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This article really buries the lede, that all of these restaurants agreed to pay GrubHub for any leads that GrubHub generated. Sounds like the restaurants shoul

by lacker 6y ago

This article really buries the lede, that all of these restaurants agreed to pay GrubHub for any leads that GrubHub generated. Sounds like the restaurants should simply stop buying GrubHub’s marketing service, if it isn’t worthwhile for them.

jazzkingrt 6y ago
The "marketing service" just means being listed at all on GrubHub itself. So restaurant owners are agreeing to a big fee to get customers from the GrubHub website and app. But it sounds like they often don't know that they are also being made to pay a fee for their own customers who are simply looking up the phone number. GrubHub isn't obviously adding any value there, these customers could just as well have pulled the phone number from Google Maps of the restaurant's own website. I think GrubHub could be acting incorrectly in few ways: 1. Restaurants don't appear to be well informed of the cost. Deceiving your customer (eg by sneaking clauses into the contract) doesn't feel right. 2. GrubHub could be deceiving the restaurant's customers, who may be making a sincere effort to order from the restaurant directly. 3. In some local markets; GrubHub might have a kind of monopoly power. I think are a lot more constraints on how these kinds of businesses can dictate terms to other business: https://en.wikipedia.org/wiki/Vertical_restraints https://en.wikipedia.org/wiki/Vertical_restraints
donmcronald 6y ago
It's a prisoner's dilemma. If a company like GrubHub decides they're going to build a demand aggregation platform for a certain market segment, part of that is going to include significant advertising to acquire users (demand). They'll also offer a good (or great) looking deal to vendors (supply). So, if you're a vendor, the appeal of early adoption is huge. You get access to a platform with a bunch of free advertising and a built in set of potential customers. The platform might let you reduce costs (shut down your website) and, as an early adopter, a lot of those potential customers become your customers in the short term. Then, as vendors keep joining the platform, it becomes de facto market for those goods. That's the point where the demand aggregation has succeeded and the vendors get converted into a commodity. Customers want a class of product, not a specific product. So now, you _must_ be on the platform to succeed even if you hate it and you're just another cog in supply side of the system, The company (like GrubHub) that successfully aggregated demand can rent seek for as long as they maintain the demand monopoly and there's nothing a single vendor can do about it. Get used to it because every industry susceptible to demand aggregation is going to look like the food industry soon IMO.
onepointsixC 6y ago
Those businesses agreed to Grubhubs marketing services in hopes of expanding business. All Grubhub did was just painting over that businesses' existing signs and marketing, and demanding a fee.

by lacker 6y ago

jazzkingrt 6y ago

The "marketing service" just means being listed at all on GrubHub itself. So restaurant owners are agreeing to a big fee to get customers from the GrubHub website and app. But it sounds like they often don't know that they are also being made to pay a fee for their own customers who are simply looking up the phone number. GrubHub isn't obviously adding any value there, these customers could just as well have pulled the phone number from Google Maps of the restaurant's own website. I think GrubHub could be acting incorrectly in few ways: 1. Restaurants don't appear to be well informed of the cost. Deceiving your customer (eg by sneaking clauses into the contract) doesn't feel right. 2. GrubHub could be deceiving the restaurant's customers, who may be making a sincere effort to order from the restaurant directly. 3. In some local markets; GrubHub might have a kind of monopoly power. I think are a lot more constraints on how these kinds of businesses can dictate terms to other business: https://en.wikipedia.org/wiki/Vertical_restraints https://en.wikipedia.org/wiki/Vertical_restraints

donmcronald 6y ago

It's a prisoner's dilemma. If a company like GrubHub decides they're going to build a demand aggregation platform for a certain market segment, part of that is going to include significant advertising to acquire users (demand). They'll also offer a good (or great) looking deal to vendors (supply). So, if you're a vendor, the appeal of early adoption is huge. You get access to a platform with a bunch of free advertising and a built in set of potential customers. The platform might let you reduce costs (shut down your website) and, as an early adopter, a lot of those potential customers become your customers in the short term. Then, as vendors keep joining the platform, it becomes de facto market for those goods. That's the point where the demand aggregation has succeeded and the vendors get converted into a commodity. Customers want a class of product, not a specific product. So now, you _must_ be on the platform to succeed even if you hate it and you're just another cog in supply side of the system, The company (like GrubHub) that successfully aggregated demand can rent seek for as long as they maintain the demand monopoly and there's nothing a single vendor can do about it. Get used to it because every industry susceptible to demand aggregation is going to look like the food industry soon IMO.

onepointsixC 6y ago

Those businesses agreed to Grubhubs marketing services in hopes of expanding business. All Grubhub did was just painting over that businesses' existing signs and marketing, and demanding a fee.