Over the past couple of years, the online food delivery marketplace has become popular among modern people. The COVID-19 pandemic has led to a boom in this business, and quite evidently, there is no looking back. The food delivery marketplace has grabbed an excellent place in the online world, and people are using it more than ever.
More and more entrepreneurs are looking forward to investing in such online food delivery platforms and making a good fortune out of them. However, before investing in such on-demand food delivery apps, one should know properly about them.
Since the overall business and revenue model of such a platform is quite complex to understand initially, entrepreneurs should be careful and well-versed.
Let us see how an online food delivery platform works and how it generates all the revenue.
Working Process of an Online Food Delivery Marketplace
In general, there are four entities or heads working hand-in-hand in an online food delivery marketplace
- Marketplace owner
- Merchant
- Customer
- Delivery personnel
When these four entities work in sync, the marketplace gets a lot of success. Here is a detailed explanation of how an on-demand food delivery app, or the platform in general, works.
- The admin or owner of the marketplace partners with various merchants in the area. These merchants mainly include restaurant and food chain owners and list those restaurants on the platform.
- The merchants add the relevant information on the platform, including name, menu, operational hours, working days, packaging methods, additional services, etc.
- Customers register on the online platform through their mobile numbers, emails, or social media handles to avail of the services.
- After the registration process, the customers can find their desired restaurants through a flurry of advanced search options. When the restaurant is selected, they can also select the desired food items and add them to the order cart.
- Customers finally confirm their order and complete the payment through various payment gateways available.
Merchants get notified of the orders. They accept those orders on the platform and prepare them in the restaurants, ready to be delivered. - Delivery personnel receives delivery requests from the merchants through the marketplace and report to the restaurant for item collection. With modern technology in the on-demand food app development, customers can track the status of their food and delivery staff in real-time.
- Once the order is completed, the delivery staff picks the items up for delivery. The order is handed over to the delivery personnel directly at the place of the order.
- The marketplace owner or admin earns a share of the revenue from each order placed at the marketplace. The cost of the food item is transferred to the merchant or the restaurant owner separately.
Benefits of an Online Food Delivery Marketplace
When you develop a food delivery app or marketplace, it comes with many added benefits for the owner. Apart from serving the customers more conveniently, here are some benefits owners or administrators can get.
No Need for Self-Management of Inventory
As mentioned earlier, online marketplaces tie up with local restaurants and food chains. Thus the need for managing costly inventory or infrastructure is eliminated. The merchants look after preparing the food, packing and then delivering it to the customers.
Therefore this indicates that a marketplace owner does not run their own restaurant business. They have to handle orders and transactions and solve customer issues.
Various Food Business Types
Online food delivery marketplaces allow all types of food merchants to take their share of serving customers. These online platforms enable various food merchants on their apps, whether small restaurants, takeaways, cloud kitchens, big food chains, and luxury restaurants.
This provides versatility and a wide range of options for customers. In general, managing or availing all of them together can be challenging, but online marketplaces make it look easy.
Hassle-free Transactions
When you are the owner or admin of an online marketplace, you get complete control over the transactions on the platform. You are entitled to hold the payment from the customer until the customer gives total clearance on the service received from the restaurant on the food.
This automatically gives you an edge and increased credibility in the market. Moreover, you can govern the revenue collection and requirement through and for the platform respectively.
Revenue from Every Transaction
For every order placed on the platform, the customer must pay for the food and some extra service charges. The amount entitled to the merchant is transferred to them. At the same time, the additional charges are earned as revenue by the marketplace owner.
This charge counts for the listing of those restaurants on the platform. Moreover, a significant part of the revenue comes from advertising across multiple other platforms.
Automated Management
When a food delivery app development is done, most of the operations in the platform are automated for better precision. Online and automated tools are used all the way from order placement, customer service and management, payment management, and other operations. This makes the overall interface more manageable and organized.
Complete Authority
Being the owner or admin of the online marketplace makes them the sole authority of the platform. They are the ones who set all the terms and conditions for the others on the platform.
The information and regulations for all merchants and customers are also under the owner’s sole discretion. Hence this allows the owners to have complete authority.
Variety of Customers
With the given conditions in the outside world and the need for customer convenience, people like to order their requirements online more than physically visiting stores. This allows the marketplace to offer a variety of services to different customers based on their needs and desires. This helps the business to grow while getting more versatility.
Attract Restaurants that Cannot Afford their Online Services
Even today, thousands of local takeaways and restaurants cannot afford their own online services to deliver food to customers. One of the main reasons these restaurants cannot design online services is the lack of funds since creating and maintaining websites and apps can be costly.
Such online marketplaces provide this option to such restaurants and allow them more exposure to a vast customer base. They can list their services on platforms that deliver the food through online orders.
This way, the marketplace continues to induce more and more merchants, while those restaurants can continue their services without excess overheads.
Easy Payment Terms
When you order your food from online marketplaces, you need to complete your order placement by making the payment. Online marketplaces offer different payment methods, including paying through debit or credit cards, third-party payment apps like Google Pay and PayTM, cash on delivery, payment through banking apps, etc. This makes the overall process hassle-free and safe for the customers.
Wrapping Up
If you have proper knowledge and insights into the online food delivery marketplace business, it can be quite a profitable business. Moreover, your business allows thousands of merchants to list and promote their businesses on your platform at a minimal expense. Thus proper development and management of the app can help you run this business for long time profits and growth in the market.
