Recently many have asked me about the relationship and difference between online takeaway ordering via Just-Eat and group buying via Groupon. That is natural given the phenomenal growth of the group buying concept, the fact that they are a local concept just like ours and because some of Groupon’s many vouchers are related to the restaurant industry. In reality, there is not a lot of overlap between the Groupon and Just-Eat use case. The differences are much bigger than the similarities.
For the restaurants perspective, the key differences are as follows:
- Groupon is a campaign push model. Having access to campaign channels to push new products, or support periods with low business volumes in an industry with high fixed costs is an advantage, but it will never change the normal, day-to-day support that Just-Eat provides. Our model secures restaurants a steady flow of orders every day, all year round.
- Groupon typically charges 40-50% of the transaction value for their services, our average is around 10%. That makes a massive difference for a restaurant and underscores the point above. It is not sustainable to have a significant part of your business brought in via Groupon week-in and week-out.
- Groupon works together with all local merchants, Just-Eat focuses 100% on delivery restaurants. This means, that even though the core of our relationship with the restaurants is based on providing a steady flow of extra orders, then we do a lot of other things for the restaurants. For example, we provide customer care, great discount offers on products and services they need to do business, technology services, we invite them to restaurant conferences to get news from the sector, etc. Our ambition is to be significant and integrated partners with the delivery restaurants.
- As a minor but not irrelevant point, it is worth mentioning, that the mechanism used to support the transaction on Groupon and other group buying sites result in some level of manual, administrative work for the restaurant. At Just-Eat we provide digital two-way communication between our servers/customers and the restaurants via our terminal technology, i.e.everything incl. billing is automated and very easy to manage for the restaurant.
For the consumer, the main differences is that we are always there! There might be a Groupon voucher available for next Tuesday, but that doesn’t help if you are hungry here and now. And if the voucher is for today, then it is probably not for the restaurant you really want your food from, e.g. it might be for sushi when what you want is “sweet and sour” from your local Chinese delivery restaurant. On top of that, the convenience and assurance offered by our fully web and mobile supported model incl. customer care when an order causes problems, is also key to our consumers.
And then we are of course nicer and more fun than the Groupon guys -;)
These differences are substantial and means that we are not competing 1:1 for consumers or restaurant relationship. Of course there is some indirect competition, but the way the two business models are defined today means Just-Eat and Groupon does not see each other as real competitors. We are the primary day-to-day partner for the restaurants, and Groupon is sometimes for somerestaurants a valuable campaign channel. Furthermore, at Just-Eat we already have many more discount offers available to our customers, and we are working on presenting these discounts much better, and we will also introduce new discount features (group buying, hmm!), so even the most cost stingy customer can rely on Just-Eat any day of the week for any time of cuisine.
There is talk of Facebook entering the group buying space, just like many publishers, directory companies, etc. has done or are planning to do. That is great for both consumers and merchants, and I think Groupon will feel the pressure from all these initiatives. In reality the barriers to entry are quite low in the group buying industry, so the margins will come under a lot of pressure the next couple of years, and I think we will see consolidation and specialisation as well as integration/”featurization”. There is plenty of competition in the online takeaway ordering industry, but the real competition is not originating from what Facebook, Google, etc are doing, but rather what hundreds of focused start-ups are doing all over the world. It takes dedicated focus to succeed in our space – satisfying the needs of restaurants and hungry surfers demands a customized and complex system that can not just be bolted on another business.
New ideas and technologies will of course come and go in the coming years to the benefit of restaurants and consumers, so things will change, but for now Just-Eat and Groupon can live happy side-by-side. Groupon will work horizontally to take a big bite of the very big “local marketing/campaign” market, and at Just-Eat we will support the delivery restaurants in all sorts of ways to be their preferred partner. We can all live happily for ever after! Continue reading