The Development of Application for On-Demand Delivery: Reasons, Process, Costs [for Founders]
Are you a beginner in the startup world looking to build an on-demand delivery app? Do not worry! We are here with an in-depth starter guide designed for non-tech startup founders.
If you wish to build this kind of app, you know what the on-demand economy is and how it works. We are sure that you keep a tab on the venture capital investment statistics as well.
Without that, you won’t be looking to invest in on-demand delivery app development.
In this blog, we will tell:
- Why is this the right time to start such a startup?
- How to make your startup successful?
- The technology you will use to build such an app and how much will it cost?
- And where to find a reliable tech partner?
A Quick Refresher
The development of an application to order delivery food or goods on-demand is based on quick logistics.
There are many dark kitchens and dark stores in low visibility but close to residential areas. It makes it possible to both reduce rental costs and speed up delivery time as much as possible.
Such an application will have two, or sometimes, three facets:
- User base
- Product providers
The models used for such applications are of three types, based on the parties involved:
- Model 1: Business to Business
These are B2B-focused on-demand delivery apps built to connect businesses with businesses. In such a case, the party that orders the service are facilitators instead of end-users.
B2B apps are usually related to transportation, consulting, or hiring. A good example with $55M investments is Cargomatic.
- Model 2: Business to Consumers
It is the most typical model of an on-demand delivery app. The business provides the product or service to the end-user.
An app such as Deliveroo is following a business-to-consumer model.
- Model 3: Consumer to Consumer
С2С model connects end-users with end-users. All the users have the same rights. These apps work on the principle of exchanging products and services. For example, Uber.
Thus, the development of an on-demand delivery app is quite similar to building a taxi app.
Now let’s consider why it is an excellent time to start such a startup.
The Key Factor: The Pandemic and Rise in On-Demand Delivery Apps
Before 2020, the growth estimation of on-demand delivery apps was at least 8.2%.
The benefits of such apps are further accentuated during the COVID-19 pandemic. On-demand delivery apps provide people with the basic One Click service.
During the pandemic, companies such as Bolt, Lyft doubled in number. In 2020, the number of smartphone owners that use at least one food delivery app increased to 44.1 million from 31.4 million in 2018.
Target, Walmart Grocery, and Instacart have recorded a surge in daily downloads. The swell was 98%, 160%, and 218%. These turbulent times have created an extensive market for on-demand delivery apps.
The rising trend is not expected to die post-pandemic. 63% of consumers are using these applications to avoid crowding during rush hours.
The increasing customer bias towards such apps shows that it is the right time to jump on the wagon.
Example to Follow: Fridge No More
In the last quarter of 2020, Pavel Danilov and Anton Gladkoborodov founded Fridge No More. It is an on-demand grocery delivery app. Based on the promise to provide the customers with their orders within 15 minutes.
The unique selling point of this product was its policy of no minimum purchase. Their logistic services include electric bikes for a more eco-friendlier approach.
You will find well-curated options for groceries available on Fridge No More. The co-founders have included a curated list of brands and products available.
The list does not overwhelm the customer with choices. It also allows easy management of inventory.
Fridge No More has steady growth and an increasing customer base. This example portrays how new products need a unique value proposition.
Future entrepreneurs and startup founders can analyze the method followed by Fridge No More to target key customers and develop customer retention and relationships.
Now let’s find out more about the business and technical sides of product development.
How to Create an On-Demand Delivery App?
For an on-demand delivery app to be successful, you should review every detail and feature.
The application’s aim should be to ease the process of shopping for customers. Pay attention to this aspect during the whole app design and development stages. No matter the type of services provided, it will work in the following four steps:
- Inquiry: The person requiring service will raise an inquiry to the service providers. The method of searching for a service in an on-demand delivery app is similar across the board.
- Acceptance: Once the services are ordered, the next step is for the provider to accept the request. If the required resources are not available, they can deny the request.
- Track: After the request is approved, the next step is to track the delivery route as it reaches the customer.
- Delivery: The last step is when the product reaches the customer. You need to notify the customer and send confirmation about delivered products.
The Business Side of an On-Demand App Development
Following are the business requirements for the development of an efficient and well-structured или well-organized on-demand delivery app.
- Study and analyze the needs of the targeted customers. An online survey in Facebook, LinkedIn, or even Twitter can help gain the insights and feedback of the users and minimum validate business ideas.
- Gather information and study the business model of the competitors. Analyze the gaps in the market that remain unfulfilled by the competitors. Plan how your application can fulfill those gaps.
- Make your brand or startup visible. Using social media platforms, you can highlight your brand’s features. It can attract the exact targeted customers.
As a startup, the focus is usually to create technically solid support. But, with an oversaturated market, the emphasis should be the design UX of the application.
The points below explain what your product model should include.
Marketing Plays a Key Role. Why?
The first step to create a successful app in the on-demand delivery niche is to think through the business model. Whatever the aim of your startup is, you need a viable user base.
A full-fledged value proposition can boost your sales. Plus, it can attract investors and enhance the company’s image. You can build your user base through various techniques.
|Advertise your services||Promote your app idea before its launch using different social media platforms. |
You can include special introductory discounts, free deliveries, etc., to attract customers.
Optimize your advertising campaigns.
Track whether they are effective in acquiring new customers or not.
|Attract local partners||Another approach is to focus on local marketing and promotions by partnering with local businesses. They can help you expand your user base.|
|Concentrate on user retention||You need to retain the customers you have attracted. Delivery businesses usually have a loyal user base. You can enhance the user retention rate with the following features. |
The idea is that without clever marketing, it is better not to invest in development.
Development is a tool to convert your marketing findings into solutions to users’ problems.
If you are interested in finding out more, read about startup marketing here.
The Discovery Phase
The market for on-demand delivery apps is saturated, with new apps being released every day.
The biggest challenge for developers is not developing such an app but how they can make it survive.
The discovery phase is a duration when an app idea is put into the paper. This phase calls for an estimation of the development requirements.
The developers need to consider these questions during the discovery phase:
- The value proposition of the app. What is the problem that your on-demand delivery app will solve?
- Your target market. Whose problem is the app solving?
- Your market size. What is the scale of the opportunity?
- Minimum expectations. How is the issue being addressed now?
- Requirements for the app. Which features must your application include?
- Tech stack
- Database architecture
- Additional API integrations
- What makes you different? Why do you provide a perfect solution?
The project discovery phase is crucial. Without this step, you, as a founder, are doomed to endless questions and edits from the development team and constant expansion of a budget. We’d like to recommend you find out details in our guide.
Therefore, it’s better to spend time planning rather than launch a poor-quality MVP for a high cost.
The Technical Part of Building an On-Demand Delivery App
Once you have drawn the idea behind the app, the next step is to figure out how to develop it. An MVP is the first step to create an on-demand delivery app.
Features of an MVP
A Minimum Viable Product is the minimum developed form of the app to test a business model or particular business hypotheses. The price of developing an MVP is significantly different from the cost of developing a full-fledged application.
The features included in the MVP should help to reach the initial product/market fit. There is no definite answer to the question “have we achieved the market fit?”. But product metrics come to the rescue. The crucial one for an early-stage startup is the growth rate.
With this thought in mind, we prepared the list of features that need to be included during the creation of an on-demand delivery application.
- The Admin Role
It refers to an individual who is responsible for the functioning of the app. Our development team uses a ready-made admin panel to speed up development and save your budget.
|User management||The section for customer data includes customer details along with a customer support module. The module helps connect the admin to the customers and manage their issues.||40|
|The admin can also manage the list of stores that are hosted on the app. He/she can add, remove, or modify the information for stores.||40|
|Items management||The content management feature is where the admin can add or remove the offered products and services. He/she can also update the prices and information of the products.||60|
|Analytics dashboard||The revenue section of the app will provide the admin with analytics. He/she can use the section to examine a change in user base, the status of successful orders, and other factors that affect the revenue of the app.||80|
|Total for the admin web app||220|
- The Customer Role
Customers are the end-users who buy or order products from the app. The customer’s app will include the following elements:
|User registration||Users will download and sign-up on the app to access the services and products offered.||80|
|Profile management||Users can manage their profile by adding or changing delivery address, phone number, and preferences, etc.||80|
|Search||Customers can search for a particular product or its type, brand, etc., through the search bar.||160|
|Order placement||Users can go through the catalog of products and services that are offered. They can check the prices, features, and availability of the products. |
Once they have selected the products, they can add them to the cart.
To place an order, they will have to provide their name, delivery address, contact number, alternative number, preferred delivery time and date, etc.
|Payment||The app must have a payment feature. The feature allows users to choose which payment option they want to use. |
The options can include digital wallets, debit and credit cards, and cash on delivery options.
|Order History||Users can view the products and services that have already been delivered to them in this section. |
They can also choose to reorder these services.
|Receipts||Receipts or order history is the section where users can track their past orders.||40|
|Rates and reviews||The section for ratings should allow users to submit their feedback regarding the app. |
The reviews can help you understand how you can improve your services to increase user retention.
|Notifications||Push notifications provide essential information to users. |
It includes offers and discounts available, time remaining in delivery, payment status, order status, etc.
|Total for the customer mobile app||1060|
- The Courier Role
An individual who is responsible for delivering the ordered products and services. The courier’s app will have the following features:
|User registration||The courier personnel can sign up through the app. They can begin receiving orders once the admin approves their profile.||80|
|Profile Management||The courier providers can manage the information on their profile including their working phone number, email ID, preferred area, etc.||60|
|Order Management||This is the section where the courier personnel can manage their orders. |
They can view the deliveries and accept or reject them accordingly.
|Status Update||When the courier provider is not available to take any order, they can update their status in the section.||40|
|Navigation||With GPS support, the courier personnel can reach the delivery location quickly. It ensures that the driver has to follow a predetermined route. |
Also, it prevents packages from being lost.
|Delivery History||The section displays the courier providers’ history of orders they have picked up. |
It also shows the status of those orders and the ratings they received.
|Earnings||The section calculates the earnings of the courier personnel based on the number of orders picked up and delivered, quality of services, etc.||40|
|Total for the courier mobile app||580|
Features to Scale an MVP
Along with the most essential features that need to be included in an MVP, an on-demand delivery app will need the following aspects with time and development.
Here we focused on the customer’s app as an example:
|Bookmarks||Users can save the products or services that they like for a later purchase. They can bookmark the page or add the product to their list.||80|
|Loyalty programs||The app should include a loyalty program such as special discounts, coins, etc., that the users can utilize after making a set number of purchases.||160|
|Social networks integration||Customers can integrate their social networks with the application in this section.||24|
|Delivery time estimation||Using the geolocation feature and real-time tracking, users can track the status of their order delivery in real-time. |
They can also view the orders and stores available near their location.
|Total for scaling of an MVP||424|
The Required Team Composition and Tech Stack
Developing an application requires the involvement of a large number of experienced and well-coordinated specialists:
- Project manager
- Business analyst
- UX/UI designer
- Backend developer
- Mobile developer
- Frontend developer
- QA tester
In addition to the quality of the team, the technology that will be used to develop applications is also essential.
We have listed what we use in SpdLoad. These are the most advanced and popular technologies ideal for fast high-quality MVP development.
|Backend development||Laravel or Node.js|
|Mobile development||React Native|
|Frontend development||React or Vue|
|Payment integrations||Stripe and/or PayPal|
|Navigation integration||Google Maps|
We’ve looked at all the aspects that affect the development side. Now let’s talk about how much your custom delivery app will cost.
How Much Does It Cost to Build an On-Demand Delivery App?
The number of features, platforms, and additional services is some of the factors that affect the development cost of an on-demand delivery app.
The cost of your app also depends upon the team chosen for its development. The application development options for an on-demand delivery are as follows:
- Your own in-house team
You can assemble an in-house team to create an on-demand delivery app. You will have to spend time and resources during the hiring process but it eases the management during the development stage.
It’s quite an expensive option with many hidden costs. Check this calculator to find out more.
- A local development agency
The key pros are the quality of the development and communication. However, this is an option if you have an unlimited budget, as rates are really high.
The affordable option is to hire a freelancer. Note that you will have to manage the workflow continuously throughout the development process of the app by yourself.
If you are willing to manage all the processes across all the communication channels for 80 hours a week, then this may be a suitable option for you.
- The outsourcing agency
With minimal management requirements and cost-efficient, outsourcing companies can prove to be the best option.
You can get expert developers working on your project at the least cost. It is a viable option for those working on a tight timeline.
If you’re looking for a balance between communication, processes consistency, cost, and quality, we would recommend this option.
Along with the development methods of the on-demand delivery apps, the location also affects the cost.
Choosing a team is the most responsible step if you’re serious about starting a startup. We recommend reading our guide about choosing the most suitable team.
To calculate the cost, we included the duration of the discovery and design phases – 160 hours, as well as the totals for the MVP development – 1860. The rough estimation for the whole project is 2000 hours.
This is detailed further in the table below.
|Team||Rate Per Hour||Cost of an MVP|
|The US-based agency||$150||$300,000|
The Next Step
The SpdLoad team will be happy to develop a business-focused application for you.
We’re an experienced product development team with more than 9 years of successful product building for non-technical founders, product managers, and serial entrepreneurs.
So if you’re looking for more than “just code” feel free to drop us a line.