We’re in the age of “I want it and I want it now” which is great news for most food delivery businesses. This adage has been brought even more to the forefront of the global market due to the worldwide pandemic caused by COVID-19. Not only are consumers seeking out food delivery more often, but they’re also looking for contact-free, or contactless, delivery options that keep them safe. With the increase in demand and the expanded need for contactless options, however, comes the continued possibility of costly challenges attributable to the inability to properly authenticate delivery.
Food Delivery In 2020 Is Rapidly Changing
Currently, it’s estimated that the global food delivery market will reach $164.5 billion by 2024. This growth is highly driven by younger generations who lead fast-paced lives. A recent report found that in 3 out of 5 cases, Millennials order food delivery or takeout when the hunger pangs hit.
Food delivery companies and start-ups are reaping the benefits of this growth. DoorDash, the leading food delivery service, has recently filed for an IPO to prepare to go public. The company is currently valued at $13 billion and holds 38% of the market. Others include Grubhub, following close behind with a 31% share, Uber Eats with a 20% share and Postmates with a 10% share.
As these COVID-19 times have quickly changed life as we know it, the food delivery sector has been affected in its own right. With most of the world sheltering in place, restaurants have had to resort to food delivery as a last ditch effort to stay open. Companies such as Lyft have begun to offer food delivery services as the demand for ridesharing has all but halted. Even the almighty Amazon has had to put any new subscribers to their grocery delivery service on a waitlist. Needles to say, if the beginning months of 2020 are any indication, things are changing and they are changing quickly.
Lack Of Authentication = Friendly Fraud, Refunds, Chargebacks & Fees
Unfortunately, there’s a huge problem lurking for food delivery companies, the costs associated with not authenticating a delivery. Food delivery companies have chosen to forego traditional authentication methods when the customer receives their meal from the courier due to perceived user experience (UX) limitations. The situation is made even more challenging in the face of contactless deliveries.
This lack of authentication costs delivery companies hundreds of millions annually. The losses begin when a customer says they didn’t receive their order, the order came late, the order was wrong, or something similar. The moment a customer has an issue, there are customer service costs incurred due to the customer contacting the courier or the merchant to associate liability. All this happens way before a refund is ever requested.
Customers may also file a chargeback against your business by disputing legitimate charges to their credit cards. Instead of contacting you for a refund, they ask the bank to take the money back from you by force (long after that takeout burger is gone).
In addition to the ~ $1.04 per delivery loss, it’s also possible to increase your chargeback ratio to dangerous levels, resulting in higher processing fees. Plus, you can be subjected to additional fines should your rates exceed a predetermined threshold.
How Does LISNR® Help Reduce Delivery Cost?
LISNR® works to help delivery companies reduce friendly fraud and inefficiencies associated with lack of proximity delivery confirmation. Using our ultrasonic technology and software to transmit real time data, our solution enables proximity authentication. By being “person present and proven,” we can save the average food delivery company $2 million per year.
How does it work? A device with LISNR®-enabled software (SDK) detects, transmits and receives data from other LISNR® audio technology within specified range. Once it detects the signal, the SDK demodulates the data and performs the specified function on the device, from customer authentication to mobile payment.
The result? Seamless authentication for both the food courier and the customer through sound (no OTP or QR code required). This ultrasonic solution and channel reduces friction, human error, securely and works as a valuable data point across operations.
Combating The Inefficiencies Of The Future
Friendly fraud costs, just like technology, will continue to evolve. Life changing circumstances such as COVID-19 impact businesses and push them to make drastic changes. For example, companies are beginning to advertise food delivery services that include leaving a customer’s order on their doorstep for contactless pick-up. This has led to a steady rise in costs to food delivery companies as items get misplaced or stolen.
Unfortunately, these new methods still leave room for enhanced friendly fraud due to the lack of authentication. LISNR’s technology can enable companies to authenticate customers and orders up to a distance of ~6 feet. As a result, authentication happens between the courier and the customer, no contact required.
Are You Ready to Change Your Own Food Delivery Game?
To truly take your food delivery company to the next level, you must combat friendly fraud head-on. With LISNR®, you can increase courier and consumer safety while decreasing friendly fraud and costly chargebacks. Let us help. To learn more, send us a message.