Having your food delivered to your door has become easier than ever. In many markets, the demand for online food ordering has stepped up comparing to phone orders, and Iran is seeing the same shift. Chilivery, an Iranian online food ordering website is trying to bring a convenient and accessible solution to this demand.
For this interview we spoke with Pedram Assadi, Co-founder and CEO of Chilivery. Pedram was born and raised in Dusseldorf, Germany and has worked in various companies such as IBM and Amazon.
Pedram told us that he was looking for a new challenge and wanted to start a project from 0, and scale it up from scratch. “I came here and met with a few players and investors and that’s when I met Sadeghian cousins, the founders of Netbarg,” said Pedram. These cousins are the pioneers behind a couple of startup ventures in Iran, namely Netbarg and Tik8. “The personality and the vision of the project matched, so that’s why I decided to join them. I liked how they managed Netbarg and how it became a success from basically bootstrapping it with their own funds,” added Pedram. He told us they had a tight deadline so they launched Chilivery only a month after Pedram arrived in Iran.
Read TechRasa’s interview with Sadeghian cousins from this link.
Netbarg, was launched about 5 years ago and has contracts with many restaurants, so when Chilivery launched they had a good database to contact the restaurants and the necessary sales experience.
“People here in Iran, they love food so much its part of their culture and DNA,” said Pedram with a passion in his voice. When we asked him about the online food ordering behavior of Iranians, he told us that they pay about 30,000 Tomans (8 dollars) on average. It usually comes with one main dish, one drink. “Fastfood and Iranian food are 50/50. When it comes to Indian, sushi or Chinese food they have a much smaller share than in other countries. And this is mainly supply driven,” Pedram believes.
“People here in Iran, they love food so much its part of their culture and DNA.”
Currently, Chilivery is available in all districts in Tehran and will soon launch in other major cities in Iran. Right now the company has 40 employees and has about 600 restaurants on its platform. Since most restaurants are taking orders by phone, Chilivery also did the same to launch rapidly and gain market share. Today they are in the transition to software order processing and already a high percentage of the restaurants on Chilivery are taking the orders by software.
Pedram told us if the sales of a restaurant goes up, the algorithm and the back-end of their website will automatically bring up the restaurant in its rankings. If the restaurant gets good reviews and ratings from the user side, either on the website or in sms or email, the higher the restaurants goes up in the ranking. Chilivery also does co-discounting with the restaurants. If a restaurant says they would give special discounts and promotions for the users, Chilivery would bring them up and give them more exposure with additional marketing.
“I think in Iran, if you put all the online orders together it’s maybe at 2% max”
It’s a HUGE market
The offline food market in Iran is BIG and there’s still lots of potential. People in Iran are still used to ordering food directly from the restaurants by phone, and it’s usually delivered to them free of charge. Chilivery has a few competitors such as Zoodfood and Reyhoun, but Pedram believes that the market is big enough for everyone to have a slice in this market. Let alone that the Iranian market needs startups such as Deliveroo and UberEats which provide new kind of services that can also take part of the market. “Just Eat was one of the first to launch in the UK and in the UK they’re now at about 50% online to offline. I think in Iran, if you put all the online orders together it’s maybe at 2% max,” said Pedram.
Offline to online conversion is a big challenge in Iran!
Chilivery’s CEO told us that their biggest challenge was the user conversion from offline to online. Iranians are still so used to ordering food by phone and paying by cash that they need incentives to order online. “Once we convert the user from offline to online, and he/she sees the added benefits of the online service and all the convenience that comes with it, then it’s easy to keep one.”
The other challenge for online food ordering websites in Iran is the perspective of the restaurant owners. Some of them don’t work with any online food ordering company, because they think these platforms might take their customers and some part of their money. “This is something that I’ve only seen here in Iran because in other countries it’s more like ‘ok more customers, more money and more revenue for me’,” said Pedram. After all this is the beginning of the transition towards online food ordering in Iran, and it takes some time to implement the culture. Pedram told us that they have put a great deal of time to build relationships with the restaurants. According to him this has been very beneficial for them since this way they won’t see them as a competitor that takes part of their revenue. In the end this is a win-win situation, since Chilivery is doing the marketing and acquiring new users for them and increasing the revenues for the restaurants as well.
“Once we convert the user from offline to online, and he/she sees the added benefits of the online service and all the convenience that comes with it, then it’s easy to keep one.”
One of the things that Chilivery did to make food ordering easier was introducing “Dish of the Day” promotions. “One of the feedbacks we got was that we got a lot of traffic on the website, people entered their address and then they were lost. We looked at the average sessions and it took so long for them to just order one thing because you have too much selections. So we started the Dish of the Day, and offered them 2 dishes e.g. Jooje Kabab or Cheese Burger, and customers loved it because of the simplicity. This made the selection easier and helped us a lot to basically convert traffic into orders,” he explained.
Chilivery also recently introduced a new feature called Garanchi, which is like a warranty and when your food is late Chilivery will pay all of your money back! Basically the restaurant gives an average delivery time to Chilivery and if the food takes longer to arrive than the stated delivery time then Chilivery would pay the customer all the money back as a value-added services and an incentive for them to order online. Pedram told us that they are working on a few more features but didn’t disclose any further information. “It will give you an added value and again help convert offline to online, retain customers and it will be something that no other player has yet. It will be something that will be in line with DNA and our identity,” he answered.
“We don’t do radical discounts or anything like that, because it doesn’t make food ordering more convenient in the long term.”
We all aim to increase the size of the online food orders
A fierce completion shows that there’s a big demand in this market. “All our aim is to increase the size of the online food orders so we’re all trying to go to the direction of converting offline to online,” said Pedram when answering to our question about Chilivery’s competition in the market. According to him each competitor has its own strategy, so maybe someone might go with radical discounts or another one might go with gamification methods but Chilivery’s strategy is “to give value-added services and make food ordering easier. Simplification and services that you don’t get when you order by phone”.
“We don’t do radical discounts or anything like that, because it doesn’t make food ordering more convenient in the long term. From my experience, what I’ve seen is that if you give heavy discounts you get short term demand and not long term customers,” told Pedram. “What happens here is that every customer has a Lifetime Customer Value (LTV). Once you bring a customer to your platform this is basically the financial value of a customer over a specific time frame. And to bring this customer to your platform you have a CAC, a Customer Acquisition Cost. And if this Customer Acquisition Cost is more than your LTV no matter how much you bring customers you’re burning money and basically it’s buying your growth and that’s not sustainable,” he explained. Pedram added that their long-term strategy is built on different pillars all based on a superior customer experience.
Online Payment in Iran is not yet convenient
Just like other Iranian e-commerce websites, Chilivery has several payment methods. You either pay by cash at your door, pay with your online wallet or pay online by typing in your card number and a couple of other fields.
“One-click online payment should be the goal of all e-commerce players in Iran. With our online payment wallet we are offering a very convenient and simple payment method for our customers. However, online payment could be still much more convenient in Iran, but there are still some regulatory challenges that slows down progress.
Chilivery has a strong monthly growth in the number of its online orders. Recently, Chilivery just launched its new website with a new UI/UX design and the smart mapping system which helps the customers select their exact position for better geo-location finding. At the end of the interview, Pedram told us that Chilivery very much values customer feedback. So if you have any suggestions for Chilivery and their new website get in touch with them via email.