How to Deliver on the New Definition of Convenience. P. 36
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THE BUSINESS OF CONVENIENCE RETAIL OCTOBER 2017 | CSPDAILYNEWS.COM THE DIRECT SELL How to deliver on the new defnition of convenience. P. 36 As on-demand delivery upends retail, here’s how c-stores can take part in THE the revolution BY SAMANTHA DIRECT OLLER AND JACKSON LEWIS SELL ILLUSTRATIONS BY GUY SHIELD Retailers shouldn’t let the consumer-direct movement pass them by. 36 CSP OCTOBER 2017 ervice by service, category by cate- equity. The consumer is more familiar with “Not only are we convenience space right now is to fgure out: onsider a pint of ice gory, the convenience store is being Shell than Filld, more experienced buying What are these new defnitions that we don’t replicated—and, some would ar- apples from Aldi than Amazon. But this layer taking market share understand that are enabled by technolo- cream. For most gue, improved—on smartphones and online of insulation will last only so long as online from the c-store, gy?” says Thoresen. “Laziness—for lack of a through on-demand, direct-to-consumer retailers add physical touch points—with no we’re creating a better word—suddenly becomes a new part c-stores, it’s a decent ofers. better examples than Amazon’s test of Am- of convenience.” Need something to drink or snack on? azonGo and its 2017 acquisition of Whole whole new market.” This doesn’t mean c-stores can’t deliver Place an order with goPuf, InstaCart, Pea- Foods Market [CSP—Feb. ’17, p. 28]. on this new defnition of convenience. But it category, solidly in pod or Drizly. How about a hot meal? Just tap “Ordering groceries online is on some does mean they must master the on-demand that UberEats, Grubhub or DoorDash app. level conceptual: You don’t see the products, delivery model—or, in some cases, fll in its the top 30. Maybe you could use a smoke? Yummy.com the facility, a lot of things until it comes to plans to be in 24 by the end of the year and gaps. will have a pack to your door in 30 minutes. your door. That is a little scary to people,” “an aggressive expansion platform” planned For goPuf, it’s the top seller. Car needs a top-of and wash? Luckily, you says Barnaby Montgomery, founder of for 2018, says Ilishayev. have Booster Fuels or Filld for the fllup, and online grocer Yummy.com, Los Angeles. GoPuff heavily targets millennials—in DELIVERING DATA And when the temperature Spify and Washos can provide that cleanup. Hence, he says, Amazon’s recent playbook. particular, college students—with its mar- ehind on-demand delivery’s “Convenience is going to a new level,” “The building, product and people in the keting. For example, the beverage section quick-fulfillment shine is a care- drops, sales increase by 80%. says Scott DeGraeve, a former executive community have a relevant impact on the of the goPuff app is called “Dranks,” and fully plotted, well-honed logistics for online grocer Peapod and principal with demand online.” the deals section is “Cheap Sh**.” “It’s what framework. Scott DeGraeve Consulting LLC in Chica- This dynamic is why Yummy.com, which makes people love goPuf,” Ilishayev says. Yummy.com’s six stores serve as ware- “People still want ice cream go. “It used to be a convenience store on ev- ofers online deliveries in 30 minutes or less, So while convenience stores may feel houses for its delivery service, with all on- ery corner and being able to pop in and out decided to open six brick-and-mortar neigh- their prime locations, impulse mastery and line orders picked from their shelves. About [in winter],” says Rafael quickly, get what you want with a few items. borhood markets in the Los Angeles area af- quick in-and-out protect them from the 40 local distributors supply the chain. Each But now … you can deliver it to me. That’s ter the launch of its online delivery service. on-demand delivery revolution that is rock- store is assigned its own mini feet of deliv- Ilishayev, co-founder of the even more convenient, and if you can get it Each site is 5,000 square feet with 3,000 ing the grocery world, they should not get ery trucks, which head out with one to three to me in an hour or so, that’s really great.” SKUs of fresh produce, meat, beer, wine, too comfortable. orders per route. Philadelphia-based online Consumers are clearly primed. snacks, deli sandwiches, general merchan- “ ‘Convenience’ is increasingly meaning “Because we deliver in 30 minutes, the “The fact that these businesses exist sig- dise and tobacco. But Yummy.com’s com- delivery, and convenience stores aren’t nec- routing of the order is a very important way nals that there is some kind of white space in petitive diferentiation is not necessarily this essarily geared there,” says Bill Bishop, chief to achieve our service promise,” Montgom- delivery service. “They just the marketplace that we didn’t see before,” brick/click model, but rather the ability to be architect of retail consultancy Brick Meets ery says. “You can’t overload a driver with says Erik Thoresen, principal with Technom- better—read: more convenient—than a trip Click, Barrington, Ill. “They’re geared to be too many orders where they can’t fulfll the don’t want to go out and get ic, Chicago. “A lot of that’s enabled by tech- to the grocery store, thanks to fast delivery. visited, not to be delivered from.” promise.” nology, which wasn’t feasible 10 years ago. And soon, it hopes to be less expensive too. “The challenge for people who are in the Yummy.com’s delivery fee is $6.87, with the ice cream.” “Because consumers are interested in do- Montgomery doesn’t consider Yummy. ing something new, they’re willing to take a com to be a convenience store. He doesn’t Also, e-commerce is a chance on a marketplace that doesn’t really even believe the channel is his competition. exist yet,” he continues. “And when they fnd Rather, he’s targeting traditional grocers and judgment-free zone. that those providers in that marketplace meet Amazon. But other on-demand delivery ser- their needs in a new and better way … they’re vices do have their sights dead set on c-stores. totally open to changing their behavior.” “Not only are we taking market share “Imagine walking to a And the consumers most likely to use away from the convenience store, we’re delivery are the younger set. Already, 48% creating this whole new market that didn’t 7-Eleven on campus and in the of Gen Z consumers say they order food for exist before for people [who] want the goods delivery at least once a week, compared to but can’t get them,” says Ilishayev of goPuf, back freezer you see 30 pints 23% of consumers overall, according to which allows customers to shop on its mo- Technomic’s 2017 Consumer Direct Study, bile app for everything from snacks to phone of ice cream,” says Ilishayev. powered by Ignite. Sixty percent of consum- chargers and laundry detergent. It delivers in ers say they would consider using grocery 30 minutes for a $1.95 delivery fee, which is “You want three of them, but delivery in the future. waived for orders over $49. GOPUFF Ilishayev and fellow co-founder Yakir OF Gola were your typical college kids driving you’re only going to get one.” BRICK BYPASS their car-bereft friends to nearby c-stores for f course, there are trade-ofs relat- snacks and other supplies. They thought it COURTESY The goPuf customer is ed to consumer-direct shopping. would be easier if a business could bring the For one, many of the providers c-store to the customer, and so goPuf was defnitely springing for three. are startups with little to no brand PHOTO born. Today it operates in 21 markets, with GoPuff delivers alcohol in at least 12 markets. Drivers check IDs using their goPuff app. 38 CSP OCTOBER 2017 OCTOBER 2017 CSP 39 BRICK CLICK a minimum order of $14.99. For orders $100 or greater, delivery is free. While the retailer ofers everything from cigarettes (with age verifcation occurring upon delivery) to deli sandwiches and cleaning products, 15 of its 20 most purchased items are fresh produce. Montgomery believes that this fact, along with its most popular delivery window being 6 to 9 p.m., shows that customers are using Yummy.com to buy meal components. Because customers place orders online at Yummy.com, this interface also serves as TRAVEL. According to Alexandria, Va.- BROWSE. The home screen of an inventory-management tool, helping the based NACS, 42% of fuel customers go into the goPuff app includes an average the c-store, and most make a purchase. of 1,800 to 2,000 SKUs. company track to the unit level at each of its stores. GoPuff has a warehouse positioned in the epicenter of each 2.5-mile-wide delivery zone to help it fulfll its 30-minute delivery window. It also has access to advanced tech- nological tools such as artifcial intelligence and machine learning. These tools allow it to analyze everything from driver behaviors to traFc patterns so it can continue to optimize deliveries. GoPuf is also building a database of cus- SHOP. According to State College, Pa.- CHECK OUT. The consumer places items tomers’ spending habits, including their pur- based VideoMining, about 20% of trips in a digital “cart” before purchase and chasing and sampling behavior and baskets, last fve minutes or more.