Life has nowadays become too fast-paced to the extent that many people are finding it hard making simple everyday decisions. Simple everyday tasks like shopping for groceries and cooking that used to be a joy to perform are now proving to be rather unattractive. People would rather have their shopping or a meal delivered at their doorstep as opposed to taking the time to engage in these activities.
Companies have taken advantage of this need to create on-demand delivery apps. Users can, therefore, access essential services from the comfort of their homes at a simple click of the button. Over the last 5 years or so, the on-demand delivery apps have become so critical to people’s lives that many cannot do without them. Right from ordering food, shopping, cab and even beauty services, all can be delivered at home.
The on-demand delivery apps leverage users’ need for comfort and convenience to create an opportunity for service provision and generating revenues. Based on the recent statistics on the on-demand market dynamics, the sector is growing rapidly. A few stats in the food industry below illustrates this trend:
- Restaurants, both big and small have increased their average revenues by 25% through online ordering.
- Users who order their meals online are 67% more likely to visit the restaurant they ordered from than those who do not.
- The online delivery niche is expected to expand from $20 billion in 2017 to $55 billion in 2022.
- By the end of this year (2019), payments made for food online through apps are expected to hit the $210.45 billion.
- 61% of users indicate that they would order delivery online from their favorite restaurant if such a service was on offer.
These and other statistics show the profitability of the on-demand delivery niche. The effect has been the proliferation of delivery apps on the two major online app stores: Google App Store and Apple App Store. The success of ventures such as UberEats and Airbnb has led many business owners and individual creators to think about developing on-delivery apps.
One of the most critical components of on-demand app development is the cost. The costs associated with creating an app from scratch is quite significant, and without proper funding, the project can easily fall through the cracks. This write-up addresses this aspect of app development, with an emphasis on the on-demand delivery apps for both the iOS and Android platforms.
Understanding the process of app development
The first step towards estimating the cost of creating an on-demand delivery app is to be familiar with the process of development itself. Once one has a good grasp of the tasks involved and how long they take, they can easily generate cost estimates for the entire project. Below are some of the critical aspects of the on-demand delivery app development.
Timeline
- App design timeline
- App
development timeline
- Backend development
- Frontend development
The team
The development team consists of these key people
- UI/UX designer
- Android/iOS developer
- Backend developer
- Business analyst
- QA engineer
- Project manager
Key on-demand App features
- Signing up
- Generating orders
- Scheduling deliveries
- Tracking deliveries on a map
- Paying for deliveries
- Rating or providing feedback on deliveries
- Product search
- Shopping lists
- Wishlists
- Real-time messaging or calls
- Account settings
- Notifications
- Order history
The most time-consuming features of app development
- Admin panel – 30 hours on average
- Delivery status – 40 hours on average
- Payment processing – 50 hours on average
- Push notifications – 48 hours on average
- Booking delivery – 32 hours on average
The total costs for the development of an on-demand delivery app can then be estimated by multiplying the total hours spent on developing the app with the vendor rate. For instance, it tool between 2425 and 3525 hours to create the Uber app3
Understanding the market
- What are the characteristics of the on-demand delivery marketplaces?
- Fast and immediate delivery of services and products
- A user experience focused on a mobile-first approach
- Lower prices compared to traditional sellers and service providers
- Seamless payment processing systems
- Freelance contractors who work on a part-time basis
- Actionable rating systems.
Conducting an analysis of the Market
The on-demand delivery market for apps is saturated with an app for almost anything under the sun. However, very few of these apps are well known globally because they operate in a rather restricted geographical location. Others such as Uber have a global reach. UberEats currently covers 50 cities in 13 nations and is growing at a very rapid pace3. Some of the commonest categories of on-demand delivery services include:
Package delivery
two large industry players tried their hand at package delivery but did not succeed. UberRUSH (by Uber) and Shyp were modelled on the premise that people would not hesitate to pay to receive their orders fast. Both were forced to close down their merchant delivery service since they hadn’t anticipated competition from local retailers. Their concept of sending a driver to the location to pick up a single order couldn’t work in covering the delivery costs. Roadie and Hitch managed to crack the parcel delivery market wide open by offering crowdsourced delivery services. Their mobile apps enable users to log their delivery with the daily planned routes, thereby ensuring that the companies save money on bulk deliveries as compared to the single order delivery by Uber and Shyp.
Local grocery and food delivery
These offer delivery services for food and groceries from local retailers. Examples include Postmates and Instacart. Instacart specializes in grocery delivery through the hiring of personal shoppers to buy and deliver goods to their clients. Postmates also delivers groceries but makes use of their own employees instead of relying on outsourced contractors.
Retail delivery: a majority of online shopping orders usually involve users buying smartphones and tablets. Retailers of these products have also joined the on-demand delivery market. For instance, Amazon has developed a business model where it delivers same-day orders to prime clients in more than 10,000 cities around the world. A number of start-ups have also emerged to complement the brick-and-mortar retailers in delivering products to their customers. A good example here is Deliv, which has partnered with Sony, Adidas and other retailers to deliver their products from stores at an agreed upon fee. Deliv then enlists the services of freelance contractors to make these deliveries. The model is beneficial for both businesses, it allows the delivery service to grow while the retailer has the chance to widen their reach in the market.
Market Analysis
Market analysis also includes a SWOT analysis to establish the model’s strengths, weaknesses, opportunities and threats.
Strengths
- Gaining a competitive advantage over the traditional delivery models
- Beneficial to both consumers, delivery personnel and the business
- A chance to grow customer loyalty through efficient service
Weaknesses
- Possible high delivery costs
- Need to balance between demand and supply
- It takes time to build trust
Opportunities
- The on-demand delivery market is very wide.
- Opportunity for rapid growth especially in metropolitan locations.
- Collaborating with other retailers.
- Increased chances of widening the product base offered to clients.
Threats
- Risk of collapse if proper planning not done from the start.
- There is no regulation in the sector.
- Competition may be tough.
Technology Stack of Delivery App Development
Development of an on-demand delivery app will require integration of existing apps to facilitation provision of services. This may demand collaboration with these creators for permission to incorporate their apps in the delivery app design. A food delivery app, for instance, may need to integrate with the following apps:
- For generating restaurant listings – GrubHub API or FourSquare API
- For processing payments – Square API, Braintree, Stripe, PayPal
- To find user Location – Core Location Framework, Google Places API
- To find Directions – Google Maps, MapKit
- For registration – Facebook SDK Login
- For storage – Amazon Cloud Storage
- For analytics – Google Analytics
How Much Does It Cost to Develop an On-Demand Delivery App?
As can be seen from the foregoing, there are numerous factors that do influence the total cost of creating an on-demand delivery app. luckily, it is possible to generate an estimate of the costs to aid in the planning and design phases of the app development process. The two critical factors that affect cost are design and functionality. The price of an app will be determined by how it functions. Based on functionality, apps can be categorized into standalone, database dependent apps, web-based apps, games and productivity apps. Server-based apps and those involving complex user interactions are sure to cost more than the other apps.
According to Andrew Jones the average cost of developing a web-based app can be between 30k and $100K. The range would grow in case a web application is also needed together with the mobile app. App design also affects cost. Paying for good app design, especially where the app is intended for widespread circulation should be therefore considered an investment. Android and iOS compatible on-demand delivery apps will vary slightly in terms of cost. These figures incorporate the entire app development project, from the mobile app design, development of both the iOS and Android versions, testing as well as launching it into the market.
How to minimize transport and delivery costs
While it’s true that delivery apps cost a lot to build and maintain, companies and businesses can do a lot to cut costs and ensure profitability when operating these apps. All it takes is some deliberate planning to develop an operation schedule that will minimize costs. Once the app has been operationalized, several steps can be taken to accomplish this. They include:
a) Route synchronization
Companies like Roadie and Hitch capitalizes on the fact that a driver is already headed in the identified direction to accept orders, thereby enabling them to save significantly on delivery costs. They end up paying the driver less for each order as opposed to if they had let a single driver handle each order. Their business model allows them to earn about 20% of each order amount.
b) Restricting the delivery radius
Putting restrictions in place for the delivery radius also ensures that companies are able to minimize cost. Couriers are only allowed to deliver within a certain radius, thereby cutting on the cost of fuel and the wear and tear of the vehicle. Deliv, for instance, restricts its couriers to a radius of 15 miles.
c) Using energy-efficient transport systems
Another great way of cutting back on delivery costs is to use energy-efficient transport vehicles such as bikes. Bikes are an excellent delivery option for couriers delivering smaller packages. This is what Postmates uses. The cost of maintaining the bike is relatively lower as compared to car maintenance. It’s also easier to find independent couriers such as students with a bike on the lookout to make a quick buck.
Additional Recommendations for successful on-demand app development
Think local
It is normally easier to target a smaller densely populated area when thinking of launching an on-demand delivery app. It will be easier to properly recruit and manage contractors, advertise the services and test the idea before going full-scale. Once success has been obtained, operations can be expanded to cover a larger area.
App promotion
should be done before launch: Promotion and advertising are crucial for creating awareness before the app is launched. Referrals, social media and offline adverts are some of the best channels to accomplish this.
Aim at building trust
Building trust is important for the success of the app in the market. Enabling reviews and ratings for contractors, screening of the partners and offering customer service and support are the best ways to guarantee that clients trust the app.
Retain contractors
contractors will only stick with a certain app if it proves to be worth their while. Competitive rates, reimbursement of delivery expenses, schedules that are flexible and other attractive perks will ensure that contractors stay loyal to the business.
Consider profitability from the beginning
Any business model that doesn’t consider profitability from the word go may fail before long. Because the costs of delivery are usually high, it’s critical to develop a business model that allows for reasonable profit recovery.
Final thoughts
The cost of developing an on-demand delivery app is considerably high. There should be a proper approach involving a proper balance of the factors involved to ensure profitability. Only then can one be assured of success. The trick is to start small and gradually upscale the business at each level of growth. Getting the right group of people and organizations to partner with will also increase the possibility of creating a successful app.
Get in touch with Vivim to find out how our engineers can help you to create on-demand app and help your company to focus on important tasks.
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