How Much Does It Cost to Create an On-Demand Delivery App?

On-demand, app-based startups have been a major trend ever since Uber became popular. The popularity of the “Uber for X” concept suggests that on-demand delivery services might be the future for many market segments, including grocery shopping and service ordering. In this article, we’ll discuss approaches to on-demand delivery app development and look at the cost of building an UberRUSH clone for both Android and iOS platforms. But first, let’s define what “Uber for X” actually means.

What characterizes on-demand delivery marketplaces?

  • mobile-first user experience
  • fast delivery of products or services
  • cheaper prices than traditional service providers or sellers
  • independent contractors working part-time
  • frictionless payment
  • actionable rating systems

Market analysis

The market for on-demand delivery apps is relatively new. There are already several apps in this field, but very few of them are well known, since these apps only operate in limited geographical areas. On-demand delivery services fall into the following subcategories:

1. Package delivery. Examples of these delivery services are Shyp and Kanga. Kanga delivers things to any adress, while Shyp solely is focused on delivering items from your home. It’s especially useful for people who sell products through online markets like eBay or Etsy and have to use a package delivery service to deliver products to buyers. Shyp’s shipping solution is cheaper than regular post.

2. Local food and grocery delivery. Examples of food and grocery delivery include Instacart and Postmates. Instacart focuses on grocery delivery. They hire personal shoppers (contractors) who purchase and deliver products to customers. Postmates delivers both fast food and groceries from well-known shops such as 7-eleven. What’s more, Postmates also offers a small number of household items, such as dish soap and sponges, that people normally buy when they go grocery shopping.  

3. Delivery for retailers. Since much online shopping happens on smartphones and tablets, some of the biggest retailers have also jumped on the on-demand delivery bandwagon. Amazon Prime, for example, promises to deliver Amazon goods in less than two days.

There are also a lot of startups that develop on-demand delivery apps for brick-and-mortar retailers. That’s actually what UberRUSH and Deliv do. It’s a win-win situation for both sides, because a retailer can reach a larger customer audience, while a delivery service can grow a user base much faster.

Yalantis recently finished developing Brilliant Move, an app for a furniture delivery service that works with local furniture retailers. The Brilliant Move app makes furniture delivery much more convenient.     

To get a better sense of the opportunities and threats of on-demand delivery apps, we conducted a SWOT analysis:

Uber for X SWOT analysis

Top KPIs for on-demand apps

To make your app successful, you need to identify and track the most important KPIs. For a mobile on-demand delivery service you need to consider two things: user acquisition and user retention.

How to grow the user base

Regardless of their niche, on-demand services promise cheaper and faster delivery. This is where their competitive advantage lies. In order for your business to hold this competitive advantage, you should consider the following:

  • Start locally.When starting a business, it’s usually easier to start with smaller investments. In the on-demand market, this means that you should test your concept in a limited geographical area with a dense population. This will make it easier for you to enroll and mobilize drivers and grow your user base without slowing down the service.  

  • Make sure to advertise your service even before launching the app. You should use all channels from social media to PR. Another great idea is to acquire users through a referral program in your app. With referrals your customers can, for example, invite a friend to use the app and get a free delivery in return.

  • Collaborate with retailers: As we have already mentioned, collaboration with retailers is a great way to grow a user base because the retailer has already done the hard work of acquiring a customer audience. This is how Instacart and Postmates began. As a startup you can collaborate with smaller retailers, but as you get noticed, larger retailers might also be interested. Postmates, for example, recently went into collaboration with Starbucks.   

How to retain users

Retention applies to both customers and contractors. Of course, you want your customers to keep using your service over and over. But to be efficient, you’ll need to keep your service attractive for contractors as well.

We gathered some strategies that will keep up your retention rate for both customers and contractors:

Retaining customers

General statistics for delivery companies show that customers are very loyal. Once they have tried a company, they tend to stay with it. Few people want the inconvenience of trying out new companies if they have already found one that can satisfy their needs. Reliability and impeccable customer service are the two most important ways for an on-demand delivery app to retain customers. Here are a few strategies to attain trust and attractiveness:

1. Great customer support: Customers should receive quick and friendly responses to inquiries or complaints. Customer support should be easily accessible from the app.  

2. Actionable rating system: After a delivery is completed, customer feedback is crucial. Listening to user feedback is a great way to innovate. Just keep in mind that it is important to react to the feedback to keep the customers happy. For example, if an Uber driver receives too many low driver ratings, their account is suspended until they pay for an Uber training session. Include a rating system to your on-demand app development.

3. Contractor screening: Screenings can include background checks, video interviews, verification of a driver's license, insurance, and registration, driving history checks and proof of dependable vehicle.

4. Special offers: Customers will want to use your app again if they can get discounts, vouchers or gifts. These special offers can be implemented via loyalty programs. You can, for example, give your customers higher discounts if they use your app longer.

Retaining customers is only one part for this KPI. The other part is retaining contractors. Here are four strategies for retaining contractors that you can use if you build an on-demand app.

on-demand delivery app like Postmates  

[the Postmates app]

Retaining contractors

  1. Salary: What contractors get paid may vary, and mostly depends on location. In order to keep customers it’s important that the price for an on-demand service is low, but a contractor’s salary should also be attractive. Otherwise, contractors will walk away to work for other companies. According to Postmates, their contractors earn up to $25+ per hour.  

  2. Flexible working schedule:One of the reasons why on-demand services are attractive for contractors is because of their flexible working schedules. When contractors can schedule their working hours as they want, they get a certain freedom.

  3. Covering transportation expenses: Even an attractive salary may quickly be eaten up if contractors have to personally pay for vehicle and gas expenses. You might want to consider subsidizing gas and transport costs.

  4. Other sources of motivation: There are many ways to motivate contractors. Uber, for example, has been sending its top seven best drivers to the World Cup in Brazil this year. Uber also has a rating system that allows drivers to rate their customers. This way drivers can avoid low-rated customers if they want.

Now that we have addressed KPIs, let’s take a look at the basic features that your on-demand app developers can implement.

Key features for an on-demand delivery app

An on-demand delivery app should provide quick access to goods or services, and a convenient way to book them. The most important features for an on-demand delivery app are:   

  • making orders
  • scheduling a delivery
  • tracking delivery status on the map
  • paying for delivery
  • rating or providing feedback about deliveries

If your app focuses on food delivery or grocery shopping, then additional features should be added:

  • product search
  • shopping lists
  • wish lists
  • real-time messaging or calls

How much does it cost to develop an on-demand delivery app like Uber?

We calculated the cost for an on-demand delivery app based on our latest project Brilliant Move, a furniture delivery service that functions like Uber. Below are the hours that go into design and development for the iOS platform and backend development.

how much does it cost to develop Uber for x?

Yalantis’s recommendations

  1. Start locally. It’s easiest to start in a small area with a dense population. This will make it easier to recruit contractors, advertise, and test your concept. After you have acquired some users, you can operate on a larger scale.

  2. Promote your app before launch. This can be done through social media, offline advertisement or referrals.

  3. Earn trust. Establishing trust is important for an app’s success. You can create trust by enabling contractor ratings and reviews, screening drivers and offering customer support.

  4. Make your contractors stay. Retain your contractors by making it attractive to work for you. Making it attractive to work for your service might mean a competitive salary, flexible working schedule, reimbursement of transportation expenses and other creative sources of motivation.   

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