Factors responsible for outsourcing of delivery services

Group1 Sec E
Shashank
Atulya
Vignesh
Abhinav
Prateek

Literature review

Journal 1:
Sharkey, J., S. Horel, D. Han & J. Huber (2007).
Association Between Neighborhood Need And Spatial
Access To Fast Food, International Journal of Health
Geography, vol. 20, pp. 47-60
Summary:
The four most prominent (in order) delivery restaurant
selection criteria were Price, Speed of Service, distance,
Quality of Food. The ability of quick service restaurant
establishments to satisfy these criteria ultimately leads
to the level of customer satisfaction, which promotes
repeat business and drives profits.
Following Price in level of importance were two
convenience criteria: Speed of Service and distance . A
quick service restaurant can gain relative advantage if it
provides consumers timely service even if they are at a
far distance. This implies that quick service restaurants
need to understand consumer traffic patterns and have
Takeaways:
efficient and consistent operations.
Some of the factors for decision to outsource the
delivery services are:
a. Speed of service
b. Distance to be served
c. Price incurred in delivery

Report:
Technopak food and services trend in India a detailed report year 2014
Summary:
The commercial benefits of a purely takeaway/delivery-focused format have tempted
operators to expend their time, money, and energy in this direction. Among these benefits
is the lower initial investment required in terms of rentals, interiors, furniture, etc. to launch
such a format. The fixed costs of such an operation are also lower, with such expense heads
as CAM, labor, and utilities seeing considerable reductions. Most crucially, there is lower
dependence on quality real estate, which comprises a major cost for restaurants.

Takeaways:
Home delivery services are offered by majority of restaurants across major cities and the
market size is huge to tap. Factors which play major role in going for home delivery
depends on
a. Cost incurred on rentals
b. Labor cost

Literature review

Journal 3:

Journal4:

Petra Lietz,Research into questionnaire

design, International Journal of Market
Research Vol. 52 Issue 2 pp 249-272
Summary:

Kenneth K. Boyer, The Ohio State University Andrea M.

Prudhomme, The Ohio State University Wenming Chung,
University of Texas at El Paso THE LAST MILE CHALLENGE:
EVALUATING THE EFFECTS OF CUSTOMER DENSITY AND
DELIVERY WINDOW PATTERNS JOURNAL OF BUSINESS
LOGISTICS, Vol. 30, No. 1, 2009

This research paper gives info regarding

following factors while designing a
questionnaire:

Question length

Specificity and simplicity

Question order

Responses

Number of response scale options

Odd or even number of response

scale options

Takeaways:

Question order is important while

framing the questionnaire

A decision on whether or not to offer a

usually neutral middle option that
allows respondents not to commit
themselves to a direction in their
opinion or attitude.

Scale to be used

Summary:
The journal studied the relation between efficiency and 2
important factors- customer density and delivery window
length. 30% of adults in the observed area are available at
their homes to receive their order. This results in strategically
determining the correct vehicle route to be followed based on
density and delivery time.
Areas with more customer density increase operational
efficiency with number of people being served in per area
being larger. But when customers are unavailable, there is
greater risk when parcel is left unattended. This decreases
with customer density i.e.; in rural areas but causes an
increase in operational cost.
Vehicle route planning is a major issue and it can be made
Takeaways:
much more efficiently when delivery time window is larger
Home
delivery
will
be profitable
thereby
giving
more
flexibility.if

Customer density is high

Volume of orders is high

Returns are lower

Shortest route is taken for delivery

Journal5:
Conceptual model on application of chisquare test in education and social
sciences Sureiman Onchiri Masinde
Muliro University of Science and
Technology, Kenya
Summary:
TheChi-Square test of Independenceis
used to determine if there is a
significant relationship between two
nominal (categorical) variables. The
frequency of one nominal variable is
compared with different values of the
second nominal variable. The data can
be displayed in an R*C contingency
table, where R is the row and C is the
column
For tables larger than 2x2, the chisquare approximation can be good even
if some expected counts are less than 5
The chi-square approximation is good if
"no more than 20% of the expected
counts are less than 5 and all individual
expected counts are 1 or greater" Re
2x2
tables with one or more expected
Takeaway:
counts
< 5,
the
chi-square
Chi square
test
to N-1
be used
for our test is
usually
analysis a much better choice than
Fisher's exact test.

Hypothesis and Variables

Hypothesis:

H1: The decision to outsource

H2: The decision to outsource

Delivery boy availability)

H3: The decision to outsource

H4: The decision to outsource

Variables:

On time delivery
Delivery boy availability
Cost incurred
Distance covered
Service time
Volume of order

depends on the cost of setting up own delivery service

depends on vendor performance (defined as combination of On time delivery and
depends on the distance served by the restaurant
depends on the volume of home delivery orders received by restaurant

Construct and Statistical Tool

Independent variables used for the analysis

Service
time

On time
delivery

Volume
of order
Decision
for
outsourci
ng

Delivery
boy
availabilit
y

Distance
covered

Cost
incurred

Questionnaire (Link )
Questionnaire:

Q1.Define the type of your restaurant

a.Fine dining
b.Take out
c.Fast food

Q2. Do you have home delivery facility in your restaurant?

a.Yes
b.No

Q3.What percentage of your orders are take away

a.<30%
b.30-50%
c.>50%

Q4.What is the ticket size of take away order

a.<200
b.200-500
c.500-1000
d.>1000

Questionnaire
Q5.Rate the factors below as prerequisite for offering home delivery services on an Interval scale of 1-5
with 1 being the lowest and 5 the highest
a. Most of the orders are from nearby areas

b. The order size is large for home delivery orders

c. Their are third party vendors who provide delivery services at lower cost

d. It is a must feature for any good restaurant

e. Cost of setting up of delivery services

Questionnaire
Q6.Rate the factors below according to their importance for measuring performance of home delivery services
on an Interval scale of 1-5 with 1 being the lowest and 5 the highest
a. Volume of order

b. Distance to be served

c. On time delivery

Q7.Are you aware of third party vendors in home delivery services?

a.Yes
b.No

Q8.How likely are you to use a third party vendor in delivery services in the next 6 months?
a.Yes
b.No

Questionnaire
Q9. Rate the factors below according to their importance for selecting a third party vendor in delivery services
on an Interval scale of 1-5 with 1 being the lowest and 5 the highest
a. Order delivery time

b. Cost effectiveness as compared to having a delivery boy

c. Increased range of home delivery services

d. Ability to handle large order volume

Construct and Statistical Tool

Sampling Technique used: Stratified Random

Sampling

Tool for analysis

Statistics tool: Chi-square
Test for Independence:
The test procedure is used
because the following conditions
are met:
The sampling method
isstratified
random sampling.
Total Sample Size:120 with 40
from each strata (type of
restaurant )
The variables under study are
allcategorical.
Sample data are displayed in
acontingency table, the
expected frequency count for
each cell of the table is at
least 5.

Regression Test Results

Relati
on:

Decision for outsourcing delivery = 4.836 + (-1.513)Fine Dining + (-0.673)Fast Food + (-1.570)TA_25
+ (-1.161)TA_50 + (-.0839)TA_75 + (-0.333)TS_200500 + (.0794)TS_500800 + (1.235)TS_800 +
(0.539)Aware of third party vendor + (-0.126)Order from nearby areas + (0.494)Planning for
offering home delivery + (-0.037) Availability of delivery boy + (-0.428)Price charged per order + (-

Coefficients, Tolerance, VIF & Excluded variables

Literature Review
When can you Safely Ignore
Multicollinearity?
Paul Allison, September 10, 2012
The article inspects multicollinearity during linear
regression, its measurement and how and when can it
be avoided or ignored respectively. The author
introduced a term VIF, variance inflation factor.
The value of this variable is determined by the formula
1/(1-R^2), where R^2 can be obtained from linear
regression of each predictor against the other predictor
variables. If there was any dependency, the value of
VIF will be greater than 1.
It indicates basically, the extend to which the value is
inflated by other variables. The article further analysis
the different scenarios when multicollinearity can be
ignored.
1. Variables with high VIF are usually kept as control
variables and as long as they aren't variables of
interest, they can be safely ignored.
2. The high VIFs are usually caused due to
multiplication of different predictor variables amongst

List of significant variables at 95% significance level

Fine Dining

Fast Food

TA25

TA50

TA75

TS500-800

TS 800

Aware of third party

vendor

Order from nearby

areas

Planning to offer home

delivery

Price charged per

order

Managerial Implications:
Take away restaurants are more likely to use the service than the other 2
Restraints propensity to use the service increases with the increase in % takeaway orders
Restaurants with order value > 500 are more likely to use the service the propensity to use increase directly with increase in
order value
Restaurants aware of third party vendors are more likely to use the service
Orders from nearby areas does not seem to have an impact on restaurants decision to use the service
Restraints planning to start home delivery are more likely to use the service
Availability of on time delivery, delivery boy ,grievance mechanism does not appear to have an impact on the restaurants
decision to use the service although it may have an impact on if they continue using the service
Price charged per order is inversely affects a restaurants decision to use the service

Business Development Plans for Road Runnr

Use Food and restaurant apps to
find out restaurants having
minimum price of item above 200
range and offering home delivery
services and target them

Pricing should be initially low

in areas where adoption is
less so that there is more
awareness for the services .
Once the customer is
satisfied with the services the
prices can be increased with
increased offerings like order
tracking and minutes left to
deliver

To target restaurants
planning to offer home
delivery services attractive
schemes such as first few
deliverys free can be
launched so that these
restaurants get a trial of
services offered by Road
runnr

To increase awareness
about the third party
service apart from
usual promotion
techniques Guerilla
marketing techniques
in areas having high
density of restaurants
can be used.

Appendix
A one unit increase in fine dining decreases the
probability of going for third party home delivery by
0.633.
A one unit increase in fast food restaurant decreases
the probability of going for third party home delivery by
0.284.
A one unit increase in awareness of third party vendor
increases the probability of going for third party home
delivery by 0.245.

For restaurants having less than 25% for one unit increase home
delivery orders the probability for going for third party delivery
services decreases by 0.636
For restaurants having take away order between 25%-50% for one
unit increase home delivery orders the probability for going for third
party delivery services decreases by 0.452
For restaurants having take away order between 50%-75% for one
unit increase home delivery orders the probability for going for third
party delivery services decreases by 0.288
For restaurants having order between 200-500 for one unit increase
in home delivery orders the probability for going for third party
delivery services decreases by 0.128

For restaurants planning to offer home delivery for one

unit increase in number the probability for going for third
party delivery services increases by 0.475
For one unit increase in number the probability for going
for third party delivery services decreases by 0.027
for one unit increase in price charged per order the
probability for going for third party delivery services
decreases by 0.394
for one unit increase in on time delivery the probability
for going for third party delivery services increases by

For restaurants having take away order between 500-800 for one
unit increase home delivery orders the probability for going for third
party delivery services increases by 0.284
For restaurants having take away order above 800 for one unit
increase in home delivery orders the probability for going for third
party delivery services increases by 0.488
For restaurants having orders from nearby areas for one unit
increase in home nearby orders the probability for going for third
party delivery services decreases by 0.125
one unit increase in grievance redressal the probability for going for
third party delivery services decreases by 0.032

THANK
YOU