DTC Moves of the Month: The Convenience Economy
Today’s consumers expect control and speed. They want their purchases to be convenient: when they want it, how they want it, and where they want it. Pandemic-driven consumer trends combined with increased technological innovation has led to significant growth for brands that are capitalizing on this Convenience Economy. Brands are bringing consumers what they want, right to their door, faster than ever. And food convenience is booming. You may be thinking about restaurant delivery, but companies are getting creative with even more ways to serve their customers, reducing distance, time, and price to get goods to customers. In this edition of DTC Moves of the Month, we’re examining how Instacart is approaching new customer segments, the rise of "ultra-fast" grocery, a coffee startup going head-to-head with Starbucks, autonomous delivery by 7-Eleven, and how Door Dash and Goldbelly are seeking new engagement.
Instacart & Dollar General
Instacart rolled out a new feature partnering with Dollar General. The partnership will allow customers who don't live in high-density urban areas to access same-day delivery. Oftentimes, Dollar General stores serve as the only grocery store option for many rural communities. Those customers haven't seen the same proliferation of delivery services that urban customers saw during the pandemic. The move suggests that Instacart may have saturated the higher-income urban market and now they're targeting consumers across geographies and socioeconomic classes. If the company can figure out the logistics of rural delivery, dollar stores could deliver more than groceries and could be a distribution center for all sorts of DTC brands. For DTC brands, partnering with these types of non-traditional delivery companies could be a strong brand awareness play.
Fridge No More, Buyk, Gorillas, GoPuff, and Getir
For those urban customers for whom delivery is already a standard part of life, the next opportunity for is in ultra-fast delivery. If you don't feel like popping over to the nearest bodega, there's a fleet of new options promising 15-minute delivery to your door. There's been an explosion of companies in this space including Fridge No More, Buyk, Gorillas, GoPuff, and Getir. For customers used to increasingly fast delivery that started with Amazon's two-day promise, this is the next frontier. Although these companies deliver groceries, what they really promise is better logistics. As customers expect more — and faster — last-mile delivery will become increasingly important. It's getting harder for DTC brands that don't own their distribution channels to deliver against customer expectations. We wouldn't be surprised if these companies start to deliver more than groceries and partner with DTC brands to deliver everything from Capsule to Glossier.
Blank Street Coffee
Blank Street Coffee has a different approach to the convenience economy — and investors just plunked down $25 million to fund it. They won't deliver anything to your door, but they'll get you your coffee lickety split, and at better prices than Starbucks to boot. How is that possible? They've majorly cut down on the real estate footprint of coffee shops. They realized that there's a customer segment that wants good coffee fast and doesn't care about a nice seating area. Blank Street prioritized a smaller footprint for grab-and-go coffee, even using small mobile trucks. They also employ fewer people and rely more on machines to make the coffee orders. Beyond automation, they've also made use of digital. Twenty percent of current orders come through their app and they're pushing more customers to order ahead. Other companies like Sweetgreen and Domino's have seen customer volume increase with mobile-first orders. Our bet is more DTC brands invest in mobile apps and reduce real estate going forward.
7-Eleven is kicking off a new autonomous delivery service in California, through a partnership with Nuro, a leading robotics company whose vehicles are already being used for grocery deliveries, pizza, and deliveries from CVS Pharmacy stores Texas. Customers simply download the 7NOW delivery app, add items to their shopping cart, and can select autonomous delivery for no extra charge. Just 30 minutes later, they’ll meet the autonomous vehicle outside, grab their items from the back, and can enjoy. This isn’t the first time the convenience store has forayed into autonomous delivery before. In 2016, it became first retailer in the U.S. to make a drone delivery to a customer's house. “Since then, we haven't stopped looking for ways to redefine convenience for our customers inside and outside the four walls of our stores,” said 7‑Eleven Chief Digital Officer Raghu Mahadevan. Legacy players like 7-Eleven can’t be discounted in the race for futuristic ultra-convenience. Continual innovation and digitization by startups and heritage brands alike is only going to make it better for customers, who can get what they want, right when they want it—and with a seamless experience to boot.
Doordash & Goldbelly
Doordash has added nationwide shipping to its app, allowing customers to order dishes from popular restaurants around the country. So even if you don’t live in New York and you’re craving a delectable pork bun from Momofuku, or a legendary pastrami from Katz's Delicatessen, you can get it delivered straight to your door. This is a direct play to steal some of Goldbelly's marketshare, which currently partners with 900 restaurant partners across the U.S. While they are a second mover, DoorDash is betting that its strong brand recognition and category reach will entice its current network of restaurant partners to offer nationwide delivery and bring new restaurants onto its platform. Meanwhile, Goldbelly has eyed growth in a different direction: food media. The brand recently announced Goldbelly TV—think Food Network, QVC, Master Class. Combining celebrity chefs, e-learning, and e-commerce in a single video platform, Goldbelly TV will drop new videos every week so consumers can fall in love with a dish, hear from the chefs, then literally consume the content. While the restaurant delivery war is far from won, we love seeing new ways these brands are engaging with customers.
Sources: The Verge, TechCrunch, Morning Brew, Below the Line, Progressive Grocer, Fast Company