To click or not to click

Is online ordering right for your business?
Laura Aiken
July 15, 2009
By
p10_computer

There are trends and then there are evolutions. We are without a doubt playing witness to an unfolding future of Internet mobility and nearly incomprehensible software sophistication. Whether you are receiving online orders now or not, keeping abreast of the current online marketplace is critical to having the information to stay a participant and not just a witness to the changing customer habits.

Statistics from NPD Group, a leading global market research firm, show that online ordering is a growing trend but still a small percentage of the Canadian market. Online ordering only accounts for 0.2 per cent of total traffic, but QSR pizza and family/mid operators account for close to 80 per cent of these occasions. The top menu item ordered online is pizza, followed by chicken entrees. Telephone and Internet orders are leading growth as walk-in traffic numbers decline, however these two mobile methods only make up about five per cent of combined restaurant traffic. NPD notes this implies that although they may be growing, the mainstream market has not totally caught on yet.

According to Ad Age, a marketing publication, the large pizza chains are doing 20 to 30 per cent of their business online but are looking to get that figure up to 50 per cent. In an article titled “Why Pizza Giants want Customers to Click”, Bob Kraut, vice-president of marketing at Pizza Hut, indicated the company expected to hit $1 billion in online sales by the end of 2012 which is 10 times the May 2007 amount of $100 million, and that the online pizza buyer is more recession-proof than most.

Increasing the percentage of orders put through online requires promotion. Online ordering isn’t necessarily the right move for businesses without the money to market their endeavour, says Fred Rayman, a veteran of the hospitality industry who’s been developing ordering solutions for over 30 years.

“For the individual one-off stores, I’m not sure it’s a good fit if they don’t have the money to promote it,” says Rayman, who guages the online sales figures for his clients through his role as a principle in Opal online, a company specializing in call centre technology.

 Once you are at four or five stores, it’s time to start thinking about the economies of garnering your share of the online ordering business, he says. One of the brands in Opal’s portfolio is doing 30 per cent of its off premise sales online, says Rayman, but most are reaching the 10 to 12 per cent sales mark. He noted the business that is reaping the 30 per cent also spent a significant amount of funds promoting it.

Online ordering systems are far more favourable to the independent small business, with exciting projects in the works that can drive niche groups of local customers to your website. Sean Jordan, an experienced web entrepreneur and founder of the B.C. based multimedia company Avocado Canada Productions, is working with a company in Europe to further the technical capabilities of the Internet to link online ordering to the local market. His target demographic is the independent “mom and pop” pizzeria. Jordan is linking up with the site www.loveclients.ca, a search engine technology site that promises to convert online searches into offline sales through numerous ways, amongst them figuring how to localize web marketing. The technology is there to control your local marketing to the point where you can pinpoint the people within 15 kilometres of your store. The concept of the worldwide web has turned into a sophisticated machine capable of producing qualified business from the local area. Jordan’s aim is to combine the ‘shop local’ search engine technology with an online ordering system. He points out that between the advanced technologies of Google maps and the iphone, it’s getting easier and easier for customers to search out specialized small business.

The revenue model for Jordan’s project, which he says is still six to eight months in the making, is to offer the system for free and earn money based on performance. He estimates his system will earn $1 to $1.50 per order put through the system, costing him about 30 cents to generate the lead that brought the business to the pizzeria. Tech support would be 24/7.

“Online ordering can help our target market, which is the mom and pop operation that make up a huge part of the pizza market.” Jordan says many of the current systems out there are very expensive to invest in, particularly the ones that need to be linked in to older POS systems. “The mom and pops need an affordable solution.”

He adds that the pizza engine will keep the store in control of their message, acting as a facilitator. If a customer base within 15 kilometres is all the pizzeria wants to talk to you, that’s completely possible, and they will even be able to take themselves offline at any time if they like.

A natural concern for pizzerias is the ability to connect with the customer regarding how long their order is going to take, and other adverse circumstances that can happen during a busy rush. Owners and managers may see a lack of communication in online ordering, but Rayman says the technology is well advanced to deal with this fear.

“It can be set up in real time, know if the store is busy, anticipate delivery times, tell customers that something is out of stock, and other adverse conditions. The technology is readily available to control those situations.”

In fact, the ease of the technology has reached the point where your pizzeria doesn’t need a website or POS system to set up online ordering. A new California based service called Dash Order, which launched at the end of April, is touting itself as the easiest and most cost effective system to join the market. The new venture is co-headed by Jorge Fernandes, who co-founded Dash Order’s parent company MonVia. Fernandes is no stranger to the techie universe, having already founded four successful start-ups.

There are innumerable companies on the market offering online ordering software, making it a highly competitive market. Like Jordan, Fernandes is looking to bring an affordable solution to small and mid size businesses in a consumer market he believes is ready to take off.

“There is a pent up demand with consumers for online ordering,” he explains. “But the restaurants haven’t been ready. Considering most folks cannot afford to have their own IT department, we are helping the market by bringing in a usable product for the small to medium sized business.”

Dash Order is looking to help the small business owner by providing a simple system with no upfront or ongoing costs. Like Jordan’s planned venture, Dash Order will make its profits from a percentage of your online sales. Dash Order provides marketing materials to promote your new service, which comes back to the crux of success with any new offering from your pizzeria. As noted by Rayman, the success of online ordering through your pizzeria is rather tied to the amount you are able to promote it.

“Online marketing is essential to it. Without the support, you’re lost,” adds Jordan. There are several reasons why today’s customer is responding to online marketing and ordering, even if the ordering aspect isn’t fully entrenched in the mainstream.

“People have a visual of the product they are going to be buying,” says Rayman. “People like to see all the specials and an order taker doesn’t necessarily have time to go through all the specials. A lot of consumers use the website to decide what to order, even if they are not comfortable completing the order online.”

Good photography is a wise investment for your website, as it is likely driving the call to your business even if the customer doesn’t have the option of ordering directly online. Another advantage Rayman noted that is key to the delivery business is that there are no accidental errors of address online.

With pizza leading the way in menu items ordered online, now is a great time consider whether or when your business will play witness or participant to the online evolution.

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