Consumer demand for foodservice and grocery delivery services continues to grow.
Tammy Mastroberte, Convenience Store News
NATIONAL REPORT — While the pandemic accelerated the adoption of delivery and curbside pickup in the retail and restaurant industries, more than two years later, the demand for these services continues to soar.
Convenience stores offering these services now find themselves uniquely positioned to not only offer foodservice delivery to compete with quick-service and fast-casual restaurants, but also make grocery items available, including tobacco and alcohol in certain states.
“We are continuing to see growth in delivery, and we keep rolling out the option to more stores,” Jodi Riggs, external business development manager at Wesco Inc., a Pittsburgh-based chain of 55 c-stores, told Convenience Store News.
Wesco actually started offering delivery using Vroom Delivery in 2019 prior to the pandemic, and each year has seen tremendous growth in the offering. In 2020, the retailer saw delivery grow 233 percent over the prior year. Last year, it grew another 177 percent compared to 2020, according to Riggs.
“We also saw about a 25-percent increase in sales within the first year of rolling out delivery at some of our stores, and we see higher rings or basket sizes [for delivery] vs. in-store purchases. In some cases, this is up to 5 times higher,” she reported.
Consumer research done by Hathway, which was recently acquired by Bounteous, found that today’s shoppers want delivery as an option for c-stores and will use it when it is available. In February 2022, the company surveyed 2,000 adults equally distributed among age groups and locations across the United States and found that an average of 49 percent had ordered from a c-store in the past 12 months — up 6 percent from a survey done three months prior.
Among those who ordered via delivery, 18- to 29-year-olds were the highest percentage to use this option (75 percent), followed by 30- to 44-year-olds (60 percent).
“The study also showed there are a lot of consumers who are trying to order delivery from a c-store only to realize they don’t provide the option,” noted Kevin Rice, executive vice president at Bounteous and former chief marketing officer at Hathway.
Approximately 42 percent said they attempted to order delivery in the past 12 months, but the c-store didn’t provide it. Then, 62 percent of those who could not make the purchase tried again within a few months, Rice shared, noting how the data shows a gap between consumer expectations and what is being offered. Additionally, 81 percent of consumers in the survey said they anticipate ordering via delivery more in the future.
“People want this and the data is showing it,” Rice said. “Demand will continue to grow, and it creates so much opportunity in the c-store space because delivery skews toward the dinnertime daypart and that is a daypart c-stores have historically struggled to capture.”
Choosing the Right Delivery Option
Convenience store operators have a few routes and combinations they can choose from:
1. Third-Party Providers
Many c-store operators start in the delivery world by partnering with third-party providers such as DoorDash, Uber Eats and Grubhub. These providers can handle both the ordering and delivery, so the convenience store only has to get the order ready for pickup and make sure the items available for delivery are uploaded into the third-party system and current.
By working with a third party, a c-store retailer can add delivery quickly and put its stores in front of an audience they might not have had prior. The chief drawback of this route is that the retailer will not own the customer loyalty and data.
“When choosing this, you are handing over the relationship with the customer to the third party because they own the transaction and the data and can continue to market to these customers,” noted Rice. “C-stores should be deliberate about using them as an acquisition channel and then getting [customers] to order directly through their brand if and when that is available.”
For retailers that find the task of uploading all its offerings onto these third-party platforms and managing the process too large of a task — especially for smaller chains — there are also companies like Lula Delivery that will handle this part for a monthly fee.
2. Outsourcing the Drivers
For c-store operators that want to remain in control of the ordering process and retain the customer data and loyalty, they can work with certain third parties using a white label solution. This route allows the c-store to take the orders and handle the transactions on their end, and then outsource the driving part to the third party.
“DoorDash and Uber Eats are the two biggest providers with white labels and are the easiest to work with because they are so big,” said John Nelson, CEO and founder of Vroom Delivery, an e-commerce solution provider.
3. Taking It in House
For convenience store operators with the capital to invest and the resources to dedicate to it, creating an online ordering and delivery system in-house using employees as drivers is yet another alternative. This can get complex from a technology perspective, but there are options available to the c-store industry today to make it work in a seamless way.
“The most advanced players in our industry, like 7-Eleven and Casey’s, have moved to trying to own more of the process and do it on their own,” said Kay Segal, founding partner at Business Accelerator Team, a convenience retailing consultancy based in Phoenix, Ariz. “That doesn’t mean they don’t use third parties too, but it goes back to owning the data, the consumer and the process.”
The Ins & Outs of Delivery
Many c-store retailers are still evolving their practices around delivery and pickup. And, of course, there are still those that are reluctant to dive in — especially smaller chains that either don’t know where to start or don’t have the staff to take it on.
“So many small operators don’t deliver because of the barriers to entry,” said Adit Gupta, founder and CEO of Lula Delivery, which connects c-store operators to multiple third parties and handles onboarding and fulfillment. “It’s not just getting the data and products into a system, but also updating it and keeping it synced that scares a lot of people away.”
Once a retailer signs up with Lula, the company takes on the task of adding their products and images to the system and then syncs the stores up with every delivery service available to them, including Uber Eats, DoorDash, Grubhub and more. This includes foodservice, as well as other items in the store, such as tobacco and alcohol where permitted.
The addition of age-restricted items comes with its own challenges because age verification is needed. At Wesco, when a customer places an order, they enter their birthdate into the system and then, when an associate prints out the order, it has that birthdate listed. Upon delivery — done by Wesco’s own employees — that date is compared with the customer’s ID.
“Because we have our own drivers, we can deliver anything we want, including alcohol and tobacco,” said Dan Sloboda, fresh research and development lead at Wesco.
One of the reasons the company decided to handle delivery in-house was because many of the chain’s rural locations could not be serviced by the third-party delivery vendors. “Uber Eats, for example, could only service 35 percent of our locations,” Sloboda recalled.
Wesco delivery drivers are store employees who are not only paid a delivery fee by the company, but also have the opportunity to collect tips on each order.
“The reality is one piece of technology is not going to provide all the functionality needed to be a best-in-class provider to the consumer,” observed Segal of Business Accelerator Team. “The retailer really needs to map out their development journey for delivery and pickup and look at what can we start with and what can we build onto that. It’s not a one-and-done.”