More and more grocery and restaurant brands are working with aggregators to complete their eCommerce offering. Over the last few years, companies have grown increasingly reliant on these providers, for good reason: they provide a needed service that can be scaled quickly and drive new revenue without much up front capital outlay. But there’s also a general, albeit complacent assumption among executives that these aggregators are the sum total of their brand’s delivery strategy. And that’s worrying.
Confusing your delivery partner for your last mile delivery solution is a mistake you can’t afford to make in today’s changing market.
How we got here
It all started innocently enough. Grocers and Restaurant brands, many of whom weren’t thinking much about ecommerce or delivery, were approached by technologically advanced companies with large user bases who offered to take care of it for them. Most of these brands were more than willing to hand over this nascent part of their business. What did they have to lose?
On the surface, it’s a match made in operational heaven: The enterprise provides the actual products, and aggregators take care of the complicated ecommerce ordering and delivery. That’s how companies like Instacart and GrubHub became the go-to online sites for grocery and restaurant delivery, respectively.
At the time, in the restaurant and retail spheres, few companies were performing deliveries, so it was a great deal for enterprises from these industries: extra revenue for little to no work on their part. The only downside was a double-digit cut of the profits.
Fast-forward to 2019, and this partnership looks completely different.
Where we are today
The business model that aggregators were using may work on a smaller scale, but at scale, and as a retailer or restauranter’s sole answer for delivery, it’s financially untenable for the brands – and as it turns out, even for the aggregators. Uber Eats is predicted to perform at a loss for years; as for the brands themselves, they’ve woken up to the fact that ten percent, or more in some cases, of their revenue is coming from aggregators.
More importantly, their customers are also going to the aggregator websites to place orders.
According to a William Blair Restaurant report, orders directly from a restaurant’s website or app are going down, and orders via third party platform are up. If a brand leaves its ecommerce partner, customers will continue shopping on the aggregator’s site, because these delivery partners have morphed into wildly successful online marketplaces.
This is also one reason why, though they may not be complete last mile delivery solutions, delivery providers are an important facet of a restaurant’s business. You have to be where your customers are, and like it or not, hungry consumers are on these third party sites.
So if delivery providers aren’t last mile delivery solutions, what are?
Last Mile Delivery Solutions
Last Mile delivery solutions are the systems, capabilities and processes that enable you to take control, measure, manage and synchronize your entire delivery ecosystem; your operations, your customers, and your delivery partners. It’s platforms that connect your entire delivery flow, digitizes your data, and hands you the reins. A last mile delivery solution will enable a business to benefit from working with multiple delivery models, ecommerce providers, and delivery fleets, without being dependent on any one provider. And it brings all of the data into one place so that your entire delivery ecosystem can be measured in real time.
The true test of a delivery solution is that it will help you put your data to use in improving delivery performance, whether that data comes from internal resources or external providers. When you have your operational and customer data in one place, it’s easy to view performance on a high level and make decisions that help you deliver more results using fewer resources.
The good news is that current delivery providers can and often should be a part of that solution. Businesses should adopt more holistic last mile delivery solutions that include relationships with delivery providers, but which give them more operational and customer data, flexibility, and control over their delivery than they have today.