Convenience Stores Grapple With Third-Party Delivery Economics
As consumers come to expect more of their food — restaurant and grocery alike — on demand, convenience retailers are in the unique position of being able to meet their cross-category needs in one purchase with the added bonus of offering daily essentials as well.
Yet, as convenience stores build out their delivery capabilities, they face the same conundrum as their grocery and delivery counterparts: do they sink the investment into maintaining their own in-house fleets, or do they sacrifice vital customer data and a portion of the sale by relying on third-party aggregators?
Read more: Convenience Stores Seek Sweet Spot Between Restaurants and On-Demand Grocers
7-Eleven, for one, the largest convenience retailer in the world, has deals in the U.S. with leading delivery aggregators. The c-store is available via DoorDash, via Uber Eats, via Grubhub and via Postmates. At the same time, however, the retailer is attempting to reduce its reliance on these channels and incentivize direct delivery ordering. Earlier this month, it was reported that the company has acquired white-label on-demand delivery provider Skipcart.
Additionally, the company has its delivery app, 7NOW, available in cities across the country, offering on-demand delivery of hot food, packaged snacks, alcoholic and nonalcoholic beverages, a limited selection of groceries, and a range of household essentials.
Related news: 7-Eleven Builds Out Delivery Capabilities as Merchants Escape Reliance on Aggregators
In an effort to drive frequency in the face of competition from aggregators and other convenience delivery services, the retailer announced the launch of its 7NOW Gold Pass subscription at the start of this year. The subscription offers free delivery, among other benefits, for $5.95 per month, significantly lower than the $9.99 standard rate for aggregators.
See: 7-Eleven Launches Subscription to Make Delivery Economics Work in All Parties’ Favor
Convenience giant Couche-Tard also has a delivery deal with DoorDash, and some of its stores are available via other aggregators. Additionally, in the spring, Food Rocket, a company that delivers groceries within 15 minutes in Chicago and San Francisco, announced the close of a $25 million series A funding round in which Couche-Tard was the lead investor.
“Food Rocket has an amazing, entrepreneurial team and technology with the potential to disrupt the delivery space,” Kevin Lewis, chief marketing officer at Couche-Tard, said in a statement at the time. “We are excited to partner with them as we continue to explore and pursue different and innovative new ways to serve our customers and make their lives a little easier every day.”
In an interview with PYMNTS last fall, Art Sebastian, vice president of digital experiences at Casey’s, the third-largest convenience store retailer in the United States, which operates more than 2,400 stores, noted that the company determines for each of its stores what the best delivery method is. At the time of the conversation, the stores delivering via third-party outnumbered those with in-house fulfillment about two-to-one.
“When you do it yourself, you obviously have to work on, how do we optimize this?” Sebastian said. “How do we ensure we have the right amount of drivers that meet the needs for orders, but we don't have extra drivers standing around? So, plenty of work there.”