Delivery.com CEO: Google's Entry Into Food Ordering Was a Matter of When — Not If | Street Fight

Delivery.com CEO: Google’s Entry Into Food Ordering Was a Matter of When — Not If

Delivery.com CEO: Google’s Entry Into Food Ordering Was a Matter of When — Not If

Online Food Ordering

Earlier this week, news surfaced that Google was testing a buy button for search results. The reports come a week after the company announced that it would integrate with a handful of delivery platforms, allowing searches to order food from the confines of the search results pages.

One of the companies behind the Google announcement was Delivery.com, a decade-old online ordering company based in New York. The company, which is one of the largest independent online order firms left in the U.S., was also a launch partner for Yelp Platform, a similar initiative launched by the reviews site in 2013.

Street Fight recently caught up with Jed Kleckner, chief executive officer at Delivery.com, to talk about Google’s recent moves and handicap which of the other big tech companies may be interested in food delivery (hint: Amazon.)

Delivery.com was one of a handful of partners to launch with Google’s new initiative, as well as Yelp’s last year. How do these search companies not represent a threat to Delivery.com, and other delivery businesses?
The reality is that eyeballs online are not necessarily all coming to Delivery.com. We took a platform approach from the beginning where we have users we acquire directly online organically or through other channels that then frequent our direct channel (our website, mobile web experience or native app). It would be silly to think everybody is coming to Delivery.com’s direct channel. They’re not. They are searching on Google, they are reading reviews on Yelp, they’re visiting other locations on the web.

If we can expose our merchant content to people that know about us, as well as people who do not, we can drive transactions both ways. If that’s something they can do elsewhere off Delivery.com that fully monetizes our merchant, then by all means it’s a good thing. It’s a win for our merchants, it’s a win for us and I think also it’s a good thing for companies like Google or Yelp in so far as it allows them to close last mile. Where they started perhaps initially as a content aggregator, they are now becoming a place also for transactions to be completed online from local businesses.

But doesn’t that consolidation between search and commerce mean less players will succeed?
It just grows the whole market. It’s a way for us to expand our presence both directly online, as well as through channel partners. These channel partners have a halo effect basically by you stumbling upon the name Delivery.com when you are searching on Google, it becomes something you recall at some point later on and causes you to directly come to our web or mobile experience at some point in the future. It’s certainly not cannibalizing, in fact in our view it’s certainly something that’s going to grow the overall business and the overall market.

What does the entry of Google mean for the food ordering space. Does it simply continue trends already in progress or does it mark a meaningful turning point in the industry?
I don’t think it was ever a question of whether Google would do something like this — it was really more a question of when. I’m sure one of the things that has driven their decision to now do this is that mobile is becoming such a pervasive way for people to search and discover things, that it’s only natural people should be able to purchase those items as well. And it’s not just about food. I think this is the beginning of probably many other categories to which you’ll be able to transact.

If you look at our business, it’s akin to Amazon in that Amazon started with books and learned the behavior of its consumers and over time those consumers are now able to buy many things other than books. Delivery.com started in the food category with food being an anchor vertical much like books were for Amazon. But our view is over time people are going to eventually want to be able to have access to every kind of vertical, whether it be prepared items like food or commodity items like alcohol or having your dry cleaning be picked up or delivered. I certainly think this is going to be something that would make a lot of sense for a platform like Google where people are searching for things other than just food.

GrubHub has chosen to build the entire stack itself, owning everything from the tablets on which orders are processed to the delivery networks itself. That’s very different from the more distributed model seen here. Do you think that model will work, and how do you see these two models living together.
Think about the Apple approach to iPhone versus the Android approach to Google. The Android approach certainly has more distribution in terms of devices out there today than the iPhone. But there are strong arguments for both a closed system versus an open system. In the case of GrubHub looking to close the last mile one could argue that it’s perhaps more defensive as they’ve seen things like the Postmates or DoorDash working to make inroads in the form of the last mile itself.

But there are also massive last mile networks out there that are not necessarily 100 percent focused on food, but have figured out ways to make labor forces that are crowd sourced extremely efficient like Uber or Lyft. What GrubHub is doing is more an indication of as you build demand at scale locally, you have the ability to drive down the cost of delivery fees. So, the question is whether it’s something they should do themselves.

Do you see the actual process of delivering as something that will become core to their model?
I don’t anticipate GrubHub is going to own the last mile in every market they are in; they don’t necessarily need to. It’s really more a market-by-market decision, and the question for us is do we decide to own it or do we decide to partner. If there’s a way to do that in an integrated format and get efficiencies by doing it that could open up our abilities to provide delivery from not just the restaurants that do delivery, but from every single restaurant in Manhattan and the five boroughs and surrounding areas of New York and every city in the U.S.

Outside of the Google announcement, what has been the most important development in the food ordering industry over the past 12-18 months?
Probably what’s been most interesting is just the broader attention that’s been brought to how technology can be utilized to either optimize or improve the way food is prepared or delivered, or frankly any local product is prepared or delivered.

The broader amount of capital that’s been invested into this space doesn’t seem to be at any type of end point, it’s just increasing and showing that in fact this is a very, very large market. It’s a $70 billion dollar industry just with food alone of which only a couple percentage points of it is being handled all online. So 9 out of 10 orders that are placed for takeout are done over non web based formats. I think what’s happened is that the investor community and certainly the consumer mindset is starting to validate the fact this is now a massive market. And I think there’s going to be more of this to come.

What other large companies might you see moving into the food ordering space over the next year?
From a technology standpoint there are others on the ecommerce side that could get into it — namely, Amazon. There are other large content-driven businesses like a Facebook that could get further into the small and medium-sized business initiatives and they seem to be doing more of that anyway on their traditional channels. It’s certainly possible they could move into closing the last mile. Then there’s the traditional retailers, some of them have taken a partner approach, Whole Foods for example has done that with Instacart. The question is in time do they want to eventually own that themselves? And you also have large national brands like McDonald’s or Burger King who may realize this may be something they want to be in.

I look at our world very similar in that there are large retailers and small retailers that have their own website and have the ability to do ordering directly on their own website, we provide them that capability. Similar to what we do inside Yelp’s environment, we can place a similar iframe and plug it directly into a retailer’s website so they can run it as their own, but they also realize we have a million and a half people visiting and purchasing from our website every day. There is no reason those two things can’t coexist. And there are certainly analogs in traditional retail to show they do and it works.

Liz Taurasi is a contributor to Street Fight.

Leave a Reply

Your email address will not be published. Required fields are marked *

Name *

Leave a Reply

Your email address will not be published. Required fields are marked *

Name *