Delivery has become a hot trend throughout most consumer industries. Amazon Prime Now is delivering more food and other essentials to customers across the country, Starbucks is flirting with delivery, McDonald’s is partnering with Uber Eats, and even 7-Eleven has begun beer delivery in some states.
Given these developments, should convenience stores begin offering delivery? And if so, how should they do it?
It’s no secret that consumer demand is driving the push for delivery. In fact, 52% of millennials would buy from c-stores more frequently if delivery options were offered. And as the generations preceding millennials continue to age, they’ll rely more on delivery as well.
The increased competition comes from both inside the industry – with mega-chain 7-Eleven exploring its options – and outside the industry – with behemoth Amazon moving into the traditional c-store space. Convenience stores may be facing an “adapt or die” proposition, and there are a number of issues that should be addressed before delivery is offered.
First, c-stores need to decide whether to build their own delivery infrastructure or rely on third-party delivery companies like Uber Eats and GrubHub.
Second, c-stores need to weigh the costs and consider the margins involved with selling products. Some third-party delivery services take as much as 30% of an order’s revenue, while in-house delivery has its associated costs too. The less expensive items that many c-stores rely on for revenue should be priced to ensure profitability – or at least breaking even.
Third, c-stores need to think about the control of their customer data. Third-party deliverers often don’t pass along the valuable data that makes subsequent targeted marketing effective. If handling delivery in-house, c-stores need to collect and process this data in a way that helps turn delivery recipients into regular, engaged customers.
Fourth, c-stores need to determine which products to offer for delivery, how to package them to ensure that they arrive in good shape, and the legality of delivering liquor, cigarettes, and other behind-the-counter items.
In case all of this seems a bit overwhelming, we have created an on-demand training called “Convenience Stores and Home Delivery: Yes or No?” This free, streaming video examines the pros and cons of both third-party and in-house delivery systems. It also covers the essential “Four P’s” of any delivery program – product, price, place, and promotion.
The half-hour video is packed with information to help you make an informed decision about delivery and begin creating your own profitable delivery program. Click here to watch “Convenience Stores and Home Delivery: Yes or No?” now.