USA, and worldwide share a solid base to the on-demand economy. The hyperlocal on-demand delivery model touched the highest figures of interaction via local delivery in a small geographical location. Here, a local service provider acquires on-demand products or services locally for delivering it to the customer in the same area.
For example, a consumer places an order for his/her favorite delicacy at a restaurant using a dedicated mobile application. The food aggregator (Like Zomato) processes the order and assigns a delivery partner for procuring the order at the restaurant and delivering the same at the location shared by the customer. As a result, the aggregator earns a commission for processing the entire system and the delivery partner receives a fee for the ride.
The disruption made by the hyperlocal on-demand delivery model is real and registers an unbelievable growth. The heart of this model relies on the quick delivery of goods as per consumer requirements within the specific geographical area.
For instance, when you need your favorite pizza from Domino’s, you simply need to place an order (with optional preferences) in the mobile app and the delivery team provides you the same at your doorstep, eliminating your requirement to personally visit the outlet.
Pushing aside the ‘call-based’ orders, this streamlined and accountable process indulges a rapid transformation, not just at face value but through practicality. New-age entrepreneurs, large business chains, individuals, and similar people found a pool of opportunities in business-making, thanks to the hyperlocal spectrum. Meanwhile, consumers enjoy these services within the comfort of their homes.
FAQ’S ON DEMAND SERVICE BUSINESS
Any business working on provisioning goods & services on demand is an on-demand business. Brightest examples like DoorDash, Instacart, Uber EATS, and more find easy mentions when the topic of on-demand business crops up. These businesses employ a commission-based model for earning revenues while distributing an extensive range of services.
Consumers download an on demand delivery app via app stores (Apple Store and Google Play Store). The intuitive & responsive app facilitates order options (and preferences) for customers to choose and place orders. Multiple payment options like credit/debit card, net banking, UPI, etc. get authorized by a gateway. Consumers receive their orders at their doorstep.
The gross expense of starting an on-demand delivery service can range between $10,000 and $30,000. However, these figures encompass rough estimates of various delivery app development costs. Launching a startup of an app-based delivery business may incur different kinds of investment, depending on specific requirements, efforts, time, and geography.
Kick-starting your online delivery service requires a host of activities, such as establishing a legal entity, registration for taxes, acquiring permits & licenses, etc. Before that, you need a robust platform for penetrating your business into the online world and collect tangible orders from the customers.
Aspiring entrepreneurs can successfully utilize a white-labeled on-demand app by personalizing for enticing app experience. You can simply create an on demand app like Uber or Zomato by using drag-and-drop features and publishing on an app store. No expertise in coding or programming is required for creating this app.
Top 10 benefits of online delivery business include:
· Easy ordering process
· Accurate order management
· Efficient customer management
· Convenient & quick order placement
· High-quality customer data
· Hassle-free customer acquisition
· Free and accessible marketing
· Seamless feedback collection
· Beat the competition
· Expand the business
HOW TO START AN ON DEMAND SERVICE BUSINESS
Time needed: 7 days
Uber-like on demand delivery service begins at app development, but a fair share of activities characterizes the marketplace for doorstep delivery. Let’s have a look at them.
- Selecting the target Market
Market analysis holds a crucial role in making a business operational within a limited geographical area or multiple countries. If an idea isn’t viable in the specific region, investing loads of money doesn’t help. SWOT (Strengths, Weaknesses, Threats, and Opportunities) analysis highlights the right picture.
- Selecting Product categories
Rushing to an immediate conclusion in this section may crash business before it even starts. We recommend identifying product categories judiciously while keeping an eye on the demography, geography, competitors, absence of key services, and cost-benefit ratio.
- Single Vendor Business
The single-vendor approach brings a high level of compatibility between business owners, customers, and vendors. As a low-cost platform, the ease of communication and workflow maximizations draws potential benefits minus pitfalls. Newly-made startups can directly focus their energies on developing this one.
- Multi Vendor Business – Aggregators
Online delivery aggregators for Platform-to-Consumer delivery facilitate mediation between consumers and local service providers. Only a Smartphone application or a simple website enables people to check product lists, prices, ratings & reviews, and then place orders.
- Application Platform
iOS or Android or both? Decide on the application platform for starting an on-demand delivery business. You can develop your own app or hire a team of developers or a single professional developer for developing a well-intuitive, robust, and dedicated application.
- White label Application
A large variety of white-labeled applications are available for pickup and delivery, food, home services, etc. for any individual to hit the ground running at a minimal initial setup cost. This cost-effective solution lets you begin your startup journey without worrying about extraordinary costs.
- Payment Gateway
Adding a payment gateway has become a norm for service providers. The payment authorization of credit/debit card payments or direct payments enables e-businesses to install a seamless buying and checkout journey for their customers. Popular payment gateway examples include PayPal, Stripe, Apple Pay, WorldPay, etc.
- Invoicing system
Won’t you send your customers invoices? QuickBooks and FreshBooks are the popular invoicing system for small businesses. Similarly, a wide range of invoicing and billing systems integrate seamlessly with the major application and minimize late/missed payments, reduce overheads, and promote transparency.
- Logistic
Business owners subscribe to these on-demand models for not having to invest in the logistics. Since on-demand services partner with independent delivery contractors, these facilities enable superior money-making opportunities for the latter. Uber-like brands have their team of dedicated professionals.
- Social Media promotions
Fun, engaging, and creative social media posts with special promotions, memes, order coupons, etc. build huge interaction with the audience. Zomato’s social media promotion strategy remains on point in the market it serves and fetches zooming benefits.
- Print Media promotions
Does your target audience spend more watch time on print media like newspapers, magazines, etc.? You can determine the efficacy of programming a promotional strategy for different print media outlets and penetrate the message through this audience.
- Loyalty Program
Innovative loyalty programs like Starbucks Rewards officially prove why it’s important to enhance customer retention. Awarding loyalty or reward points on the purchase, special offers via push notifications, etc. keep a customer glued and loyal to a brand for a long time.
MAJOR ON-DEMAND DELIVERY BUSINESS CATEGORIES THAT EXCELLED
All categories reached new heights in the on-demand delivery industry, but three genres made it to the top and made rapid growth of billion-dollar revenues.
TOP NAMES IN ON DEMAND DELIVERY
Branching out a popular brand might do injustice to the several brands that have grown by leaps and bounds for the on-demand economy. At one instance, Uber is widely recognized for its ride-hailing taxis across various countries and cities and in another Ola has connected various people for its taxi services. Likewise, names of Foodpanda, Uber Eats (repeated the umpteenth time, we know!), Swiggy, Zomato (did it touch the 100th time for mention?), and lots more grabbed the headlines.
DUNZO
DELIVEROO
PUBLIX
YODAWY
EAT 24
DOMINOZ PIZZA
JUST EAT
SMARTMEDICS
WECHEMIST
WHY DO ON DEMAND BUSINESSES FAIL?
Major pointers like business management, commission-based model, technical issues, poor customer service, and a myriad of subjects come up regarding business failures in the on-demand delivery sector. We would like to enlist some key reasons for the failure of on-demand delivery businesses.
01.
HIGH COMPETITION
A smart and flourishing business like Pronto in the UK offered delivery of healthy meals. Nevertheless, the delivery app succumbed to the aggressive promotional budgets of Deliveroo and Uber – an on-demand challenge had to surpass easily.
02.
INCOMPETENT PRODUCTS
The on-demand space sets a stiff competition among rivals, especially with each one of them coming out with ingenious ideas to attract the audience. Any brand not following up or bettering their performances makes their product obsolete and incompetent in the market.
03.
INABILITY TO SOLVE PROBLEMS
Quick-fix or band-aid solutions never help an on-demand business. Ineffective ideas or inability to resolve real-life problems for customers force a business out of the league. Numerous businesses, hence, find it tough to keep it afloat with the existing resources.
04.
DEMAND SUPPLY MISMANAGEMENT
Often businesses undervalue or overvalue demand and supply and slip-up their planning processes. These steps or activities take a major hit afterward and push the business backward, in terms of growth, revenues, and success.
