What is D2C?  How can it grow your takeaway business?

B2C, B2B and now D2C…it is all a bit confusing.

Not everyone is a fan of the use of acronyms, but D2C (direct-to-consumer) has the potential to grow your business and increase your profitability.

In an industry where thousands of businesses have become accustomed to and reliant on large ‘aggregators’ to provide their online ordering services and link to consumers, many feel that serving your customers directly is no longer worthwhile, but this simply isn’t the case.

In an era when technology is affordable for all, where the supply of packaging is easy to source and delivery can even be paid for on-demand, there is nothing to stop any takeaway business marketing and selling direct to their customers.

Benefits of adopting a direct-to-consumer model

The benefits of D2C might depend on your current sales channels but overall, they apply to all businesses:

• No middlemen – you serve your customer direct
• Own your customers – the data is now yours to own and use
• More personalised – offer individual offers and rewards
• Better control of profits – know your costs and margins upfront
• Ability to try new things – vary your menu or offers to see what works

Lets have a look at a couple of these in more detail.

1) No Middlemen

No matter how you spin it, having someone in between you and your customer is only going to mean someone is going to lose some margin and profit, and that’s you!

Companies like Just-Eat, Deliveroo, Uber-Eats and Foodhub make their money by taking money off you, and in many cases, they even take money off your customers too. Standard commission to restaurants can range from 15-30% of the order value and the aggregators can go on to charge up to 5% to the consumer on top.

Who is making money on these orders? With up to 35% of the value going to the ‘middlemen’ it doesn’t leave much for you!

With a direct-to-consumer approach you’re cutting the middlemen out.  Yes, there are fees for your online ordering service and mobile app, and you may have to factor in the cost of last-mile delivery, but you are in control of these costs.   Delivery in the main is paid for by the consumer, so you can easily reduce the ‘middlemen’ costs by 80-90% if not more.

2) Own your customers

D2C means you are in control of all steps of providing the service, which includes, gathering and owning an amazing amount of data about your customers.

Having the data is one thing, using it effectively to grow your business is another.  When you embark on the D2C journey you need to ensure that the systems you put in place allow you to use the data collected to grow your business and drive more sales.

Some key things to look out for are:

• Multi-channel marketing –email, text message or push message marketing
• Data Grouping – filter by age, gender, signup date, last order or total spend
• Automated marketing – scheduled messages, reminders, and user level rewards

In an ideal world the system you use to serve your customers direct, should not only capture the data, but provide the marketing tools as well, just because you’re doing things yourself, it doesn’t mean it has to be harder or take more time.

The challenges D2C can present

The biggest challenge with going direct-to-consumer is you now take on full responsibility. Part of the appeal to some of the ordering portals is it adds in a layer between them and the consumer to ‘make their lives easier’, but the reality is usually far from the truth.

Over the last couple of years, we have seen many stories of how the large aggregator platforms were auto accepting customer refund requests, at the expense of the restaurant, with no consultation with the business providing the food, and in many cases, no legitimate reason for the refund.

Whilst it may mean you do have to engage with some customers directly, it should give you better control over the outcomes and any interaction with your customers should be seen as a positive, even if it’s a complaint, as you at least have the power to turn it around.

Another challenge can be the handling of payments, managing refunds and consumers trusting your payment system to be secure and reliable.

The key is to work with an established and proven service provider, that uses a consumer recognised and trusted payment solution, that removes any concerns your customers may have.

Yor online ordering service should make managing the payments easy, with the latest payment methods like Apple Pay, Google Pay and Klarna available as standard.

Are you ready to take on D2C for your takeaway business?

Direct-to-consumer is a model all businesses need to adopt in one form or another to remain profitable and competitive.  

The decision you need to make is how you will approach D2C, will you opt to try and do it all alone, or choose a partner that can provide not only the services and technology you need, but the expertise to help you build a bigger, stronger, and more profitable business.

App4 have been working with takeaways and restaurants since 2014, helping them adopt the D2C model, and we have helped them save over £38million in online ordering commissions along the way.