Startup Uber is delivering convenience store goods to wealthy neighborhoods in D.C. Could your town be next?
By Erin Rigik, Senior Editor
Uber, a venture-funded startup and transportation network company that connects passengers with drivers of vehicles for hire and rideshare services via a mobile app, is piloting a c-store items delivery service in Washington, D.C.
This week, the company announced that it hired former Obama adviser David Plouffe as senior vice president for policy and strategy, and is testing a program called “Corner Store,” that will deliver more than 100 items—including in categories such as bottled drinks, first aid, candy and snacks, and baby items, among others—with no delivery fee to customers.
The service specifically targets customers seeking convenience items.
Customers just select the corner store option in their Uber app, Monday through Friday, 9a.m.-9 p.m., set a delivery location, meet the driver outside to place the order, and then the items are charged direct to the Uber account, where users can register their credit card. Then the driver fills the order and returns with the delivery.
Now, only two delivery zones are available, and both are in sections of Washington, D.C., including northwest D.C. and the Capital Hill area.
New Industry Players
“Home delivery services have been around for some time; however, technology and new industry players are introducing different business models,” noted David Bishop, managing partner of Balvor LLC, a sales and marketing firm that specializes in convenience and grocery retail. “The operating models differ based on a range of variables, including supply chain, organizational structure, product offering, customer service and pricing—to name a few.”
Indeed, other such virtual grocery services include Instacart, which delivers in as little as an hour by connecting customers with a local personal shopper who picks up groceries from the desired store; and offerings from Internet giants such as AmazonFresh, which offers same-day and early morning delivery of fresh groceries, everyday essentials, local products and Amazon.com items; and Google Shopping Express, which gives members free unlimited same-day deliveries.
“Uber is in a ‘test and learn’ mode,” said Bishop. “Their initial offering appeals primarily to a quick trip that includes one or a few items that are mainly HBC and general merchandise products with a very limited range of candy and non-alcoholic beverages. From this perspective, they’re testing a ‘blue ocean strategy’ as other industry players are competing for the stock-up and fill-in trips. The question that needs to be answered is, ‘how will they make money doing this while still delivering value to the consumer?’
Convenience Store Threat?
Bishop noted that whether Uber or any of the other services are a threat to convenience retail depends on the type of markets and needs served by the operator.
“What convenience retailers should take away is how are they thinking about expanding beyond their core offering to grow market share. For instance, Casey’s is driving growth through the expansion of its pizza-delivery program, while Wawa extends its reach by offering signature products like its coffee beans online for those who are no longer close to a store location,” Bishop said.
Jeff Lenard, vice president, strategic industry initiatives for NACS (National Association of Convenience Stores) noted that the news of Uber’s offering reconfirms that what our industry provides—convenience—continues to increase in importance.
“The definition of convenience continues to evolve from extended hours of operation and convenient locations to a new set of definitions, many of which involve mobility,” Lenard said. “It is clear that change continues at an ever-accelerating pace as more companies seek to deliver on the promise of convenience. It’s important for retailers to stay apprised of these trends, but also to continue to pay attention to what the consumer wants. Bells and whistles don’t necessarily translate into profits.”
Constant Evolution
Indeed, in today’s environment companies are striving for ways to increase convenience and innovation, often taking the product right to the customer. Starbucks, for example, is now piloting coffee trucks at three colleges, including Arizona State University, James Madison University in Virginia, and Coastal Carolina University in South Carolina. The pilot is part of Starbucks’ quest to find new store formats beyond the typical retail outlet in order to reach more customers.
As technology opens more doors to innovation going forward, and other channels converge on the convenience segment, thinking outside the box to best meet customer needs will become a key strategy.