Between the Idea Napkin assignments and the three Elevator Pitches we gave, this is the most realistic and thought out venture I have. This venture is essentially a third-party delivery service for restaurants that do not currently deliver, but want to. In Gainesville, the closest thing we have to this is 352 Delivery or DoorStep Delivery. It will differ, however, in that our service will be free to the end consumer, being the customers of the restaurants we would deliver for. I will get more into how this will all work later. Below, I'll describe three things: The opportunity available, the innovation involved and the venture concept itself.
The Opportunity
There is a trade-off to using a third-party deliver service. Not all restaurants deliver. For those that do not delivery, a third-party delivery service provides that option for that restaurant's customers. Although, this allows the end-consumer to be able to get their food delivered when they otherwise could not, it is also expensive. Doorstep Delivery, for example, will charge at least a $4 delivery fee onto every order with a $10 minimum, That is the trade-off. This prevents many people from using these third-party delivery services. The opportunity here involves removing the trade-off entirely so that it is a win-win situation for the customer. If a business can do that, they could potentially do really well. The consumers for such an idea would be anyone within a certain radius of the delivery service office (i,e. a 4 mile radius). Anyone further than that would be out of our delivery range. When it comes to the businesses, any restaurant that does not currently delivery, but would like to or would benefit from doing so would be our direct customers, allowing us to serve the unmet needs of these restaurants and the undermet needs of the end-consumers of the food.
The Innovation
What I would be offering is a free delivery service to the end-consumers. This would attract them to order from us. Although our expenses would be a bit higher than that of Doorstep Delivery or any of our other competitors, our sales would also be higher because of such a large incentive. Assuming that the right marketing is done, we should be able to attract the customers of other delivery services to order from us instead. Aside from that, we would make money by charging the actual restaurants commission for each order. That is the same way that the other delivery services make money. It is usually in the realm of ~25%. We could match the percentage of the our competition to flip some of these restaurants to use our delivery service in place of theirs to build ourselves quickly and allow the restaurants to see how fast their business can grow with us instead. When it comes to speaking with restaurants who do not currently utilize a third party delivery service, we can start a bit higher than that at around 30% and go down from there if necessary.
The Venture
The original problem which gave rise to an opportunity was the trade-off that I previously mentioned. Although the consumer can get their food delivered from restaurants that do not have delivery services, the customer must also pay a larger price for that food. A free delivery service would create a win-win situation for the end-customer, giving them an incentive to order more food. Not only will they be able to order their food for delivery, but they will be able to do so free of charge. This gives us a large competitive edge over competing third-party delivery services while pleasing the end-consumer. At the same time, we will also be providing restaurants that do not have a delivery service the ability to deliver their food and for approximately the same cost as our competitors.
The best way to go about doing this would be to set up an office for the delivery drivers near the center of town, or wherever we think most of our business would come from. For example, if this were to be opened in Gainesville, it would be smart to open somewhere near Butler Plaza so that we are near UF's campus while also being close to the highway for quick access to Newberry rd. This office would serve as a place for the drivers to come back to and as an office for us to process orders, handle customer calls, etc. The orders would primarily be made online, but could also be placed over the phone. In terms of advertising, hotels (for people who are not familiar with the area and want food delivered), dorms and off-campus housing would be the main focuses. We would also have a car sign for each driver so that people see our name and logo as the car passes by.
Essentially an order would be placed, either on-line or over the phone. When the order is placed, the order would be faxed immediately to the restaurant by someone in our office. The driver would immediately be sent out to pick up the food and deliver it to the customer. A couple minutes after the fax is sent, one of our employees would call the restaurant to ensure that the fax went through. This way, by the time that the driver gets to the restaurant, the food would be ready, allowing for quicker delivery. At the end of every month, we would send each restaurant a check with an invoice showing all of the orders we took for them and the totals of the orders. We would keep 25-30% of it, depending on what the agreement is with that restaurant and give them the rest.
Our Unfair Advantage
Our biggest advantage over our competitors is by far the free delivery aspect of our concept. That is what will drive our customers to order through us over anyone else. It would also serve as a huge marketing tool, especially with the lower and middle class who really pay attention to prices. The higher class folks may just pay attention to who can deliver the quickest, but it could also be an incentive for any of them who search good deals.
The Next Product
For any businesses that do not want to pay the 25-30% commission, we can also provide pick-up ordering online. That is, if a restaurant does not have the ability to take orders in advance online for carryout, we can give them the ability to do so. It would work in a similar fashion in that we would receive the order and fax it to the restaurant to make. The customer would then come by to pick it up at their specified time. We would take 5-10% of those orders as opposed to 25-30%.
The Next Move for Me
If this takes off, the next move for me would be to find another city to open a delivery service in; one that either does not have one or one that has too few delivery services relative to its population. The idea would be to keep opening these delivery services and make a franchise out of it.
Feedback from My First Venture Concept
I originally said that I would match my competitors' prices for ~25%/order in commission for the first 6 months and, after building report with the business, to raise that slightly to 28-30% to cover more of our delivery costs. One person was reasonably concerned that most businesses would not be too happy about that switch in higher pricing. I changed that here. Instead, I would match the price my competitors give to restaurants who they already work with in an effort to flip them to working with us and remain at that same price, unless if my competitors' price goes up as well. I would also offer an initially higher price to restaurants who do not currently use a third-party delivery service because I would not be forced to match anyone then. That was the only constructive criticism I received.
The Opportunity
There is a trade-off to using a third-party deliver service. Not all restaurants deliver. For those that do not delivery, a third-party delivery service provides that option for that restaurant's customers. Although, this allows the end-consumer to be able to get their food delivered when they otherwise could not, it is also expensive. Doorstep Delivery, for example, will charge at least a $4 delivery fee onto every order with a $10 minimum, That is the trade-off. This prevents many people from using these third-party delivery services. The opportunity here involves removing the trade-off entirely so that it is a win-win situation for the customer. If a business can do that, they could potentially do really well. The consumers for such an idea would be anyone within a certain radius of the delivery service office (i,e. a 4 mile radius). Anyone further than that would be out of our delivery range. When it comes to the businesses, any restaurant that does not currently delivery, but would like to or would benefit from doing so would be our direct customers, allowing us to serve the unmet needs of these restaurants and the undermet needs of the end-consumers of the food.
The Innovation
What I would be offering is a free delivery service to the end-consumers. This would attract them to order from us. Although our expenses would be a bit higher than that of Doorstep Delivery or any of our other competitors, our sales would also be higher because of such a large incentive. Assuming that the right marketing is done, we should be able to attract the customers of other delivery services to order from us instead. Aside from that, we would make money by charging the actual restaurants commission for each order. That is the same way that the other delivery services make money. It is usually in the realm of ~25%. We could match the percentage of the our competition to flip some of these restaurants to use our delivery service in place of theirs to build ourselves quickly and allow the restaurants to see how fast their business can grow with us instead. When it comes to speaking with restaurants who do not currently utilize a third party delivery service, we can start a bit higher than that at around 30% and go down from there if necessary.
The Venture
The original problem which gave rise to an opportunity was the trade-off that I previously mentioned. Although the consumer can get their food delivered from restaurants that do not have delivery services, the customer must also pay a larger price for that food. A free delivery service would create a win-win situation for the end-customer, giving them an incentive to order more food. Not only will they be able to order their food for delivery, but they will be able to do so free of charge. This gives us a large competitive edge over competing third-party delivery services while pleasing the end-consumer. At the same time, we will also be providing restaurants that do not have a delivery service the ability to deliver their food and for approximately the same cost as our competitors.
The best way to go about doing this would be to set up an office for the delivery drivers near the center of town, or wherever we think most of our business would come from. For example, if this were to be opened in Gainesville, it would be smart to open somewhere near Butler Plaza so that we are near UF's campus while also being close to the highway for quick access to Newberry rd. This office would serve as a place for the drivers to come back to and as an office for us to process orders, handle customer calls, etc. The orders would primarily be made online, but could also be placed over the phone. In terms of advertising, hotels (for people who are not familiar with the area and want food delivered), dorms and off-campus housing would be the main focuses. We would also have a car sign for each driver so that people see our name and logo as the car passes by.
Essentially an order would be placed, either on-line or over the phone. When the order is placed, the order would be faxed immediately to the restaurant by someone in our office. The driver would immediately be sent out to pick up the food and deliver it to the customer. A couple minutes after the fax is sent, one of our employees would call the restaurant to ensure that the fax went through. This way, by the time that the driver gets to the restaurant, the food would be ready, allowing for quicker delivery. At the end of every month, we would send each restaurant a check with an invoice showing all of the orders we took for them and the totals of the orders. We would keep 25-30% of it, depending on what the agreement is with that restaurant and give them the rest.
Our Unfair Advantage
Our biggest advantage over our competitors is by far the free delivery aspect of our concept. That is what will drive our customers to order through us over anyone else. It would also serve as a huge marketing tool, especially with the lower and middle class who really pay attention to prices. The higher class folks may just pay attention to who can deliver the quickest, but it could also be an incentive for any of them who search good deals.
The Next Product
For any businesses that do not want to pay the 25-30% commission, we can also provide pick-up ordering online. That is, if a restaurant does not have the ability to take orders in advance online for carryout, we can give them the ability to do so. It would work in a similar fashion in that we would receive the order and fax it to the restaurant to make. The customer would then come by to pick it up at their specified time. We would take 5-10% of those orders as opposed to 25-30%.
The Next Move for Me
If this takes off, the next move for me would be to find another city to open a delivery service in; one that either does not have one or one that has too few delivery services relative to its population. The idea would be to keep opening these delivery services and make a franchise out of it.
Feedback from My First Venture Concept
I originally said that I would match my competitors' prices for ~25%/order in commission for the first 6 months and, after building report with the business, to raise that slightly to 28-30% to cover more of our delivery costs. One person was reasonably concerned that most businesses would not be too happy about that switch in higher pricing. I changed that here. Instead, I would match the price my competitors give to restaurants who they already work with in an effort to flip them to working with us and remain at that same price, unless if my competitors' price goes up as well. I would also offer an initially higher price to restaurants who do not currently use a third-party delivery service because I would not be forced to match anyone then. That was the only constructive criticism I received.
Interesting post you have. Great execution on how you wrote this! This is definitely a great post, and I love how you analyzed the feedback and came to your conclusions and reflection. The product is definitely a great idea, and I hope that you continue to gain success as you move forward with this product.
ReplyDeleteHere is my blog: http://jtbelga.blogspot.com/2016/04/venture-concept-no-2.html
Great job on this post! (any reference to Gilmore girls is automatically great!) I loved the detail you used and the over all idea of your product. Feel free to check out my blog at http://ufclassblog.blogspot.com
ReplyDeleteHey Abraham,
ReplyDeleteCool idea! I love delivery ventures because they always have their own unique special sauce - in your case it's the free delivery aspect. I think it's great that you want a win-win situation for the consumer, it's always best to look out for the greater good. That being said, how scale-able is a free delivery idea? If you charge the same commission to restaurants, how will you make money? Or isi the end goal to absorb all the customers through your free delivery and eat the costs as you grow? In any case, great idea.
Please see my blog post here: http://sadokh.blogspot.com/2016/04/venture-concept-no-2.html
Thanks,
sadok