The Difference Between First-Party and Third-Party Online Ordering
First-party orders originate on your own branded web ordering application or mobile app. With first-party ordering, you own the data, the guest relationship, and you don't pay any commission fees.
Third-party orders are restaurant food orders that come in from marketplaces. Marketplaces usually charge a commission from the restaurant and provide exposure to new customers and the drivers in return. The most popular third-party marketplaces in the U.S. are Doordash, Uber Eats, and Grubhub (in that order). For more insight on first-party online ordering, check out our blog on the power of first-party data compared to third-party.
Now that you’ve invested in first-party online ordering, you should be asking yourself if you’re leveraging the online ordering system as much to avoid seeing your profits taken as fees and commissions charged by delivery services.
How to Convert Third-Party Guests to First-Party Ordering
In general, first-party ordering has many benefits over third-party ordering, including owning the guest relationship and data, saving money, and increasing revenue.
While third-party marketplaces provide an avenue for new guests to discover a restaurant brand, they charge restaurants a hefty chunk of their revenue, between 15-30% in commission fees, just to use their service for delivery orders.
A comprehensive digital ordering strategy should combine participating in marketplaces (a.k.a third party) with a cutting-edge first-party experience and a well-thought-out plan on converting third-party guests to first-party ordering.
Third-party vendors offer online ordering menus hosted separately. It’s often difficult and expensive to set up and make changes to menu items. With your first-party ordering system, returning customers can order through your site directly, and you’re both spared the commission fees.
Many first-party online ordering systems integrate with POS systems allowing easier synchronizations like instant online menu changes. Incentivio integrates with the best point of sale systems like Toast, Square, Qu, and more, where changes made to the POS are instantly reflected in our platform.
Now you have more control over your brand rather than a third-party service controlling the way your restaurant is listed. On top of this, you also have a way to communicate your new first-party online ordering system to guests.
To bring those third-party guests to your online ordering system, make a statement showing off the online ordering on your website. The best way to showcase the new ordering platform is by creating a loyalty program where guests can earn points and rewards with every purchase. This incentivizes guests to order directly from your restaurant, which helps increase revenue and retain guests.
You can also raise your prices on third-party apps while keeping prices lower on your first-party ordering platforms (website and branded mobile app). Increasing third-party orders covers your cost to pay a commission on each order and, in turn, incentivizes guests to save money by ordering directly from you rather than paying the extra fees.
Another way to bring guests to your new first-party platform is by providing a code in third-party orders that discounts an item or entire order only redeemable through your website or branded mobile app. Guests will want to cash in on the promotion and continue using your new online ordering platform for the loyalty program.
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