Don’t Be “Out-Convenienced” by Big Tech
Industry Trends in Grocery
The grocery industry is already experiencing a massive shift toward e-commerce and home
delivery. A recent FMI/Nielsen study predicts that grocery e-commerce will total $100B by 2022, and that 70% of people will shop for groceries online by 2024. Brick Meets Click states that companies that provide on-demand delivery and pickup services are expected to grow sales by 25-30% in 2019, over twice that of stores not offering these services.
Shift in Convenience Industry Already Underway
This massive shift to online grocery purchasing has begun to impact the convenience store
industry as new e-commerce, delivery-only offerings have started emerging. Amazon Prime Now currently serves over 50 cities. GoPuff, a new start-up offering home delivery of convenience SKUs in as little as 15 minutes, is now operating out of over 100 locations. Several more highly-funded ventures are expected to emerge in the near future as well. For instance, with a recent cash injection of $150m by one of the founders of Uber, City Storage Systems (formerly CloudKitchens) is developing networks of centrally located warehouses to offer on-demand convenience and grocery items with extremely fast delivery times.
Don’t Be the Less Convenient Option
While utilizing third party services such as Uber Eats may seem like an easy way to enter the market, it is unlikely to materially increase convenience sales nor profits, and it will not help the stores compete against the new Big Tech entrants into the space. There are several important reasons for this:
- In most states, it is illegal for third parties to deliver the alcohol or tobacco products that drive significant sales of other items.
- As these services charge fees of up to 30%, stores cannot offer most of their products online without massive price increases, making them uncompetitive compared to other online offerings.
- Stores become simply another food offering on a crowded platform, competing directly with every other local restaurant and market.
- Third party delivery networks are not available in many areas, particularly in rural locations. Chains become restricted to the serviceable areas of the third party network which often may not cover many of the store locations.
Running one’s own e-commerce/delivery solution also comes with its own challenges. Stores need to have employees available to make deliveries, and the drivers usually must be insured. Additionally and most challengingly, stores need to develop the technology systems to allow customers to place orders and manage those inbound orders, along with the price book, fees, etc. Trying to do this internally could cost upwards of $1m upfront with ongoing maintenance costs and take years to do properly.
We built an easily managed, affordable ecommerce solution
Vroom Delivery’s platform was built from the ground-up as a full-stack ecommerce solution for convenience stores. This includes ordering technology, order management technology, tools for maintaining online price books, customer analytics tools, tools for drivers, and more.
Setting up Vroom across your network of stores can be done in a matter of days, at minimal upfront cost. As part of the offering, Vroom also consults on setting up your logistics and marketing aspects of the program.