Whatever industry you operate in, new digital marketplaces are popping up promising exposure to large customer bases. eCommerce platforms like Amazon, Etsy, eBay and Uber Eats can be a great way to bring in new customers and diversify your revenue streams, but they aren’t without risks. The Telstra Business Intelligence report on Digital Marketing found that 76% of customers surveyed use third-party platforms to buy online.
So, how should a small business approach this overwhelming paradox of choice? Freddy’s, a neighbourhood pizzeria on Melbourne’s Chapel Street, has found the balance between leveraging delivery apps and nurturing its in-store customers.
Here, co-owner Daniel Leuzzi explains how he weighed up the pros and cons of using third-party delivery platforms.
Crunch the numbers
It’s essential to weigh up the costs of using a third-party delivery platform when assessing it as a channel to create another income stream for your business.
Compare the fee structures of the platforms delivering in your area and consider the various fees that can be involved, such as a sign-up fee, how much they charge for delivery and pick-up, and whether the cost of your product will be higher in the app than it is in-store. Will the customer be taking the hit, or will you? And if it’s the customer, are you happy with the price they’ll be charged?
There are also hidden costs you may not have considered, such as professional photos, hardware to keep track of orders and Restaurant Manager software.
While Freddy’s has found third-party apps useful, Daniel suggests curbing your enthusiasm.
“Don’t expect it to be a bank breaker. The percentage the platforms take is high, but it allows you to be seen online and have that platform visibility, so it’s good for business.”– Daniel Leuzzi, co-owner of Freddy’s Pizza
Focus on the in-store customer experience first
Customers are often drawn to third-party platforms for their convenience and seamless digital experience. But when you turn your product over to a third-party, a lot of the customer service is out of your hands.
Freddy’s integrated a third-party delivery app soon after opening in April 2019. But it was only after they built a strong foundation by focusing on their in-store customers first.
“Our business doesn’t rely on Uber Eats,” says Daniel. “Our belief was to look after the customers in the shop first. With a new business, we didn’t want to take on too much while figuring out our systems.”
Planning is the most important factor when preparing to merge your in-store experience with a third-party app. It’s worth creating a strategy for how you’ll monitor any elements that another company manages – especially if it results in a poor review. Daniel recounts that, at first, this was a challenge for Freddy’s. “One of the difficult parts is being reassured that your product will be looked after,” he says. Often, third-party platforms will have built-in reviews and feedback for each process. This helps you to track and get feedback on every part of your products’ journey – from store to customer. Keeping an eye on any feedback is vital in managing quality control. It allows you to see delivery speed and the state of your product when it arrives. It also guarantees that you’ll be better equipped to deal with any negative reviews or less-than-perfect interactions.
Consider whether you are ready to scale your output
Logistics have a huge role to play in how successful a new distribution channel will be for your business. Are you ready for the new business it could bring? The more streamlined your processes, the more prepared you will be for busy periods and the extra orders that will (hopefully) start coming in. In turn, this gives your customers a better experience and an incentive to spend with you again.
There are a few things you can do to make sure your business is ready for another distribution channel. First, review your current back-of-house and delivery processes to see if they can handle the demand created from the new channel. Are there any processes you need to restructure before launching into a new market? Are the “busy times” for app deliveries different to your in-store customers? Do you have enough staff to cover the workload – and is your rostering process ready to utilise delivery app data to make sure you’re covered?
Entice new customers
Third-party platforms give your business the opportunity to market to new audiences and through other channels. Daniel says that employing non-owned channels gave Freddy’s an edge. “It’s a competitive way to broaden your marketing and broaden your customer base.” To get the most out of these services, you’ll need to entice these new customers to spend with you.
One way to do this is through providing incentives, like intro or promo offers. This is a great way to draw attention and new crowds to your business. But it can also feel like another financial hit on top of the costs associated with running the platform. At first, new customers might choose your business because of the promo code. But give them a great experience and they’ll likely spend with you again. It’s up to you to decide if the risk is worth the reward.
Telstra Plus Market – a new way to reward customers
Telstra Plus is a rewards program where customers earn points for purchases. Telstra Plus Market is third-party online marketplace that gives your small business the ability to create Telstra Plus points offers for your goods or services. This means when Telstra Plus customers shop with you, they can earn Telstra Plus points. It costs nothing to join the platform and you only pay for points you’ve set to award customers for a successful sale.
Telstra Plus Market could be the perfect addition to your business if:
- You’re a small to medium-sized business with 100 employees or less
- You sell the majority (or all) of your products direct to consumers
- Payments and transactions are mostly one-offs i.e; no subscriptions
- You take most of your payments by card (credit or debit)
Freddy’s have found a way to balance third-party marketing opportunities and customer experience in a way that works for them. While the costs associated with running a third-party platform are high, they’ve carefully weighed their options and used it to create multiple successful revenue streams. By setting up Freddy’s properly first, Daniel and his co-founder Thomas Giurioli ensured that any third-party platform revenue is, in Daniel’s words, “a little cream on top”.