The Online Delivery Discount Drama

Picture this: India v/s Australia match playing live on TV. You and your spouse are

hooked to your sofa, not to miss any move. In some time, the stomach is going to

rumble and you know that the food is to come home in a click. You go to your favourite

delivery app and ordered all of your favourite dishes that were on discount.Well, who

does not love a good discount? And if paired with food, there is nothing better than that.

This is the story of the majority of us out there and honestly, I feel, there is nothing to be

ashamed of. With time, we have let laziness take over us and online food ordering apps

are worshipped as saviours to the point that we are now addicted to it. We just want our

food to be delivered as soon as possible, any time of the day, at any place with the

touch of a button.

Somehow, discount affects our decision predominantly. There is not even much thought

put in before jumping onto the rival app, simply because we are spoilt by the lure

convenience. Honestly, we do not even care about the business aspect of these

delivery apps and its effect on the restaurants and delivery kitchens. This technology

disruption has really brought a revolution in the way we eat, altering our culinary habits.

Here is where the actual issues start. The restaurants offer discounts on these food delivery platforms, with the hope that this could help to reach out to more customers and even get walk ins. They pay for the discounts, they pay to the platforms, which directly is going to hit their profit margins. This loss has to be made up for in future opportunities. So now the restaurants will have to invest more in advertisement and push in for sales to close more deals to compensate for the same.

On the flip side, the aggregators have rigorously trained customers to buy only on discount.

Discounting is an addictive downward spiral. The more you do it, the more people react

to it, want it, and expect it. Given this constant sale spree, would you ever buy anything

full-price? This has made it difficult for restaurants to implement full-price pricing

strategies by persistently relying on price war to introduce new dishes and drive

traffic.

The discount game has become a competition, becoming a rare winning

scheme/approach, particularly, if you are a small player trying to match the bigger

competitors. It is impractical to think the big players can be out volumed for they get the

bigger share of the economy scale. Even among similar competitors, an over-reliance on

deals always spurs a race to the bottom — a race that no brand wins.

Well, the game does not end there. After giving a discount, the restaurants will try to find

ways to lower costs to maintain margins - by compromising on the service related

activities of the account or dropping down the material cost. This becomes more like an

unnatural way to operate efficiently causing them to overstep into the unknown which

may end up negatively affecting their perceived value.

In the end, no matter how best you give, the customer is a fickle human who can shift

his loyalty where he gets a major monetary benefit. So you end up investing in multiple

apps, doubling the existing risk. In the study, titled 'Digital Platforms Reign in the Food

Ordering Market', 95 % of the respondents surveyed order food online, owing to

promotional offers and discounts. In another survey, ‘Consumer's Perception on Online

Food Ordering’, talks on similar lines, where 44.4% said that they spend less than 250

INR on online delivery. Will this amount of spending capacity be okay with restaurants?

Well, these platforms have brought restaurants and customers closer but is discount

addiction the right way to make the customer think the are winning? Maybe a middle

ground has to be found for the restaurant players to thrive and the customers to enjoy

its discount benefits. The future is seemingly bright for online delivery, but it is up to the

restaurants how do they make the most of it.