After the rapid adoption of the on-demand taxi booking services, the next sector that is gaining traction with millions of users is the online food ordering and delivery services. Key entrepreneurs always keep their investment options open due to the food ordering and delivery business model. Also, it requires less initial capital to set this business and experiment with new things. At Oodles, our blockchain team thinks that using blockchain-technology solutions to build a food delivery app can further augment its adoption on a wider scale.
Similar to any given industry like taxi services or online e-commerce, the food delivery industry deals with challenges occurring from centralization, lack of transparency, and legacy business models. Indeed, even after a commission of an average 20-25% on every order, the food delivery businesses are not able to grow in a considerable manner.
Apparently, the challenges are difficult to resolve without evolving with technological advancements like blockchain, IoT, and AI. The increased use of blockchain to develop food delivery apps indicates that it can eliminate several, if not all, challenges of the on-demand food delivery services. From a high-level perspective, the first thing blockchain will do, it will decentralize the food delivery network, and thereby, provide numerous advantages. They include data and privacy security, identity management, food traceability, simplified audit processes, end-to-end transparency, and more.
Before exploring the boons of developing a food delivery app with blockchain, it is important to understand the functioning of its service model.
In a typical food ordering app, you register name, address, and location. Next, you log into the app and search for the restaurant and add food to the cart. And finally, select the payment method and order the food.
Now, the order is assigned to a particular restaurant. The restaurant cooks the food and in the meantime, the food app company assigns a delivery partner to the restaurant. The delivery partner picks the food and uses the map to deliver it to the customer.
If you see very closely, starting from sourcing the material in the restaurant to delivering the food to the customers, a supply chain is formed.
Now we can see the problems in online food delivery and how blockchain can eliminate it.
When a customer order food using the app, he/she doesn’t have any idea about the hygiene conditions while making the food and also the quality of the food delivered. The same is with the restaurant, they don’t know the quality of the material they use for making the food.
This problem can take a huge toll on the food ordering business. The trust factor of the user comes down when they find that the quality of the food ordered is compromised. An unreliable supply chain is a reason for this.
With this abysmal supply chain, even the food ordering app company cannot check the state of the food delivered.
A smart contract is a computer program that directly controls the transfer of data between parties under certain conditions. Each stakeholder in the supply chain can update the information about the food in a digital ledger. The smart contract works automatically by matching the data in the ledger with the already present standard data.
For example, the supplier of raw materials can update the quality and price of the ledger. The restaurant owner, in turn, can assure the quality of materials by using the output data from a smart contract. The same applies to restaurants. The app admin can verify the quality of food being delivered using a smart contract.
Using blockchain tech, a certificate of excellence can be given to the food delivered.
On average, a food delivery app company takes around 20-30% as a commission for each order. The commission is proportional to the no. of people in the supply chain.
Even then the delivery partners and restaurants are provided small commission by many food delivery app firms.
By bringing blockchain, the third-party app owner is replaced by the restaurant owner. This improves the overall business efficiency and higher commission for the delivery partner and the restaurant.
From the admin and customer point of view, the credibility of the delivery partner and restaurant is important. Here blockchain uses smart contracts to automatically verify the documents and licenses for both the restaurant and delivery agent. In case of any discrepancies in the documents, the admin is alerted.
Even during cashless payments by the customer, the process can be made relatively easy and simple using blockchain which was otherwise cumbersome and complex.
Apart from it, B2B payments between admin and restaurant, restaurant and material supplier, are made fast with added security. Normally B2B payments attract high processing fees and unnecessary time delay. This is not the case with the blockchain applied payment system.
All the B2B transactions are done using smart contracts that work automatically to verify the data.
While the applications of blockchain are not limited to what I said above and still researches are going in this technology. Online food delivery startups even after getting 20-30% commission are not running sustainably. With blockchain in payment system, B2B transaction, and food sourcing and delivery, the overall cost is reduced and this will lead to sustainability in this business. So, blockchain is a safe bet.
We have helped many existing restaurants and new entrepreneurs with our solution and most of them are satisfied with it. We always apply the latest technology to our solution and that said, we are working hard to apply blockchain in SpotnEats solution.
If you are keen to get our solution to run a food delivery business or want to upgrade your restaurant with our solution, we are ready to work with you. You can also speak directly with our business executive regarding your needs.