Current Environment Shines a Bright Light on Distribution Channels

Last week we shared our interview with Jon Sewell. He’s the franchise owner from Iowa City, Iowa, who is pushing a cooperative food delivery initiative as a means of competing against the big aggregators (DoorDash, Uber Eats, etc.).

Many of the issues explored in that post were elaborated on in an excellent post by Miriam Ellis on the Moz blog. So in this vein, we read with interest this piece from Dubai-based venture capitalist Imad El Fay that furthers the conversation about distribution.

In today’s world, distribution is as important as the product, perhaps even more so. We’ve believed for some time that product differentiation is increasingly difficult in today’s economy. This is particularly true in the SaaS world where a couple of talented engineers can build a product as a side hustle using many free or inexpensive developer tools. 

Alright, so they can build it. But getting the product to market takes considerable resources. This could mean pouring tons of cash into Google or Facebook ads or investing in content generation to drive top of the funnel leads. However you cut it, distribution takes on a far more important role in today’s world and with the coronavirus, perhaps more so than ever. 

As the article points out, businesses rushed to build partnerships with demand aggregators and marketplaces to enable online buying. And understandably so. While necessary at the moment, the article also points out that businesses need to have some control over their distribution channels. 

Toys No Longer Us

‘Toys R Us’ stands out as a cautionary tale. Its decision to outsource its online operations to Amazon is a stellar example of the pitfalls of losing control of this aspect of your business. As eCommerce accelerated, ‘Toys R Us’ lost more and more connection to its customers because Amazon sat in the middle. 

We all know how this story ended. ‘Toys R Us’ shut down two years ago after 70 years in business. 

Trojan Horseradish Sauce

This brings us back to the topic of foodservice delivery. The delivery aggregators are to local restaurants what Amazon was to ‘Toys R Us’.

The aggregators have positioned themselves in the middle of the relationship. They are taking in all the data that comes from both sides of the market — the restaurant owners and the local consumers. That data can no doubt be used against the restaurant owners and maybe even the consumers. 

It is no wonder that Dominos runs its own delivery operation. By doing so it controls the customer experience. It’s able to tie its world-famous pizza tracker with its delivery platform to keep hungry customers well informed of their pizzas’ progress.

What would prevent restaurants inside of a cooperative local delivery service launching something like the pizza tracker? Consumers want to know the real-time progress of their orders. Sure, the delivery platform can expose where the order is once it has left the restaurant. But how about revealing even more by tracking the progress of the sushi or burger order?

Engagement Begets Advocacy

We expect to see more and more of the experience exposed to the customer.

Did you know that in 1924 Henry Ford opened the Rouge factory for public tours? Why? To bring customers closer to the product. Ford knew that by engaging customers more deeply, he would ultimately transform them from mere customers into advocates. This is where things are heading today.

Rethinking the notion of distribution and what it looks like virtually will be to winning the all-important customer experience sweepstakes. 

Related Localogy Coverage

Restaurant Cooperative Chomps Back at High Delivery Commissions

Grubhub Wins the Day, but Tough Months Lie Ahead for Food Delivery Space

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