Online Food Delivery: Customer Loyalty

Former Director, Product at Grubhub

Why is this interview interesting?

  • How Grubhub plans to drive customer loyalty with online food delivery customers
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Executive Bio

Aaron Smith

Former Director, Product at Grubhub

Aaron joined Grubhub in 2015, one year after Grubhub merged with Seamless, and the business was growing at over 100%. He was responsible for leading the consumer product experience as the business trebled it’s active diners from over 6m to 18m in 2018. Aaron previously spent 4 years at Amazon managing Scheduled Delivery and Dropship teams. He left Grubhub in late-2018 and is now SVP and Head of Product for TruCar. Read more

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Interview Transcript

Do you think it’s possible to drive customer loyalty in this landscape?

I do, but I think it’s tricky. I haven’t seen an example like this, where you have a new incumbent, profitable and growing, and then multiple companies come in with billions of dollars to spend, with no care about profitability. Uber’s obviously gone public in the last year, and you can see what’s happened to their stock, they’ve really been clobbered. But DoorDash is still in a state where they’ve got billions of dollars sitting there. They’re not public yet, and they’re spending like crazy.

I think loyalty is difficult when people throw money around. 20+ years ago, in the US, there were a lot of competing telecom companies. Your phone bill would be $120 a month, and there would be competing phone companies trying to win your business saying, “Hey, sign up with us, we’ll give you $150 cash.” Then you could quit that one two months later because another one was offering a similar deal, so you’re practically making money off these people. There was no logic to the market, it was a free-for-all trying to win customers, there was so little loyalty. It feels like that’s the case right now.

I do think there are some options to improve loyalty, and I think it’s one of the reasons they’re all successful in different areas. You need the best restaurants in the area, and some competitors don’t have them. If I want to order from North Italia, I’ll go and see which platform has it. Then I know Grubhub’s got North Italia, so I’ll just go on there for now. People have more loyalty to a restaurant than they do a platform. If a restaurant is always on the one platform, they might not even try the others. Companies are also trying to create a loyalty programme. Uber is trying to do it. They’ve already implemented it on the Uber side, but I haven’t noticed it on the Uber Eats side yet. The problem in this market is there aren’t huge margins. Starbucks can let people order six coffees and then give them one for free because their cost is almost nil. With Grubhub and other companies, margins are slim, so you give away one free meal and lose your entire margin.

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Online Food Delivery: Customer Loyalty(December 5, 2019)

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