Online ordering: A flourishing trend

April 18, 2007
* This is an excerpt from the upcoming Pizza Marketplace mini-guide, "Online Ordering: Reach more customers now." Click here to pre-register for this report.
Online commerce has taken the world by storm in the past 15 years. Nearly every retailer operates a Web site, and many of those allow for online ordering of goods and services
According to an October 2006 report by Cambridge, Mass.-based Forrester Research report entitled, "US eCommerce: Five-Year Forecast And Data Overview,"  revenues from online retailing, excluding travel, will top $250 billion by 2011.
Because restaurant operators generally operate on razor-thin profit margins, they've moved much more slowly in embracing the Internet, instead preferring to wait for the pioneers to take the arrows.
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"Restaurant operators care about technology, but they care more about selling food," said Jim Melvin, founder of SIVA Corp., a Delray, Fla., software developer for the restaurant industry. "As technology has matured over the last few years, though, we've seen operators stick their toe into the technical side of the business."
There's no doubt online retailing is here to stay, and pizzeria operators are increasingly turning to the Internet to help them boost their businesses.
One industry where online ordering has been a proven success is the pizzeria business. Major players such as Pizza Hut, Domino's and Papa John's have seen the benefits online ordering can provide, and now independent operators are also reaping its reward.
Online ordering can boost sales and increase customer reach. Most of all, it can give the one-unit operation the same marketing and customer-retention tools as the major chains.
Fueling the Internet revolution
The name of the first person to order a pizza online has been lost to history, but the idea, at least, was introduced to the mainstream via the 1995 thriller The Net, in which a computer whiz played by actress Sandra Bullock ordered a pie online from her local pizza shop. While the movie might not have been Bullock's finest moment on film, the idea of ordering dinner by computer dazzled moviegoers and quickly caught on.
The Internet and the World Wide Web were the playground of academics and computer geeks in the early 1990s, and pizza was the fuel that helped launch the computer revolution. College students and those same computer geeks quickly adopted online ordering technology and made extensive use of it.
"The Gen X-ers and 20-somethings are eating machines," said Trevor Stout, CEO of Santa Clara, Calif.-based Jacent Technologies Inc. "They'll order up to four times per week. They're very tech-savvy in general and some of our customers are realizing that."
Pizza's popularity with the college crowd, along with the delivery aspect of the business, meant it was only natural that online pizza ordering would be one of the first commercial applications of the new technology.
"We see it in both pizza and sandwich places, but mostly in places that deliver food," said Rich Bowman, cofounder of PDQ Pizzeria System, a point-of-sale solution provider for the pizza industry. "About 90 percent of people that are ordering food are ordering for delivery."
By 1995 a new word, e-commerce, had entered the country's vocabulary.  As more and more people went online, businesses increasingly began to look for ways to integrate the Internet into their operations.
According to the Web site, more than 233 million people in North America are connected to the Internet, or about 70 percent of the population. Worldwide, more than 1.1 billion people are online.
Reaping the benefits
Although No. 3 pizza chain Papa John's International Inc. joined the online world fairly recently, the benefits the company has reaped are indisputable. The Louisville, Ky.-based company is the recognized leader in online pizza ordering
"We launched online ordering in 2001, and since then we've had more than 25 million orders transacted on," said Papa John's spokesman Chris Sternberg. "In 2006 we transacted more than $200 million worth of business through our online ordering site."
It all comes down to convenience, Sternberg said.
"Nearly all of us are on line and many of us live there for many hours each day," he said. "Papa John's want to be where people live and where they are most likely to want to take care of business."

Topics: Domino's Pizza , Online Ordering , Operations Management , Papa John's , Pizza Hut

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