Thinking of jumping onto the digital ordering bandwagon? Let’s have a look at the fundamental differences between online ordering marketplaces (Food Panda, Grubhub, JustEat etc) and online ordering systems and how they impact F&B businesses.
Online food ordering on the rise
Online food ordering is on the move with more than 26% of the world population ordering delivery and pickups through their computers and mobile phones, according to a research done by Nielsen. Big brands like McDonald’s and KFC have had their customised online ordering system for some time, snagging millions of dollars in market share. On the other hand, smaller restaurants with lesser outlets under their belt lose out to these prominent players on the market as they do not have the capacity to develop their own online ordering system/website. In order to be able to compete, smaller brands are required to fork up a big sum of money to devise an online ordering system/website that will support its non-dine in business.
Addressing this problem, several enterprises have launched various solutions that focus on helping smaller F&B brands own an online ordering platform. The solutions range from online food ordering marketplaces to online ordering systems. One such solution provider is Oddle, a software-as-a-service provider offering an online ordering system; empowering over 200 brands including established ones such as PAUL bakery. In this article, let's have a look at the fundamental differences between online food marketplaces and online ordering systems and how they impact businesses.
Online ordering marketplaces:
Good for beginners in the short run, not so for the long run
Online food ordering marketplaces like Deliveroo, Grubhub and Foodpanda let customers order food online and help F&B owners do delivery. Their main target audience include F&B brands that hope to offer an online ordering platform and acquire new online customers. Online food ordering marketplaces often engage in aggressive marketing to attract customers to its site where various brands are listed. Users are exposed to different brands available and may subsequently place their orders directly from the online ordering marketplace site.
Aside from exposure, these marketplace solutions also deliver for the restaurants. It assigns riders to all the orders that are received, thus easing the logistical issues for restaurants. With the exposure and logistical convenience, it is not a wonder why online food ordering marketplaces appeal to new players in the F&B industry.
With advantages, come disadvantages. For every order transacted through the online ordering marketplace, a percentage from the total price is charged as the transaction fee. Henceforth, the more orders the restaurant receives, the more money it has to pay the site.
For this reason, it is highly unprofitable for F&B owners to only use online food ordering marketplaces in the long run. Think about it this way, when restaurant owners rent a brick and mortar space, they pay a rental fee every month instead of a percentage per transaction made in that space. Likewise, this transaction fee puts the restaurateurs in a disadvantageous position when the person who places an order is a returning customer. Simply put, it is not logical to pay a percentage to the online ordering marketplace provider when it is a repeat customer. Per transaction fees are meant for marketing to new customers and maybe partly for delivery but definitely not just for the online ordering service because that can be easily resolved by a service provider that has an customisable online ordering system solution.
Seemingly convenient logistical solutions offered by online food ordering marketplaces may actually possess a hidden pitfall. Orders are processed by the marketplace service provider and subsequently communicated to the restaurants through the online ordering system. Having a third party involved in the transaction means that restaurateurs neither have full control of the online ordering system nor the orders that come in. Modifications to the settings and online ordering system’s frontend menu means affecting operations time, as the process is not instant.
Differences between a customisable online ordering system and online food ordering marketplaces
Online ordering solution, Oddle, recognised the problem with the price model of online ordering marketplaces and problems resulting from having no control over the system. Determined to find a solution that is truly beneficial for one of the founder’s owned restaurant’s needs, it came up with a the Oddle online ordering system to address this gap. It presents F&B owners with a highly customizable frontend menu, an order management system as well as tools useful for business analytics.
Unlike online ordering marketplaces that charge per transaction, Oddle proposes a price model that has each F&B’s business’s best interests at heart – no one should be charged for every received order. Bringing the logic of brick and mortar space over to the digital space, Oddle charges F&B owners a flat subscription fee regardless of the transaction amounts during their subscription to the online ordering system.
Besides that, Oddle presents its F&B clients with something that online ordering marketplaces do not. It allows them complete control over the orders that come in. This comprehensive online ordering system relinquishes control to F&B business owners over their online ordering system’s frontend menu aesthetics, allows them to consolidate phone, email, and online orders on the online ordering system backend, along with access to sales and customer data. One key belief is that customer management and interaction should be in the hands of F&B owners and not service providers who wouldn’t know customers as well as F&B business owners do. By giving full control, the Oddle online ordering system allows F&B owners to ensure the satisfaction of their customers.
However, it is inevitable that giving full control of the solution to restaurants creates a situation where marketing and logistics are not fully addressed. This solution requires each restaurant to market its own brand and manage their own delivery fleet.
Order management is not all
Understanding the importance of good marketing and the increasing needs for logistics, Oddle is looking into strategic partnership with various F&B review sites in order to drive traffic into its merchants’ sites, as well as partnership with delivery partners to counter the need for delivery fleets. This will bring in value and benefits to the merchants using the system. It is also developing its latest marketing arm, FeastBump, to increase traffic to its participating F&B clients.
Further expansion for Oddle
After clinching US$718,000 seed funding, Oddle is looking into expanding its operations to various countries like Taiwan, Australia, and Indonesia to benefit more F&B businesses with its online ordering system. Currently, this Singapore-based start-up has expanded its market to Hong Kong and Vietnam, with over 350 outlets from 200 paying merchants*.
Despite starting off by targeting smaller brands, Oddle has begun to correspond with bigger chains, believing that they too should be able to benefit from a system that does not cause them an unreasonable sum of money.
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*This article was first published on 29th April 2015. As of 8th January, a total of 800 F&B businesses are onboard the Oddle online ordering system.