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Striking the Right Balance Between Third-Party Marketplaces and First-Party Online Ordering

Home Our Blog Hospitality Striking the Right Balance Between Third-Party Marketplaces and First-Party Online Ordering
restaurant, Striking the Right Balance Between Third-Party Marketplaces and First-Party Online Ordering, NFS Technology

In the wake of its initial surge during the pandemic, online ordering has transformed into an indispensable revenue driver for restaurants and convenience stores. Recent data from Paytronix highlights that, on average, digital orders contribute to 25–30% of a typical restaurant’s overall revenue. As the digital landscape continues to evolve, the question arises: should businesses opt for third-party marketplace services, first-party online ordering platforms, or find a balance between the two to maximise their benefits?

The Dilemma of Third-Party Marketplaces

While third-party marketplaces offer a quick entry into the digital realm, convenience comes at a significant cost. These external platforms can absorb nearly a third of the profits from the digital ordering channel, compelling restaurants to increase prices. However, this strategy becomes unsustainable due to inflation and the lack of ownership over customer data.

Despite the drawbacks, third-party delivery aggregators play essential roles in guest acquisition and cost-effective outsourcing of delivery services, especially for smaller operators looking to establish an online presence swiftly.

The Power of First-Party Online Ordering

Recognising the limitations of third-party solutions, businesses are strategically transitioning to first-party ordering platforms. The 2023 Online Ordering Report from Paytronix emphasises the advantages of first-party guests over those who come through third-party platforms.

First-party guests tend to

– Order more frequently and choose higher-value items.

– Tip more generously, especially in times of inflation.

– Show a higher likelihood of participating in a brand’s loyalty programme.

Ordering directly from a restaurant’s website or mobile app provides businesses with valuable, actionable data, including customer identity, dining behaviour, and demographics. Armed with these insights and greater control over the guest experience, businesses can formulate a comprehensive guest engagement strategy, fostering customer loyalty and maximising revenue.

Guest Preferences Drive the Shift

The shift towards first-party ordering aligns with customer preferences. DoorDash’s admission in 2021 revealed that 43% of its customers preferred ordering delivery through a restaurant’s website or app, compared to only 27% who preferred third-party platforms. Customers opt for third-party marketplaces primarily for convenience, while some believe they cannot order delivery directly from their desired restaurant or convenience store.

Building a Comprehensive Digital Guest Engagement Strategy

Implementing first-party ordering platforms is about more than just maximising profits; it’s about meeting customer expectations. Over the past three years, customers have consistently shown a preference for the convenience and direct interaction offered by ordering directly from businesses.

While the transition may require a commitment to change, the long-term benefits outweigh the challenges. By embracing first-party online ordering, restaurants and convenience stores can cater to their best customers’ preferences, foster loyalty, and, most importantly, take control of their digital destiny in an ever-evolving market. As the digital landscape continues to evolve, businesses must make strategic decisions to stay ahead and provide the seamless, personalised experiences that today’s consumers demand.

Tips for Converting Guests and Seizing Opportunities

Now that online ordering is considered table stakes for most operators, first-party online ordering systems have become powerful platforms that integrate fully with other critical guest engagement functions and operational systems. Combining first-party ordering and loyalty programmes, for example, delivers more personalised digital guest engagement that leads to longer-lasting, more profitable relationships.

Once a first-party online ordering platform is in place, businesses can follow these tips to convert guests from third-party marketplaces:

  1. Raise awareness:

   – Utilise in-store signage, compelling website offers, targeted email campaigns, retargeting ads, and engaging social media posts to create awareness about your online ordering system.

  1. Exclusive Loyalty App:

   – Develop a loyalty app with exclusive offers for online take-out and delivery orders.

   – First-party ordering shows a loyalty attachment rate of 41%, a significant contrast to the meagre 3% associated with third-party ordering.

  1. Utilise third-Party assistance:

   – Redesign take-out and delivery bags with a QR code or URL, encouraging guests to use your website or mobile app for future orders.

   – Leverage third-party marketplaces to promote your loyalty programme and facilitate the conversion effort.

  1. Curate Marketplace Presence:

   – Adjust the number of items you sell on third-party platforms, and use the bio section to highlight the option of ordering the full menu directly from you.

As the online food ordering landscape undergoes significant changes, businesses must adapt and take control of their digital guest engagement. To stay competitive and navigate ongoing changes, restaurants and convenience stores must assert control over their digital presence, enhance customer retention, and leverage the benefits offered by first-party online ordering platforms. In a landscape where customer loyalty is paramount, mastering the digital shift through first-party online ordering not only secures a sustainable revenue stream but also establishes a direct and enduring connection with guests. As businesses prepare for continued transformation, the integration of technology and strategic engagement becomes the key to thriving in an ever-changing market.

Chris Fletcher
Chris Fletcher Chris Fletcher Posted on: January 18, 2024
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