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Comment by notfried | Hacker News Reader

I wonder if these food/grocery delivery apps are shooting themselves in the foot with how they balance pricing/fees vs marketing/promotional costs.

You can almost always find gift cards for these services that are 10-20% off. And once you stop using these services for a short while, they bombard you with 20-40% discounts to pull you back.

So it's likely the fees are too high because they need to offset the marketing spend, but then the reason why people avoid or use these services not very frequently is because of the high fees.

Maybe there is a world in which spending less on marketing and lowering the fees could result in lower acquisition cost and higher retention.

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I doubt getting rid of the discounts would ultimately help. Price discrimination and the psychological allure of a discount are powerful tools.

When I worked in Singapore, the whole office had an Uber Eats account and every day we could order lunch from anywhere with no consideration of any fees. There are plenty of price insensitive users like that who make it worth while to keep your base fees high.

And I also know plenty of people who compulsively order things whenever there's a promotion, but would rather starve than pay "full price".

Well there’s so much customer churn in part because many aren’t willing to pay for the actual cost of the service. Food delivery does work in some cases—Dominos or the Chinese place in a probably urban location.

But it seems tough in general. Personal services even by fairly low-paid workers are pretty much luxuries in much of the West.

Pizza and Chinese places that deliver normally either have it built into the price or charge a flat delivery fee. My local Chinese restaurant charges a flat $3 delivery fee on a minimum order -- it's $3 whether you order $15 worth of food or $50 worth. Dominos ran a promotion where they'd give you a discount if you came in and picked up the pizza; they weren't losing oney, they were just giving you the delivery cost.

And the Chinese places aren’t paying indirectly for a software engineer and may some kid who is a relative doing the deliveries.

Or it might just be price discrimination. The people who are just mindlessly ordering are probably not that price sensitive, so you can charge them higher, whereas the deal hunters that would actively seek out and stock up on 20% off gift cards likely weren't going to pay the inflated asking price to begin with.

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