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Consumer information

Consumer-facing platforms generate vast amounts of consumer information. This is used to generate additional revenue - and / or is sold on to generate even more revenue.

How true is this of the restaurant delivery business?

And what is the value of the data generated by delivery companies?

Generating information

How much information do delivery companies generate from interactions with customers, restaurant partners, delivery riders and others?

Customers generate about 2 million orders per hour globally every 24 hours. And to that should be added the abandoned searches, offers pinged to mobile phones, and other interactions before an order is placed - and once the order is on its way, and after it has been delivered.

Delivery companies also interact with (low millions of) restaurants. These interactions are to do both with how the restaurant operates - the number of hours they are open, how many brands (virtual and otherwise) that they operate, the number of orders they receive and much more - and operational interactions when the order has been placed.

These latter interactions include information about the composition of each order (basket size and much else) their price, speed of production / despatch, and much else.

Delivery companies also interact with millions of riders / drivers and so they know how often they work, how efficient / speedy they are, their preferred work times and so it goes on.

And there are others that delivery companies interact with - packaging suppliers, food suppliers, credit card companies.

Overall, these interactions are in the many hundred of billions per year (possibly trillions) and each interaction comes with a wealth of information, from a wide variety of people and businesses. All of it is captured by the delivery companies.

These interactions exclude many billions of ‘polling’ interactions undertaken purely to gain information about the status of something - whether a restaurant is open or closed for example.

So, yes, delivery companies do collect information and at a large scale across a range of entities (people and businesses), geographies and locations.

The important thing is what do they do with it?

Is consumer information used to generate additional sales?

What can the consumer information be used for?

Fundamentally, it should be capable of being used to generate additional sales - more topline revenue. This can be achieved in several ways:

• Get consumers to spend more

• Get consumers to visit the platform more often

• Get consumers to spend more per visit

• Get consumers to spend more per meal

And also note, in addition to these activities which are directed at growing the top line, there is also a bottom line argument:

• Get consumers to spend more - on the most profitable items.

Information can be used to help ‘partners’ - dark kitchen operators, for example, or restaurants - create more appealing products. This is broadly part of ‘get consumers to spend more’ or ‘visit more often’, or ‘spend more per visit’ or ‘spend more per meal’, with the bonus that the ‘partner’ can be charged more for this insight.

Information can be used to identify additional services - opportunities for dark kitchens, sourcing and purchasing packaging and other products - each of which can be an additional income stream.

Each of these activities - and more - are being followed by delivery companies to generate additional sales - and therefore ultimately, and hopefully additional gross profit.

The answer to the question at the top of this section is “Yes, delivery companies do use data to generate additional sales”.

What else is the data used for?

Given the wide range of sources - restaurant operations, dark kitchen operations, riders and more - there isn’t space here to identify all (or even a proportion) of the uses to which data about them can be used either theoretically or in practice.

But these uses can be summed up as ‘improving efficiency’ - reducing costs and increasing throughput.

Again, it is clear from what delivery companies say that they intensively use this information to help their partners achieve these objectives, as well as monitoring their progress.

Selling data

But what about selling the information to other parties?

As consumer coverage is ramped up, and more sales occasions are created, more information about consumer behaviour is generated. This information can be sold to other parties.

Delivery companies have been in business for several years now, so evidence of this revenue generating capability should abound. If so, where is it?

The information below is contained within published documents made publicly available by companies that are specifically (or mainly) involved in delivery (primarily restaurant delivery rather than say grocery delivery).

Look at their P&Ls and what do we find regarding the sale of data to ‘other parties’? Not a lot.

The largest companies that are delivery specific, and that make accounts publicly available, have this to say about their revenues:

There is no evidence, in these definitions, of sales of data to other companies, nor do the actual financial statements have evidence of this.

Published corporate P&Ls have a single line called ”Revenue” which is usually discussed in annual reports in the contexts of numbers of Orders (DoorDash), GOV (also DoorDash), AOV (Deliveroo) and Take Rate (also Deliveroo).

They all specify many other services charged to partners and customers - see the box for some examples:

What does Delivery Company ‘Revenue’ include?

Some services charged to partners:

• Commissions charged to merchants (DoorDash, JET, Deliveroo, and Take Rate in the case of Deliveroo)

• Fees charged to consumers (DoorDash)

• Order driven revenue (JET)

• Promoted placement fees (JET)

• Premium placements (Delivery Hero)

• Subscription fees (JET)

• Sponsored positioning for restaurant partners (Deliveroo)

• Marketplace fees (DoorDash)

• Advertising (Deliveroo)

• Restaurant / grocer sign-up fees (Deliveroo)

• Merchandise (JET)

• Supply of packaging to partners (Deliveroo)

• Self-operated kitchens (Delivery Hero)

And some specific services - primarily paid for by customers:

• Membership fees (DashPass from DoorDash)

• Subscriptions (Deliveroo Plus)

• Consumer delivery fees for marketplace-only orders ie the partner arranges last mile delivery (Drive from DoorDash, JET)

• Gift cards (DoorDash)

• Vouchers (JET)

• Consumer fees (Deliveroo)

• Delivery fees (Delivery Hero)

Again, there is no evidence of sales of data.

Deliveroo’s Annual Report for 2021 says ‘Advertising revenue is a small part of our current model but a big opportunity … We see a lot of potential to grow this revenue channel’.

This hints at the possible value of consumer data targeted at customers on the basis of their interactions ‘with the company’s platform’. The report goes on to mention the opportunities for advertising in several places.

Clearly there are as yet unmonetized opportunities in leveraging delivery company data.

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Impact on corporate valuation

Balance sheets, too, do not say anything about the value of consumer data held by the delivery companies.

For example, it could be expected that the value of the data would be included under the heading of ‘goodwill’.

The value of goodwill for DoorDash - £316 million - did not change between the years ending 31 December 2020 and 31 December 2021, and Deliveroo’s goodwill valuation remained the same - at £4.9 million - between the end of 2018 and the end of 2021.

If data were being built up as an asset, it is not unreasonable to expect some increase in the value of goodwill.

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What does all this tell us?

The conclusion is that delivery companies do not sell the data they generate.

Will they do so in the future? Perhaps, but there is little evidence for this development and even if it comes to pass, there is no evidence what its value could be. If it were highly valued, why is nothing being sold already?

Thus, it seems that delivery company data is not being sold, nor is it likely to be. And it follows therefore that this is extremely unlikely to become a source of value other than to generate more sales and increase efficiency - for the delivery companies themselves and partners, riders and others within their ecosystem.

And given that delivery companies argue that growth will bring profits, it does not seem likely that profits will be enhanced by selling access to the terabytes of data that the delivery companies generate.

SPONSOR’S CONTENT

What a week it has been

What a week it has been for the UK. The new PM & Chancellor released their minibudget causing, what they call, ‘a bit of turbulence’. That has to be a candidate for understatement of the decade. A glance at the news is enough to leave most of us feeling deflated and defeated. So how do we muster up the energy and release those positive festive spirit vibes to all our customers??

If we look back at historically turbulent times and economic slumps, they have often been catalysts for positive change. For many operators, the upcoming run into Christmas is the last throw of the dice, and going into this period with an attitude of ‘what else do we have to lose?’ may just be our saving grace. When times get tough, we are often at our most creative.

The reality is, everyone is looking for an excuse for some festive cheer. Get inventive with menus for on-premise, as well as online. Ramp up the positive communication to your loyal customers via all direct channels available - your website, your app, your emails, and of course, on-premise. Invest the time and energy into your direct digital channels as these can make the difference. Up to 70% of your takings will come from just 30% of your customers so spend the energy on getting it right for the loyal ones. Who knows, Santa might just come delivering the goods. Read the latest consumer research from September here (free to download).

We would really like to hear from you with your comments and questions, your suggestions for topics and additional content peter@thedelivery.world

News

Here is a summary of some of the news in the last couple of weeks:

• Deliveroo launches in Qatar

• Deliveroo and Morrisons open its first brick and mortar grocery delivery store in central London

• Zomato reported revenue rose by 123% in the year to end March 2022 versus 2021

• Zomato tests effects of reducing fees for late deliveries

Email us at news@thedeliveryworld.com if you have news to share about the delivery world.

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