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How to survive in the competitive online food delivery business

woman working in a food kitchen
(Image credit: Getty)

The online food delivery industry is growing in leaps and bounds as it offers a wide variety of benefits to all the three participants- the customers, restaurants and the platforms. 

According to reports revealed by Statista (opens in new tab), the revenue in the Platform-to-Consumer Delivery section is expected to show an annual growth rate of 10.6 percent, resulting in a market volume of $54,334m by 2023. This clearly shows the bright future for those entrepreneurs who are planning to start online food delivery marketplaces.

Although the service has opened a large gateway of opportunities for the startups, the online food delivery market has a competitive landscape. Therefore, there are a number of measures that must be taken care of before stepping into the competing business market. In this blog, we will discuss how to start an online food delivery business (opens in new tab) in a competitive market. 

Also, we have listed a number of food delivery business ideas.

1. Do market research on these factors:

Location: The hyper-local sections of the urban and semi-urban area are the potential market segments for this sector. So, perform a deep market analysis to determine the optimal location(s) to grab maximum share in the nascent market.

The interest of people: You must be informed of your customer base. This means that you must gather a lot of data-driven insights about your potential customers and know their food interests and behaviour.

No of Restaurants in the region: Carefully analyse the number of restaurants that would willingly deliver food in your hyper-location segments. In addition, make sure to provide your customers with a wide option to choose from different restaurants and cuisines.

Delivery staff availability: Make sure to find your own delivery team to capture dynamic spatial synergies between facilities and customer. So, you must consider food delivery chain management to efficiently design the delivery network and standout the service competition among food services providers.

The age group of people: Under several competitive strategies, make sure that the majority of your targeted audience is millennials. This is because food delivery adoption is very much tied to age which is driven by an under-35 year’s group.

2. Different food delivery business ideas:

woman delivering food

There are plenty of food delivery business ideas that hold tremendous business potential (Image credit: Getty)

Choose the Business model to avoid direct competition with industry leaders. There are a lot of food delivery business ideas that hold tremendous business potential and are also distinct from the old ones.

Platform to consumer: This is one of the best online food delivery ideas that concentrate to provide consumers with meals from associate restaurants (that may or may not have to offer online food delivery). In other words, the business model approach is of multi-restaurant food delivery business (opens in new tab) where the platform owner manages the delivery processes.

Restaurant to consumer: This market segment embraces the restaurants carries out the delivery of food orders. The order may be placed through online food delivery platforms or instantly via a restaurant website and the restaurant is responsible for the delivery service.

Online table booking: With this business model approach, you let customers book a table at a restaurant from your platform. The main sources of revenue for the platform owner are making a commission on every booking, on-site promotions, and banner advertisements.

Prepared food delivery service: Through this business approach, the idea is about offering delicious, healthy and piping hot meals at a reasonable cost at the doorstep of the customer. Kitchen service or the online food-ordering platform can be managed by the startup itself.

Start hyper-locally: Under this business model, the aggregators need to build a channelized workforce to make food deliveries in the shortest time. This helps in reviving local restaurants and gaining a competitive edge over the food industry market players.

3. Choose your technology platform carefully:

ordering takeaway delivery on a mobile phone

You'll need a website or app to reach potential customers (Image credit: Getty)

Once you choose the best business model among different food delivery business ideas, the next big thing is to carefully choose the technology platform: a custom website (opens in new tab) and/or app. To gain every potential opportunity in the competitive landscape of online food industry, be sure your marketplace is loaded with the best features and capabilities.

1. Features: Your perfect web solution for launching an online food delivery venture should be featured pack. Some of the crucial features that your website must consist of are:

  • Multi-store
  • Restaurant reviews
  • Marketing modules
  • Discount coupons and reward points
  • Location search
  • Multiple revenue generation channels

2. Mobile apps: In this mobile-first world, make sure that the online food delivery solution not only expedites your users to access your website on their mobiles but also facilitates them to download a mobile application that delivers convenience and excellent user experience.

3. Payment gateways: This is the world of digitalisation where customers usually like to pay online for their food orders. Therefore, integrating world-best payment gateways to your venture will be an exceptional competitive advantage.  This is because it is extremely essential to keep the customers need at the first-place.

Payment gateways include:

  • Stripe (opens in new tab)
  • PayPal
  • Amazon
  • Google Pay
  • Apple Pay

4. Customization options and scalability: The food industry is evolving at a rapid pace. Therefore, to keep you up with the ever-changing market dynamics, be sure that your online food delivering business is carefully crafted that can be easily customized. 

Also, owning a marketplace that is highly scalable with exclusive rights will give you an amazing competitive power over your business rivals. Hence, flexible technology is what you want most to stand out from your competitors.

  • Powerful flexible CMS (opens in new tab)
  • Easy functionality modifications

5. Technical support: While developing and after delivering the online food delivery digital solution, make sure your technology partner sanction to provide pre and post-launch support to you. 

For instance, YoYumm is a feature-rich food ordering/delivery marketplace platform that provides 12 months of free website maintenance/support for fixing the bugs and errors.

4. Invest in marketing:

digital marketing on a mobile phone concept

Social media marketing, for example through Instagram, will promote your brand (Image credit: Getty)

The sheer power of money is playing an ever more important role in advertising in the competitive online food delivery market. The more you invest in digital marketing (opens in new tab), the more your business gets recognised. Therefore, it is necessary to digitally optimise your online food marketplace.

Rank high on Google: In today's era of digitalisation, it is important to rank high on Google. This can be done by practicing effective search engine optimisation techniques and through continuous investment in Google AdWords.

Social media marketing: Social media plays an important role as a digital marketing channel that helps to generate more leads and produce a buzz around the brand. You can run a pre-launch marketing campaign on social media to create awareness for your startup.

Send notifications through email or SMS: Still being the most reliable means of communication, send business notifications and messages to your customer base through an email or SMS. 

Word of mouth marketing: There is nothing better than Word of Mouth Marketing. You must run influencer marketing or word of mouth marketing campaigns. For this, you can contact local food bloggers or run 'refer a friend' offers to increase customer base. In Addition, deliver the best experience to your customers, and for sure, they will recommend your services to their friends & relatives. 

Use of banners or local newspapers: To attract the attention of your targeted audience, you must adopt the traditional marketing strategies which include the use of banners or local newspapers.

Since the competition in the online food delivery market is increasing day by day, the above-mentioned tips will not only help startups to learn how to start an online food delivery business but also support to understand how to survive in the competitive landscape.

Ankush Mahajan is Senior Marketing Consultant at FATbit Technologies (opens in new tab).

Ankush Mahajan
Senior Marketing Consultant at FATbit Technologies

Working as a marketing manager at FATbit Technologies. Ankush is responsible for managing the company's marketing initiatives - developing strategies and tactics to boost the company’s reputation and drive qualified traffic. Uses market research, analysis, and own innovative ideas to develop a cohesive and profitable marketing strategy for the company and its clientele.