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In the previous parts of the Digital Commerce Economics series, we explored the overall viability of delivery services for convenience stores and delved into the financial aspects that contribute to a positive ROI. In this final part of the series, we’ll take a closer look at how retailers can thoughtfully evaluate and seize the opportunity presented by delivery services. This includes understanding the economics, analyzing customer behavior, identifying trends, and recognizing the potential for incremental revenue, loyalty, and growth. In part three of this series, our goal is to equip retailers with essential knowledge to understand and successfully implement delivery strategies that foster long-term growth.
When considering the integration of delivery services, the first step for retailers is to thoroughly understand the economics involved. This includes assessing both the initial and ongoing costs, such as technology integration, delivery fees, and marketing expenses. Retailers must weigh these costs against the potential revenue generated from delivery orders. Additionally, understanding the cost structure of partnering with third-party delivery platforms versus developing an in-house delivery system is crucial. A detailed cost-benefit analysis will help retailers make informed decisions and optimize their delivery strategy for future profitability.
Customer behavior plays a pivotal role in the success of delivery services. Retailers need to analyze their customer base to understand their preferences, purchasing habits, and pain points. By leveraging data analytics, retailers can gain insights into which products are most popular for delivery, peak delivery times, and customer demographics. “When partnering with our retailers as they build toward the launch of delivery, one of the first steps we walk through is selection strategy” says Adit Gupta, CEO and Co-Founder of Lula Convenience. “In working with operators in over 40 states and thousands of stores, we’ve developed a rich dataset and an informed point of view on how to support their success” he shared. This information can guide marketing strategies, inventory management, and service offerings to better meet customer needs and enhance the overall delivery experience.
The digital commerce space - particularly the delivery market is constantly evolving, driven by technological advancements and changing consumer expectations. Retailers must stay abreast of industry trends to remain competitive. Staying informed about emerging trends in the broader retail and e-commerce landscape can provide valuable insights for shaping delivery strategies. “At Lula, we attend major industry events, network with partners, and follow relevant publications closely so we can help our retailers stay ahead of the curve,” shared Tom Falzani, Co-Founder and Chief Product Officer for Lula. A more recent example of this is participating with the team and peers at Conexxus as we consider and implement standards in delivery operations and data flow to make the process easier for operators.
One of the key benefits of delivery is the potential for incremental revenue - through both new customers and increased wallet share. Delivery can attract new customers who prefer the convenience of having products brought to their doorstep, as well as encourage existing customers to make more frequent purchases. Retailers can maximize this opportunity by offering exclusive online deals, bundling products for larger orders, and highlighting high-margin items. Moreover, having a presence on all major marketplaces, implementing a user-friendly online ordering system directly and ensuring a seamless delivery process can enhance customer satisfaction and drive repeat business.
Digital commerce and delivery services specifically also present a unique opportunity to build and strengthen customer loyalty. By providing a convenient and reliable service, retailers can create a positive customer experience that fosters loyalty and encourages long-term relationships. Implementing a loyalty program that rewards customers for their delivery purchases can further incentivize repeat business. Additionally, personalized communication, such as sending thank-you notes or special offers, can make customers feel valued and appreciated.
Selecting the right partner is crucial for successfully developing and implementing your initiative. Retailers need to evaluate their existing staff capacity and make key decisions such as whether to hire internally to manage the operation - or outsource all or much of the service. Here are key considerations when evaluating a delivery partner:
Ultimately, one must consider the long-term benefits of leveraging a partner’s established processes and industry knowledge, their focus on keeping up with ongoing developments, and the breadth of skills available vs the cost of replicating the same in-house. By carefully evaluating these factors, retailers can choose a delivery partner that aligns with their business goals and enhances their delivery service offering.
By tapping into the growing demand for convenient shopping options, retailers can expand their reach and increase market share. As delivery solidifies as an integral part of the retail landscape, retailers who embrace this opportunity early and continuously innovate will be well-positioned for sustained growth and success.
Evaluating the opportunity in delivery requires a comprehensive approach that considers the economics, customer behavior, trends, incremental revenue potential, loyalty building, and growth prospects - as well as the partners that can help with guidance along the way. By carefully analyzing these factors and developing a strategic delivery plan, retailers can unlock significant value and thrive in the competitive convenience store market.
The Lula team is here to discuss your unique needs and help you assess whether it makes sense to outsource your e-commerce initiatives or execute internally. Book a consultation with a delivery specialist and we’ll happily help your explore your options.
