A second chance for a tried business model?

Recently start-ups with a particular business model are gaining traction and finally got my attention as well: Food-delivery services.

Amongst others there is Lieferando  and Lieferheld . Both are aggressively expanding, using international expansions or TV-marketing. Back in 2000 I worked as an intern for Snacker.de, which was VC-backed and also tried to develop this market and offering. Snacker ceased to exist in 2001 if I recall correctly. It was a great experience for me, where I learned a lot, worked with great people and got the desire to work entrepreneurial implemented in my DNA. (Actually the last one was probably done by my grandfather, but that is a different story.) So naturally it is interesting to see this business model pop up again on a larger scale after more than ten years.

I am not sure, if Lieferando and Lieferheld will be successful, but I would be glad to see this offer finally take off. I think some circumstances actually changed in the meantime. But other challenges still exist. For one, Snacker needed to use fax-machines to inform the individual restaurant of an order. Obviously with DSL and UMTS, this unreliable technology is not needed anymore. Improved connectivity makes menu updates or the information if the restaurant is opened or closed easier to transmit and therefore keep the database up to date in real time. Also Snacker at the time was afraid that instances such as half time of a soccer world championship final, might represent such high numbers of orders, that IT might break down. Therefore roll-out was organized per city and TV-adds where never considered. I am not sure if this might still apply in times of cloud computing and Amazon renting out capacity.

Back in 2000 and now in 2011, the value proposition is the same. A wide portfolio of restaurants willing to deliver food to you. Where ever you are, whatever you want to eat. The open question is, do people actually want to try out a new pizza service every time? Or do they prefer to order at their favorite place instead of trusting some online reviews? (user reviews of products or services was new to the internet by the way in 2000, but Snacker had it incorporated.) Another issue is to keep track of the changing base of partnering restaurants and delivery services. The market is very fragmented and volatile. Many delivery services close shop after few months. The churn rate is incredible.

Both Lieferando and Lieferheld do or plan to cooperate with another service bloomsburys . Alliance are a interesting topic, since such services build networks of restaurants and collect interesting information about restaurants. Some information can be used for B2B-offerings or real estate players. Also food is delivered to the doorstep of the final consumer. Such direct access is rare since the days of vacuum-cleaner salesmen. This is an interesting point of contact for e.g. promotion of a big multinational consumer goods company (think FMCG). However, a sustainable business model should not depend too much on additional business. A clear value proposition will build a loyal customer base. Add-on sales and services can follow later, but the core business model should be profitable by itself and early after the start.

I will follow this business model and am looking forward for what new technologies and more tech-savvy customers will add to this business model since I was involved. Hopefully we will see some exciting and delicious services and possibilities.


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