So you own a restaurant and have been hearing all the buzz around #OrderDirect, the industry-wide wake-up call for you to take control of your online business back from aggregators. You’ve probably attended webinars on the theme, read the news reports on leading media platforms and heard of a few names that offer direct ordering technologies.
Now how do you go about actually picking one of them? When comparing the pricing, basic online ordering features, delivery partners and existing integrations, there really isn’t that much to separate the players. Even where there are some differences, those will surely be evened out by each one catching up with the others in no time.
When making an important choice that will affect the long-term health of your business, it is important to consider strategic factors beyond features and capabilities.
This blog post will guide you through some of those key questions.
1. Which verticals does this player specialize in?
Some companies are specialists in the F&B industry. Their teams have spent a large part of the past decade building products for the F&B domain, and they continue to remain focused on this vertical.
There are others who are addressing a large number of retail domains beyond F&B. A lack of focus on the restaurant vertical means they will be less likely to prioritize specialized use cases that are needed by this industry. Put simply, their future is not tied to yours.
Pick a partner who is most likely going to deepen its skills in your domain.
2. Which pricing model is aligned with your interests?
While some companies are charging a flat transaction fee per order, others charge a fixed annual fee, and still others charge both an annual fee and a percentage commission per transaction. It is important to understand the implications of this.
A partner that charges you an annual fee is going to make money whether the platform brings you orders or not. If they charge you a percentage commission per order, they take a larger share of your margins as your average order value increases.
A low, flat transaction fee is the fairest model - it means they only make money if you make money, and they don’t eat into your margins for higher value orders.
3. Who owns the customer relationship?
Certain companies host your website on their branded base URL (yourrestaurant.theirbrand.in). They also display a “Powered by … (their brand)” label on your website. Some players also aggregate all their partner restaurants in a single website owned by them. This means that ultimately, it is their brand that is placed front-and-centre in the customer’s mind, even when the customers are on your direct channel.
It is important that the technology partner is completely invisible to your customers. Your website should ideally be hosted on a generically-named base URL (yourrestaurant.online-order.link).
4. How conflict-free is their model with your existing arrangements?
Another implication of branded and aggregated websites is that they may come under the legal definition of marketplaces. Your contract with aggregators most likely requires you to maintain the same prices across all marketplaces.
Some tech partners, however, give you your own website. And hence you are free to offer lower prices to your customers without violating your contract with aggregators. This is a very powerful and important tool you have in your armoury for attracting customers to your site. Part of your saved commissions can be shared with customers by way of lower prices.
5. How dependent will you become on them?
Let us suppose you want to migrate your online business to another partner in the future. How easy or difficult will it be to migrate all your existing customer data to the new platform? Some tech partners allow you to export all your data in a completely portable industry-standard format, while others have not made any such policies.
6. Who are the investors and partners in each player?
You have seen a story play out earlier: A new technology partner who has raised several million dollars comes out with an attractive price to enter the market but its investors force the company to raise its prices in due course. It is important to understand the nature and number of investors behind your tech partner. Since this is a long term game, it is important to work with partners who will put your interest before their investors’ demands.
So, the verdict.
Given the above observations and the real risks of choosing a well-funded, opportunistic player that may turn predatorial in the future,
the first choice for any restaurant looking to build a long-term strategic advantage for their online business should be a firm that meets most of the above criteria.
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