How to Build Apps that Will Keep Business Profitable in Crisis (Part 2): Delivery Applications

, May 05, 2020

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In this blog post series, we are taking a closer look at the types of applications that will get your business through tough times of economic fallout caused by global coronavirus pandemic. In the previous post, we’ve talked about a video streaming application as one of the best choices for a profitable business.

Today, we will look at another type of highly demanded application: delivery apps. Using delivery services for basic goods during the quarantine to minimize spreading the virus can be life-saving behavior. Many delivery services provide a contactless drop-off option, so you can decide to either meet their delivery driver in person or have deliveries left at the door.

Yet an on-demand food delivery app like Uber Eats or DoorDash is a great solution not only for consumers stuck at home. Goods and food ordering apps provide businesses with an effective alternative to keep offering their services regardless of the quarantine limitations. Mobile applications create an additional channel of communication between service providers and customers that can effectively substitute offline interactions. They also make businesses more flexible, add stability, and enhance customer service.

To learn more about goods and food delivery application development, check out our article on:

Delivery Application Development: Food and Goods Delivery Market Overview

Public health awareness and precautionary measures have made the delivery industry extremely promising. Businesses rush to invest in delivery and courier app development to take their place in the fast-growing niche. By 2023, the delivery mobile app market is expected to reach $16.6 billion, so hop on as soon as you can.

When it comes to delivery software, the first thing that probably pops into your head is food delivery app development. Fair enough, everyone heard about UberEats, DoorDash, and hundreds of local food delivery apps. 41% of consumers regularly use multi-delivery apps at least once per week. Here’s a pie chart illustrating how frequently respondents ordered restaurant food delivery from a website or the delivery app within the past three months.

Frequency of ordering food via delivery apps, pie chart

Source: Zion Zion

In the highly competitive US market, most of these orders are divided between food delivery business giants. To compete with them, you will need to launch a flawless food ordering app with well-tested functionality and quality UX. According to the Good Eggs national survey, the most used retailers include Walmart, Amazon Fresh/Whole Foods, and InstaCart.

Most Used Retailers by Online Grocery Shoppers

Most used retailers by online grocery shoppers

Source: Digital Commerce 360

The survey also found that 81% of shoppers who order products online due to the COVID-related restrictions plan to continue this practice even after the pandemic ends. Besides, 60% of these consumers are spending on groceries more than before.

Such a surge in demand for delivery apps nudges many restaurants to speed up the transition to online food delivery. The next graph by Statista demonstrates the impact of COVID-19 on the expected growth of food ordering app development.

Change in Online Food Delivery Penetration Share of the Restaurant Market in the US due to the Coronavirus Pandemic (2020-2025)

Change in online food delivery penetration

Source: Statista

The popularity similar to food delivery apps is also characteristic for other types of online delivery services. Cut from offline shopping, consumers opt for brands that can offer them the same experience online. A convenient mobile app enabling buyers to browse products, place an order, and arrange delivery is a strong reason to buy from a particular retailer. Recent statistics also prove this, showing a 40% increase in shopping app engagement compared to the previous year.

Now when you know why the goods and food delivery business is so profitable, let’s talk about revenue. More about how to monetize delivery applications below.

How Do On-Demand Food Delivery Apps Work and Generate Revenue?

How Food Ordering App Development Works

The majority of top-performing online food delivery services are aggregators. This means that the food delivery app development comprises a customer app, a courier app, and a restaurant app comprised within a single system. Here how it works:

  1. A customer places an order using the food delivery app for customers.
  2. The selected restaurant receives an order on the custom app for restaurants.
  3. An available courier agrees to take this order using the app for couriers and completes the delivery.

Some food delivery services also support logistics. Unlike aggregators, such apps are fully run by popular restaurants that offer solely positions from their menu and organize delivery.

Even though in this publication we focus on using mobile app development services for food delivery apps, the options are unlimited. Many apps already deliver medicines, parcels, flowers, and other transportable goods. Their launch involves the same stages as food delivery app development.

Besides, a fresh look at delivery apps as a way to run a business under quarantine conditions can help to hold up through the crisis. The demand for mobile on-demand delivery of any goods will only grow regardless of the business niche you work in. Delivery apps are one of the key development trends during the pandemic.

How to Develop a Food Delivery App that Brings Profit

Despite the broad market prospects, to benefit from a launched goods or food ordering app, you need monetization. After all, revenue is the primary reason why businesses invest in software development and launch apps.

If you want to launch a food delivery app like Grubhub, Doordash, UberEats, or Postmates, there are four monetization options to choose from:

  • Delivery charges. Implement this model to offer paid delivery services to restaurants that don’t have their delivery team. You can build a food delivery app that charges a flat fee or a percentage of the order depending on the distance from the restaurant to the customer. For example, DoorDash charges from $0.00 to $7.99 plus a 7-15% service fee per order. GrubHub has a standard $9.99 delivery fee, whereas UberEats flat rate starts at $4.99 and increases based on the distance.
  • Commission percentage. Make money by cooperating with particular partner restaurants. A food delivery app development company can help you create an application that charges restaurants predefined commission rates and offers 100% free delivery for customers. The commission percentage approach is a good way to enter the market with a newly launched app that doesn’t have many users.
  • Peak pricing. This pricing model is based on the demand. The more users need the delivery services at a specific moment, the more expensive they are. Peak pricing is usually associated with Uber that uses it both for carsharing and food delivery services. Even though it can increase your profit, this method is quite risky. Since not all users are ready to pay an extra for premium delivery, they may just go to the competitor with a more transparent pricing model.
  • Advertising. Offer restaurants to promote their services through paid in-app ads. They will be shown at the top of the search results to attract additional attention from customers. Advertising is one of the most widely used monetization approaches in food delivery and other applications. Just make sure to advertise reliable restaurants with a decent quality of services. Otherwise, you risk losing users.

Apart from the listed ways to build food delivery apps that bring profit, you can use additional approaches. Some of them include third-party advertising, extra charges for delivery in bad weather conditions, or an additional fee for rush delivery.

The best idea is to combine multiple methods of monetization. This will enable you to develop a food delivery app that is both demanded on the market and profitable. A single approach is usually not enough.

Delivery process

How to Build a Delivery App: Software Development Process, Key Features, Time&Cost

Software Development Stages

Whether you wonder how to build a food delivery app or need to develop any other kind of mobile delivery service, the roadmap is similar. It’s necessary to carefully plan the process and redistribute the tasks between tech specialists. Overall, your in-house team or a hired food delivery application development company will go through the following stages:

Requirement discovery

Before you start building a delivery application, you have to know what you want to get at the output. A food delivery app development company will talk to your stakeholders to understand your market niche, plans, and commercial goals. After that, their business analysts and tech specialists will formulate functional and non-functional requirements, choose a technology stack, estimate the cost, and map out all the next stages. Requirement discovery is the foundation of the app development process that helps to meet the deadlines and launch a solution that works as expected.

Design and prototype creation

When the initial requirements are clarified, the hired food delivery app development company will create an MVP or the prototype of the software. The minimum viable product allows you to start marketing the future application and test its basic functionality. At this point, it’s possible to make modifications and request changes from the food delivery app development services.

Software development

The coding stage is usually the most time-consuming. The food delivery application development company will create the backend of the software and proceed from alpha, beta, and release candidate to production build. During the whole process, you stay in touch with the team getting deliverables and communicating on the progress of software development.

Testing and bug fixing

Once the software is built, it’s time to start testing and integration. The QA team uses a combination of testing approaches to make sure the code is clean and the developed application is successfully completed. If QA specialists detect any bugs, the team of developers has to fix them before the launch. It’s a mandatory stage to ensure the seamless operation of the future app and minimize any possible issues on the user’s side.

Implementation and deployment

Now the actual installation of the mobile application happens. The solution is moved to production with all its components and becomes available to end-users. If the project is simple, the team will make a straightforward release. More complex solutions need to be released in stages.

Maintenance and support

Software maintenance is an ongoing process since you will need to regularly update the application and troubleshoot. After the food delivery application development company releases the application, you will likely continue using their services for support.

The duration and complexity of the software development process will largely depend on the number of features you want. To help you understand what functionality you may need and assess the duration of the project, we’ve provided the list of the features and estimated hours below.

Key Features of a Delivery App

The functionality of a mobile solution for on-demand delivery slightly differs for consumers, couriers, and restaurants. Each party gets what it needs most.

An iOS or Android app development company will research the market to offer you the core features and additional capabilities that enable end-users to arrange delivery via your app. Usually, the food delivery app development process includes the following features:

  • User registration and login. Let users choose how they want to log in – via social media or email. Don’t make the signup process too complex or mandatory.
  • User profile. Create a place where customers can edit their info, payment details, preferences, and location.
  • Search bar. Allow users to quickly find what they are looking for by menu item, restaurant name, or address.
  • Order placing and cart. Ensure users can easily order the necessary product and effortlessly access the cart to see its content.
  • Reviews. Give users a chance to share their experiences and recommendations with other consumers.
  • Location tracking. Tie delivery to geolocation. It’s essential to optimize the delivery time, allow customers to order from nearby restaurants, and drop a location. Besides, in food delivery app development, the location may be used to track the delivery progress.
  • Push notifications. Update users on the status of their order and any related changes.
  • Delivery scheduling. Integrate calendar for scheduling orders in advance.
  • Payments. Consult with a mobile app development company to select the most suitable and secure software solutions for online payments. Make sure to allow your customers to pay in cash.
  • Messages and calls. Connect users, couriers, and restaurants to communicate about delivery details.

The listed capabilities are at the heart of all popular food delivery apps. If you decide to build an app targeting another group of products, some of them may turn out to be unnecessary. To clarify that, professional mobile app development services conduct comprehensive market research and analyze the needs of potential users.

How Much Time Does it Take to Build a Delivery App (MVP)? And How Much Does It Cost?

The average time necessary for the development of a delivery application depends on the number of factors, such as complexity, third-party integrations, features, etc. We prepared the table with the main functions required for building a delivery app with the minimum time estimation to help you better understand how long it takes to hit the market.

Functionality Estimated Hours
User registration 32+
User profile 30+
Search bar 20+
Payments 70+
Push notifications 24+
Ordering and cart 140+
Messages and calls 80+
Location tracking 100+
Reviews 25+
Design 100+
Total 621+

According to Clutch, a B2B market research firm, US-based software development companies charge from $100 to $149 per hour of work. Thus we can calculate that the pure development costs of an application will be between $62,100 and $92,529, and combined with additional design and testing expenses, a ballpark cost of a delivery application will be starting from $124,200 and $185,058. However, outsourcing your software development into Lviv, Ukraine you can develop such an application at least 2 times cheaper if compared with development internally or locally in the USA.

Technical and Business Tips on Food Delivery App Development

  • Consider using Braintree and Stripe SDKs to quickly integrate online payments into your delivery app
  • Rely on Google Places API to provide users with details on local restaurants
  • Implement Auth0 to avoid building authorization functionality from scratch and reduce time-to-market with the out-of-the-box solution
  • Allocate a significant part of your budget for UX. Ease-of-use is critical to stay competitive with other delivery services
  • Use social media profiles of your partner restaurants to promote the app and engage potential users

With hundreds of various solutions developed, Leobit has also the necessary software expertise to create delivery applications. Our team brought into life the idea of a startup from Silicon Valley and developed an e-commerce marketing solution that provides reliable shipping and quality goods delivery. Now the application has more than 1 million active users and 5+ million app downloads with 5.00 stars ranking in AppStore and Play Market.

If you are ready to expand your market niche with a delivery application, don’t hesitate to contact Leobit to get free consulting.

Be sure to stay tuned for the last part of our blog series about apps that will keep your business profitable in crisis where we will talk about fitness applications.

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