Over the past decade, many retailers have embraced the idea of selling their goods, start to finish, through someone else’s app. 

These third-party storefront and delivery platforms handle online customer orders and deliveries on a retailer’s behalf, instead of the customer buying directly from the retailer’s own storefront. It’s the model that was pioneered by the likes of Grubhub, DoorDash and Instacart, and has now been adopted by countless others.

With many retailers still lagging on e-commerce, selling products via a third-party storefront might seem less daunting than setting up their own e-commerce systems from scratch. Plus, third-party storefronts promise to add value by offering retailers access to what’s often a large pool of potential new customers. But this added value can come at a significant cost to the retailer, both financially and in terms of its customer relationships. 

With e-commerce increasingly dominating consumer preferences, third-party storefronts might no longer be a retailer’s best option. Following are a few drawbacks to selling via third-party storefronts.

Handing over business-critical customer data

In a tight, competitive retail market, it's more important than ever to understand customer behavior, both online and in-store. When a retailer’s online customer orders are placed through a third-party storefront, the storefront co-opts all the benefits of the customer purchase data, which typically isn’t shared with the retailer.

This means retailers are missing out on valuable insights from consumers’ behavior as they shop, decide what to purchase and eventually complete their transactions. Using that personalized information, retailers could continue marketing to customers, following up with e-mails or using targeted ads to spur interest in extra purchases.

In addition to helping retailers improve their understanding of individual customers and serve them better, access to customer data enables retailers to gain insights on overall purchasing trends, which aids in business planning and decision-making.

When customers interact with a third-party storefront to make a purchase, retailers are often cut off from receiving crucial information about the buyer journey. Without knowing how customers are using a storefront, a retailer can’t quantify its importance or learn how the experience can be improved upon.

Surrendering a branded experience 

Retailers should never underestimate the value of offering a branded experience, from storefront to doorstep. As online shopping becomes the norm, creating a quality e-commerce experience is even more important, because it will be many customers’ only experience with a retailer.

Rather than surrendering customers to a third-party storefront, if a retailer has its own e-commerce system, it remains in control of the customer experience. It can choose when to offer promotions, when to raise or lower consumer charges, and which last-mile delivery option will be used.

Even amid the disruption to retail and supply chains over the past decade, one thing remains constant: Every customer touchpoint is a win/lose moment for a retailer’s brand. That’s as true for the delivery as it is for the storefront.

Customers expect an easy and convenient delivery experience, from placing the order and selecting the delivery mode to tracking progress and ensuring that the driver arrives at the right place and time. If one or more touches in the chain break, you’ve hurt or even lost the customer’s trust. And once lost, it can take three times the effort to win it back.

Cutting into profits 

While storefront and delivery apps might charge retailers a comparatively low delivery rate, some of these platforms help cover their costs by marking up prices on retailers' products, often without informing the retailers. This could result in retailers unknowingly losing customers for whom price was the main consideration.

With many retail and food categories having only small profit margins, it doesn’t help when third-party storefronts charge large fees that can cut into those profits. Often, too, the pricing isn’t very transparent, with numerous hidden charges.

Listing products on a third-party storefront and using the storefront as your delivery platform comes with a commission fee of anywhere from 10% to over 30%. There might also be a “marketing” charge of up to 20%, or a “technology support” fee.

Other third-party storefronts offer “free” delivery and then fail in a crunch. Grubhub’s network, for example, struggled during a promotion earlier this year that offered New Yorkers a free lunch. Demand surged beyond capacity, and at one point there were 6,000 orders a minute coming through the app. The result was a lot of canceled orders and orders that weren’t delivered. This created negative customer experiences, which ultimately did brand damage to not only Grubhub, but also New York restaurants on the app.

Looking beyond third-party storefronts doesn’t mean you have to build it all yourself. Nowadays, there are other types of e-commerce and delivery options that are just as easy to set up, but that let retailers hold onto their customer relationships, and more of their profits.

When choosing a delivery partner, retailers should look for one that offers:

• Competitive, transparent delivery pricing. (When comparing partners, remember to factor in any platform fees and surcharges; don’t just take the base delivery cost at face value.)
• A reliable and flexible fleet that allows you to meet unexpected spikes and lulls in demand — in any market, at any time.
• National reach, including in smaller towns and rural areas, if that’s where your customers are. 
• A white-label option, so that your brand can always stay top of mind with your customers.
• The ability to support items of any size (including big, bulky, heavy and oversized deliveries).

Retailers know that customers are demanding same-day delivery, but famous-name store front and delivery platforms aren’t necessarily a retailer’s best option. By creating their own branded experience, retailers can significantly increase their profits and customer satisfaction rates. Plus, their business decisions will benefit from the data-driven insights that are only available because they haven’t surrendered precious customer data to a third party.

Valerie Metzker is head of partnerships and enterprise sales at Roadie, a crowdsourced delivery platform.