In-House Delivery vs. Third Party Services
With most of Australia spending less time out and about, delivery services have become an essential tool for many franchise businesses. As many businesses struggle with decreased foot traffic, especially those located in shopping centres, the use of delivery services allows franchise owners to continue servicing their customers and maintain revenue during these unprecedented times.
However, when it comes to delivery, making the choice between a setting up an in-house operation and connecting with a third-party service can be a difficult one. While external services such as Uber Eats and Deliveroo are popular options, their fees can eat into the profit margins of small businesses. In-house delivery provides business owner with more control but can be overwhelming logistically if there is a high volume of orders.
There are certainly pros and cons for each option, and no choice is going to fit every type of business. So how do you go about finding what is the best choice for your franchise? Is reach, promotional opportunities and convenience key, or do you prefer to have control over customer service and communication?
Using third-party services is straight forward, with a quick set-up process you can start taking orders almost straight away. Signing up doesn’t require any upfront investment, rather business owners pay a fee which is generally a percentage of the total order value. Exactly how much this is can vary based on the platform, but it is generally around 15-30%. This means that third-party services are great for businesses that take a high number of orders and work with a higher profit margin, with takeaway being their key offering.
Third-party operators can also provide a lot of exposure for businesses, as consumers can explore a wide range of choices that they may have not otherwise considered. For new businesses, or those trying to grow their delivery numbers, this can be a great promotional tool. However, it is important to ensure that your business can handle an influx of orders during peak periods. Slow preparation time can impact customer satisfaction and damage your performance potential.
In-house services are the original model, favoured by chains such as Domino’s and Pizza Hut for many years. Handling the delivery process internally offers higher levels of control over speed and service and allows business owners to manage the cost. However, going down this route requires a significant initial investment, and can be a learning curve.
This can be a great option for smaller businesses that service a loyal customer base within a local area. In the long-term, there is less impact on profit margins and the ability to build direct relationships with customers. However, it is important to consider that unless you have a large-scale operation with multiple drivers, there is a risk of being overwhelmed during busy periods.