How to Create On-Demand Delivery App: Features, Cost, and Monetization

On-demand services are on the rise these days. Companies like Uber, Airbnb, and Glovo are one of the leading players in this industry. However, a bunch of startups have managed to fit into this niche: Nuro, Deliv, and LogiNext. According to Statista, the on-demand services market in the USA is predicted to reach 54.2 billion U.S. dollars in 2027. However, an on-demand delivery app takes time and money.

To put in short, on-demand delivery app development cost may vary from $170,000 to $300,000+. On-demand delivery service requires an app for customers, another for couriers, and a restaurant solution. Each solution has its own development challenges.

How to avoid all possible pitfalls? In this guide, we’ll discuss various aspects: from idea validation to required features. Here’s what you’re going to learn:

Starting on-demand delivery app development, you need to consider the service’s type. There are two main types: marketplace and platforms with in-house logistics.

Let’s single out the details.

Popular services: Uber Eats, Delivery Hero, Deliveroo

Marketplaces or aggregators stand for on-demand delivery apps that connect users with restaurants. Customers can look through the menu, order food, and pay for it right from the app. As any other marketplace, on-demand delivery apps offer customer support if there are any problems with ordering or delivery.

The most widespread monetization model among aggregators is a fixed fee from each order. For restaurants, aggregators are a great way to keep a constant order flow minimizing idle hours. So the commission is usually worth it.

Popular services: Domino’s, Jimmy John’s

This business model generally stands for on-demand delivery apps by restaurant chains offering users options from their menu.The restaurant is responsible for the whole delivery process and no commission applied. It’s common to hire full-time couriers to serve the clients.

This business model is perfect for well-known restaurant chains. It lets them keep customers engaged providing personalized offers and not to pay commission to third-parties.

CB Insights say that 42% of startups fail because the market doesn't need their product. To avoid such situations, you need to validate your idea before launching an app.

Let’s take a look at how to validate your idea before starting the development process. Please note, you can go through the Research and Planning phases by yourself or contact an experienced IT provider who will take over the entire product development lifecycle.

How to build on-demand delivery app? You need to research the market and study your competitors carefully.

Creating a food delivery service, you need to gather information about customer needs and consider industry trends. Research your future competitors to identify their strong and weak sides. It’ll help you to create a better product.

Doing the market research, you need to answer the following questions:

• What are the goals and mission of your company?
• Who is the target audience of your on-demand service?
• What are the users’ needs and pains?
• What are their expectations from your solution?
• What features does your service need?
• How to monetize the platform?

Knowing the target audience and their preferences, you can create more personalized solutions and gain more users. For example, Uber saw the users’ demand for Business services. This solution allows creating a company Uber account. Employees can connect this account to their own accounts to request a ride. In this case, the company pays for the ride.

There are three primary target audiences for a food delivery business — students, parents, and working professionals. Each group has specific needs that you need to follow. For example, the students’ main fuel is fast food. So, it’s better to cooperate with local fast food restaurants to deliver orders faster.

As for parents, they prefer to cook and eat healthy food. They usually order groceries with home delivery. Food freshness and delivery speed are crucial for this target audience.

Working people lack time. However, they want to eat full and healthy meals. So, deliveries from local restaurants are popular among them.

As you can see, each group has specific needs. To define your target audience, you need to consider their age, location, and income level. Depending on these factors, you can create an on-demand delivery app providing a more personalized experience.

Also, it’s good to prepare a schematic portrait of your customer. This portrait consists of essential information like age, location, income, food preferences, and more.

You can find the example below.

How does the customer make an order? Are there a lot of steps? You need to answer these questions before starting on-demand delivery app development.

Customer Journey Map stands for the journey through the app from the user’s point of view. Every move, like putting a delivery address or adding a dish to a basket, is noted on the map. Having such a map, you can understand the app’s logic.

Understanding the features of your future on-demand solution, you can create a prototype of the service.

Designers can create a working prototype of the platform. Prototypes mean an interactive model that shows particular results depending on the actions.

The prototype allows showing the product owner the final variant of the app or website. It represents the app interface and functionality.

Minimum Viable Product includes only significant features needed to satisfy the users’ basic needs. MVP allows getting the users’ feedback and updating the product depending on their needs and expectations. Building an MVP tends to take a short time. However, this solution allows entering the market.

However, you can choose the Flutter app development services to optimize the development expenses. Flutter is a promising technology from Google that lets developers create cross-platform apps with a single codebase. Results are impressive — two native-like mobile apps within a smaller budget.

Once on-demand delivery app development is complete, your vendor will help you launch it in the app stores. You can then collect feedback from your first users to get their opinions on your product. Once you are convinced of the product's viability, you can scale your product and increase investments to build a feature-rich solution. This way you'll be able to reach more audiences and increase profits.

Key Performance Indicators or KPIs refer to a set of metrics that evaluate different aspects of service. They should answer the following questions:

• Is the service financially independent?
• What parts of the platform require improvements?
• Why do customers choose your solution?
• How to increase revenue?

Let’s discuss top KPIs that you should consider during on-demand delivery app development.

To build on demand delivery app, you need to consider the monetization strategy. There are several ways to get revenue from a food delivery service.

Restaurant fee

This model is quite widespread in the food delivery industry. The strategy is simple:restaurants pay a fixed price to get listed on the service. Another, and more widespread option, is to charge a fee for each order. For example, UberEats takes 15% from the order subtotal.

Ads

Restaurants can pay to rank higher on the search results. This way, ads will look more natural.

Peak hours

Delivery can cost more during the peak hours like lunchtime. In this case, the on-demand delivery platform gets higher revenue.

Delivery fees

This model implies that food delivery for the customer will be paid. In this case, it is crucial to calculate the fee amount to cover all costs associated with the delivery and exceed them, ensuring a profit.

Of course, there are a bunch of alternative ways to earn money:

• Extra fee during bad weather conditions
• Extra fee for rush delivery
• User fees

It’s not enough to create a food delivery app. You should develop an entire ecosystem to make the platform work for all parties.

A common on-demand food delivery solution consists of four parts:

• Customer app. Users can look through the menu and make orders via iOS or Android apps.
• Restaurant app. Restaurants can see and manage orders.
• Courier app. This solution notifies couriers about new orders. They can see the order status and delivery address.
• Admin panel. The product owner and the team can manage the whole platform. They can add and delete restaurants, handle payments, and more.

Of course, each solution should have various features. To give you a hint, we’ve listed the required features.

The customer app is the most significant part of the project. You need to create a user-friendly UI/UX design to gain more users. Customers are quite spoilt these days. They don’t use the application with an unattractive or unclear design.

Also, the app features affect the users’ conversion. You need to create a clear way to make an order during on-demand delivery app development. Of course, the app’s features can differ for various apps. But there’s a set of MVP features similar to every on-demand delivery app.

• Registration and login. It’s better to offer several registration options to make this process fast and user-friendly. It’s a good idea to integrate signup via social networks like Facebook or Google. Also, you need to add email and password, phone number and password signups. ‘Forget password’ option is also required. Developers need to use Facebook SDK and Google SDK.
• Restaurant search. Users should be able to search for nearby restaurants using geolocation. Also, it’s good to add filters to make the search process more convenient.
• Location tracking. Let customers track the courier’s location in real-time. You can integrate this feature via Google Location API for Android and Location Framework for iOS.
• Order and payments. After putting food to the card, customers need to pay for their order. For this, your development team will need to integrate such payment methods as Braintree and Stripe.
• Push notifications. They help customers understand the order status like accepted, delivering, and arrived. To integrate push notifications, your team can use Amazon SNS and Firebase Cloud Messaging.
• Ratings and reviews. Users need to leave their reviews to improve the service. It’s possible to keep their feedback using Microsoft Azure and AWS.

This solution lets restaurants manage incoming orders. It’s common to create a web solution rather than a mobile app. With its help, restaurant workers can accept orders and notify couriers once it’s ready.

On-demand delivery app developers should integrate the following features:

• Registration and login. To make the service secure, each employee should have an account. It’s possible to implement a signup feature, using Facebook SDK or Google SDK.
• Menu management. Using the restaurant app, workers can edit the menu to keep it up-to-date.
• Order management. Workers should have various management options like accepting orders and changing their status.

The courier app should be simple but functional. Couriers use applications on the go, so it’s better to offer a mobile version only.

How to make an on-demand delivery app convenient for couriers? You need to add these features:

• Registration and login. Couriers need to sign up to use the app. They need to have options similar to the customers’ app: social media, email and password, phone number and password.
• Navigation. You need to offer couriers convenient maps with the fastest routes. To integrate this feature, your team can use Google Maps Platform for Android and Location Framework for iOS.
• Order details. Couriers need to see all the information about orders: restaurant address, delivery address, delivery time, and so on.

The admin panel is an essential management tool for your business. Here are some must-have features:

• Login. A secure login makes your data safe and well-protected.
• Restaurant management. Admin can add restaurants to the service. Also, it’s possible to delete users.
• Analytics. Using this feature, you can track essential KPIs like the number of orders, delivery time, revenue, and others.
• Payment management. This feature allows charging fees from restaurants and users. Also, you can change the amount using this feature.

As you can see, there are a lot of features to integrate. Below you can find a table with the required features and technologies to build an on-demand delivery app.

The final cost to create an on-demand delivery app may vary from $170,000 to $300,000+. The final price to build such type of app consists of the following aspects:

• Features
• Design
• Quality assurance

The number of features and their complexity are the main cost drivers to create an on-demand delivery app. Developers need more time to implement more complicated features.

Below you can find the time and price to create features we’ve discussed in the previous part.

The app design can be a struggle since it requires a decent amount of time and money.

To gain more users, you need to create an attractive and intuitive UI/UX design of your app.

Considering all the factors below, we can calculate the final price to create an on-demand delivery app. You need at least $160,000 - $170,000 for one platform (iOS or Android) and $200,000 - $300,000 for two platforms (iOS and Android).

Below you can find the details.

Cleveroad is an IT service provider with over 10 years of industry experience. Over the years, our team has developed many custom software solutions for various industries.

Cooperating with us, you will get the following benefits:

• More than 10+ years of experience in developing custom software solutions
• Multi-industry expertise and professional approach to the nuances of various business domains
• Flexible cooperation models: Fixed Workscope, Time & Material, Dedicated team models, and more
• n-demand services per your request, including building software from scratch, legacy software modernization, UI/UX design, and more
• Comprehensive IT consulting services to help you automate your operations, modernize software architecture, and implement a tech-driven digital strategy to enhance your business efficiency

Our company's portfolio includes many custom software development projects in different domains, including on-demand applications. One of our cases is a platform to book custom services called AYIO.

The app's main idea was to allow individuals to find a specialist in different fields. Thus, the platform provides a large number of on-demand services. Our customer wanted to create a solution allowing users to switch easily between the roles of supplier and consumer with a straightforward UI/UX design. Our team created a functional and user-friendly platform MVP to fulfill our customer's product vision and stay within the budget. As a result, the company got a quality software solution that meets its needs and brings income.

If you need an on-demand delivery app developer, feel free to contact the Cleveroad team. We'll pick up your project at the raw idea stage, help you do market research, and build a unique solution to compete in the market.