6 Best Third-Party Delivery Services to Consider for SMBs in 2024

If you run a small business, you've likely seen that customer demand for deliveries is here to stay. Since the pandemic, more people now expect:

• Groceries are delivered to their doorstep.
• Meal delivery services that send premade meals to their home or office.
• Restaurant and takeout food delivered instead of dining out.

Overall, fast casual and fast food delivery increased by over 11% year-over-year in January 2023. Looking forward, online food delivery services are projected to grow at an annual rate of 13% through 2027, with the market expected to reach $1.65 trillion.

Food and groceries might be the most popular local delivery, but it impacts every type of business. Whether it's flowers, alcohol, prescription meds, hobby supplies, plants, workout gear, or cleaning products — people want it all delivered.

Local small businesses looking to increase market share but lacking delivery services must take action now. To attract new customers and keep current ones, you'll need to either start your delivery service or team up with third-party delivery companies.

In this article, we'll delve into how third-party food delivery services work, check out some popular options, and explain the basics of third-party logistics.

TABLE OF CONTENTS:

• Understanding the Mechanism of Third-Party Delivery Services
• 6 Best Third-Party Delivery Services for 2024
• Understanding Third-Party Logistics (3PL)
• FAQ about Third-Party Delivery Services for Small to Medium Businesses in 2024

Understanding the Mechanism of Third-Party Delivery Services

How Third-Party Delivery Services Usually Work:

1. Customers grab the provider’s app and order from a restaurant or store.
2. The platform's system sends those orders to your business via your phone or POS system.
3. You link up with nearby delivery drivers to handle the deliveries.

These providers simplify the ordering and delivery process in exchange for commission fees. Customers also pay a delivery fee and tip the driver.

Business owners have some flexibility with these services. If you prefer to use your delivery drivers or accept pickup orders, you might be able to use just the platform's ordering system.

While third-party delivery services offer many benefits, which one should you choose? Here are our top picks:

6 Best Third-Party Delivery Services for 2024

1. DoorDash

DoorDash is rated 3 out of 5 stars by merchants and helps many businesses expand their customer reach with online food delivery. Since 2013, it has generated $100 billion in merchant sales. You can add your business to the platform with different commission rates based on your desired level of in-app marketing:

• 15%
• 25%
• 30%

If customers choose to pick up their food from local restaurants instead of dining in, the commission is 6% for all orders.

If your restaurant has its delivery service and you want to be listed on the app, you can use the Self-Delivery tier. This option has lower prices and gives you access to marketing on DoorDash.

Don't have an online ordering system? DoorDash’s Storefront has 0% commissions and makes it easy to add an online store to your website. You’ll just pay the usual debit and credit card processing fees.

2. GrubHub

GrubHub is a popular third-party delivery platform that offers more than just delivery services. It also helps restaurants market and promote their business with promotional tools and a branded ordering website.

GrubHub, part of the Just Eat Takeaway.com family with over 355,000 restaurant partners, offers several service plans:

Basic

• Rates starting at 5%
• Zero maintenance fees
• Branded ordering website
• Free professional menu photoshoot

Plus

• Rates starting at 10%
• Includes all Basic plan features
• Access to Grubhub+ customers

Premium

• Rates starting at 15%
• Includes all Plus plan features
• Access to loyalty and promotion tools
• Option to respond to reviews

GrubHub’s fees are mid-range, but you gain access to a large customer base of over 31 million active users.

What do users think of GrubHub? The platform has a 4 out of 5 stars rating on G2.

3. Instacart

You've likely heard of Instacart if you're in the grocery business. However, the platform also caters to e-commerce businesses, retailers, convenience stores, and restaurants.

In addition to third-party delivery services, they provide:

• End-to-end fulfillment
• In-store shopping options
• Advertising tools
• Analytics
• Loyalty programs
• And more

Instacart is a popular and convenient platform. Yet, they lack transparency regarding fees and pricing for merchants. You'll need to reach out to them directly for more information in this regard.

However, they do offer businesses various tools to handle orders, manage deliveries, market their brands, and more.

What's the user rating for Instacart? The platform receives 4 out of 5 stars on G2.

4. Uber Eats for Merchants/Postmates

Uber Eats stands out as one of the most renowned third-party delivery services. In 2020, they acquired Postmates, broadening their 3PL market share. Presently, the platform is utilized by over 825,000 businesses.

While many associate this platform with food delivery, Uber Eats for Merchants caters to a variety of businesses, including:

• Grocery stores
• Retailers
• Convenience stores
• Pet stores
• Flower shops
• Liquor stores

Their platform links your business with independent drivers, scooter riders, bikers, or even walkers who handle your deliveries.

Uber Eats for Merchants offers a range of pricing options, making their service more accessible to businesses.

Here are their pricing plans broken down:

Lite

• 15% fee for deliveries
• 6% for pickup orders

Plus

• 25% fee for deliveries
• 6% for pickup orders

Premium

• 30% fee for deliveries
• 6% fee for pickup orders

Self-Delivery (use your delivery staff)

• 15% fee for deliveries
• 6% fee for pickup orders

Uber Eats may have significant fees, but with around 85 million users on their app, each plan offers a chance to significantly expand your restaurant's reach.

What's the user sentiment toward Uber Eats? The platform boasts a 4 out of 5-star rating on G2.

5. GoShare

GoShare's website and mobile app aid businesses in delivering a wide range of items, from small parcels to large boxes. Companies can:

• Obtain a free shipping estimate within the app
• Schedule their pickup time
• Specify a location
• Connect with a delivery professional to collaborate with

Businesses enjoy an upfront pricing algorithm that can save them up to 50% on delivery costs while ensuring fair compensation for drivers. Scheduling is accessible seven days a week, from 5 am to 11:30 pm.

Various delivery options include:

• LTL
• Hot Shot
• Middle Mile
• Last Mile

6. Delivery.com

Delivery.com lets people order online from their favorite local businesses with easy, quick, and free ordering on any device. It's a one-stop shop for everything from food to dry cleaning. Plus, users earn Delivery Points with every order, which can be redeemed for credits, prizes, and donations.

Delivery.com offers:

• Easy ordering: Quick, convenient, and free to order on any device
• More choices: Your one-stop shop for everything from food to dry cleaning
• Rewards: Earn Delivery Points with every order and redeem them for credits, prizes, and donations

Join over 12,000 businesses attracting new customers with delivery.com.

Choosing the Right Third-Party Delivery Service for Your Business

Each of the services and apps mentioned above is reputable and well-established. The optimal selection for any business varies based on its circumstances.

Consider these questions before making a decision:

Does this work for me geographically?

Some delivery services have geographic limitations. For instance, DoorDash only operates in North America. Ensure the service you choose aligns with your country, region, city, or even neighborhood.

Assessing Cost Structure Alignment with My Business

Some services charge a fixed fee per delivery, while others take a percentage of the order total. Find the option that helps maintain your profit margins.

Evaluating Service Speed and Reliability

Align the service with your market: Restaurant customers likely prefer delivery within half an hour, while grocery customers may tolerate waiting a few hours or even overnight. Research reviews and seek recommendations from peers.

Compatibility with Current Systems

Seamless technology integration can alleviate numerous challenges. Evaluate the service's compatibility with your existing systems, such as point-of-sale or inventory management systems.

Required Flexibility

Assess the level of flexibility needed. Determine if features like custom delivery time windows, order tracking, or proof of delivery are necessary. Categorize these features as dealbreakers, nice-to-haves, or irrelevant.

Now that we’ve explored individual delivery services, let’s delve into some background information. Feel free to skip this if you’re solely interested in reviews!

Understanding Third-Party Logistics (3PL)

In a general sense, third-party logistics (3PL) involves delegating logistics and supply chain tasks. These include warehousing, order fulfillment, and last-mile delivery to specialized service providers. These are intricate operations, and for many businesses, it's helpful to concentrate on their core competencies while entrusting logistics to expert 3PL providers.

Take the restaurant industry, for instance, which primarily focuses on preparing food rather than transporting it across town. Establishing a fleet of delivery drivers or overseeing an in-house logistics system rarely proves workable. This is why many restaurants opt to use Uber Eats or comparable food delivery apps to handle their online ordering and deliveries.

A 3PL network may consist of:

• Individuals fulfilling orders for third-party delivery apps
• Fleets that collaborate with you for delivery

Advantages of 3PL

• Swift Market Entry. No necessity to construct a delivery infrastructure from the ground up or invest upfront capital. Entry into the delivery market is nearly immediate, with the ability to easily scale up as delivery orders grow.
• Overhead Reduction. Eliminates the need to recruit, train, and oversee drivers or maintain a vehicle fleet, particularly advantageous for small businesses with limited resources.
• Enhanced Exposure. Listing on popular platforms can introduce your business to a broader audience.
• Flexible Options. Various services offer different commission tiers and services, enabling you to select what aligns best with your business.
• Insightful Data. These platforms often furnish valuable customer data that can aid in tailoring your offerings and marketing strategies.

Certain providers, like GrubHub, offer a complete ordering system solution. Customers can quickly and effortlessly place food orders, smoothly moving from your restaurant's website to the 3PL backend.

Drawbacks of Third-Party Delivery

While leveraging third-party delivery services can ease the expansion of your delivery service, there are drawbacks to consider. Customers are aware of this. According to one survey, 70% expressed a preference to order directly from a restaurant or food service to ensure their money doesn't go to middlemen.

• Reduced Control. You have limited control over the customer experience, from order placement to delivery. Any issues, such as late deliveries or missing items, may harm your reputation and lead to customer loss. Without insight into problems, assisting customers becomes challenging.
• Impact on Profit Margins. Commission fees can significantly affect profit margins. Understanding the fee structure's impact on your bottom line is crucial, especially considering the recent rise in restaurant prices in the US. Passing delivery costs to consumers may not be feasible, leading to potential profit margin shrinkage.
• Brand Visibility. Your brand is one among many on these platforms, making it challenging to differentiate yourself. The platform promotes your competitors just as vigorously as it does your business, potentially diluting your brand.
• Customer Loyalty Erosion. Customers may develop loyalty to the delivery platform rather than to your business, diminishing your direct customer relationships.
• Operational Complexities. Managing orders from many platforms can become intricate and may necessitate extra software or staffing to handle them effectively.

Considerations for Legal and Compliance Issues with 3PL

• Data Privacy. Ensure clarity on ownership and usage rights of customer data collected through the platform.
• Liability. Clarify responsibilities in cases of late, incorrect, or damaged orders in your agreement with the service provider.
• Compliance with Local Laws. Be mindful of varying regulations, especially regarding health and safety in food delivery, across different regions.
• Contractual Obligations. Review contract terms thoroughly, noting any non-compete clauses or restrictions that may impact your flexibility.
• Payment Terms. Understand payment schedules, methods, and potential deductions to avoid surprises.
• Tax Implications. Be aware of sales tax, VAT, or other local tax implications that may differ when using a third-party service, seeking guidance from a tax advisor as needed.

By carefully considering the pros and cons and navigating legal and compliance issues, you can make an informed decision about the suitability of third-party delivery services for your business.

FAQ about Third-Party Delivery Services for Small to Medium Businesses in 2024