How to Boost Your Margins When Selling on Deliveroo and Uber Eats
Selling groceries through delivery platforms such as Deliveroo and Uber Eats can be a convenient way to expand your customer base and increase sales. However, the expenses associated with these platforms can eat into your profits, making it challenging to maintain healthy margins. In this blog post, we will explore some strategies to help you boost your margins when selling on delivery platforms.
Understand the Fees Involved in Delivery Platforms
The first step to understanding the fees on delivery platforms. These platforms take a commission from every order, and these fees can quickly add up and cut into your profits. In addition to the commission, there may be other costs associated with using these platforms, such as delivery fees and marketing expenses.
Here is a breakdown of each of the platforms
- Launched in 2014 in Santa Monica
- Joining fee: £350, but offers exist
- Commission fee: varies but is commonly around 30%
- Offers promotional offers and marketing strategies
- Provides simple order management and access to sales data
- Founded in London in 2013
- Has over 148,000 partners in the UK
- Joining fee: Varies between £400-£50
- Commission fee: changes per order, but ranges from 20-30%
- Offers discounted delivery-proof branded packaging and in-app marketing tools
- Founded in Denmark in 2001 and arrived in the UK in 2006
- Joining fee: £295
- Commission fee: 14% on every order
- Offers an Orderpad tablet and printer for easy order management, personalised data and insights, and cash back and discounts on energy bills and delivery bikes/scooters.
How delivery apps affect pricing
When selling on delivery platforms such as UberEats, Deliveroo, and Just Eat, it's important to consider the impact that the delivery fee has on the price of your products. These platforms typically charge a commission fee and delivery fee for each order, which can eat into your profits.
For example, if a customer orders a meal for £30 from your restaurant through UberEats, you may have to pay a 30% commission fee of £9, reducing your revenue to £21. Additionally, if UberEats charges a delivery fee of, say, £3, the total cost of the meal to the customer will be £33. This may make your products seem more expensive than they actually are, potentially dissuading customers from ordering from your store.
Our research comparing the price products were sold on Deliveroo vs the RRP of the product shows that grocery stores could be selling anywhere between a 30-50% markup. It seems there is no standard per cent increase in the RRP. A lot of the pricing will depend on the popularity of the item as well as the wholesale price the retailer buys at.
The media have made news from the so called “price hike”, but as Guardian perhaps fairly reports “Restaurants say they have no choice but to pass on fees charged by the big food courier apps”. This can be difficult for customers to understand as they believe they are being charged for delivery and service, both line items on the final bill when ordering through Uber Eats.
In summary, the reality is that the additional price on products is reflective of the service being offered along with the product. The challenge is maintaining customer trust, who may believe they are being overcharged.
Should I list on delivery apps like Deliveroo, Uber Eats and Just Eat
Deciding whether to list your products on delivery platforms such as UberEats, Deliveroo, and Just Eat is a complex decision for any business owner. While these platforms have the potential to expand your customer base and boost sales, they also present a set of pros and cons that require careful consideration.
One major disadvantage of these platforms is the commission and delivery fees that they impose on businesses. As we previously discussed, commission fees can be as high as 30%, and delivery fees can further eat into your profits. Maintaining your margins may necessitate an increase in prices, which can have a detrimental impact on customer trust and result in negative feedback.
Another potential disadvantage is that delivery platforms often own customer data, which makes it challenging to cultivate a loyal customer base for your business. Customers may not realise that they are ordering from your business specifically, leading to a lack of brand recognition.
On the other hand, there are several benefits to listing your products on these platforms. For instance, doing so can broaden your customer base and reach new audiences who may not have been aware of your business otherwise. The recent ACS report showed that 51% of shoppers will travel only 1/4 mile to reach a convenience store. Listing on a delivery app can widen your radius well beyond this. It can also help you stay competitive with other stores in your area, particularly if they are already listed on these platforms.
Listing your products on delivery platforms can also help you prevent the loss of business to competitors who are already listed. Many customers prefer the convenience of online ordering, and if your business isn't listed, they may opt to order from a competitor instead.
Ultimately, the decision to list your products on delivery platforms will depend on your business's specific circumstances and goals. If you possess a loyal customer base and strong brand recognition, it may be unnecessary to list on these platforms. However, if you seek to broaden your customer base and remain competitive, listing on delivery platforms may be a valuable investment. Just be sure to consider the advantages and disadvantages carefully and determine whether the benefits outweigh the costs for your business.
How to get the best out of being on a delivery app
Okay, so you have decided to go for it and list your store on Deliveroo, Uber Eats or Just Eat. Here is our advice to get the best from this for your store.
1. Save on your stock
One effective way to improve your margins when selling groceries on delivery platforms is to utilise price comparison tools such as Coral. Coral is a tool that helps retailers find the best prices for the products they sell. By using Coral, retailers can effortlessly compare prices across different suppliers and distributors, helping them find the best prices for the products they need, ultimately improving their margins.
With Coral, you can easily compare prices and find the best deals for the products you sell. This will help you increase your profit margins and make more money from each sale.
2. Offer Promotions and Discounts
Another strategy for improving your margins when selling groceries on delivery platforms is to consider offering promotions and discounts. This can include providing discounts on bulk purchases or running special promotions for customers who order through the platform.
Offering promotions and discounts can increase sales, improve margins, and attract more customers to the platform, increasing brand awareness. When running promotions, it's essential to analyse their impact on your profit margins to ensure that you are still making a profit.
3. Improve Delivery Times
Fast preparation times and short courier wait times are essential for boosting your in-app ranking. Faster delivery times are a critical factor for customers, and excelling in this area can improve your score with customers and delivery platforms alike.
4. Improve Your Conversion Rate
It's not enough to have a lot of page views; you need to convert those views into orders. Optimizing your online menu is critical to ensuring that potential customers become paying customers. Make sure your menu item descriptions are clear and attractive, with reasonable prices that are competitive with your competitors and in-store prices. Remove or replace menu items that aren't selling well.
5. Streamline Your Operations
Accept orders as quickly as possible, avoid cancelling orders, and ensure you don't make any mistakes or forget to add menu items. Performing well in these areas can lead to better customer ratings and a higher ranking on delivery apps.
6. Get Featured
Delivery platforms like Deliveroo have special "Top Rated" carousels that feature highly-rated restaurants. To be featured, perform well in the areas mentioned above, including delivery time, menu optimization, and streamlined operations. While it's unclear which exact metrics are used to determine which restaurants are picked, excelling in these areas is sure to improve your chances.
Selling groceries on delivery platforms can be a great way to expand your business and increase sales. However, the expenses associated with these platforms can eat into your profits, making it challenging to maintain healthy margins. By understanding the fees involved, using price comparison tools such as Coral, offering promotions and discounts, and focusing on delivery a good experience to ordering customers, retailers can enhance their profits and scale up their business return on investment.