With consumers expecting everything on-demand, digital commerce has become table stakes. But scaling delivery while maintaining margins isn’t easy—especially in a business built for speed and efficiency. On a recent episode of the CSP "At Your Convenience" podcast, CSP's Vice President of Content Strategy Abbey Lewis sat down with Justin Jackson, president and chief revenue officer at Lula Commerce, to talk about what works, what doesn’t, and how to build a digital strategy that drives results.
“At Your Convenience” brings industry experts and analysts together with CSP editors to discuss the latest in c-store news and trends. From mergers and acquisitions to foodservice and technology, the podcast delivers the story straight to listeners in short-format episodes, perfect for the morning commute or a quick break at the office.
Listen to their conversation above, or read a portion of the transcript here, which has been edited for length and clarity:
Abbey Lewis: I wanted to start out with the big picture. One of your main areas of focus is on the evolving landscape of digital commerce and delivery for convenience stores. Why is this important right now? And what key challenges do you see retailers struggling with the most?
Justin Jackson: When you look at growth rates in delivery, it's clear that customers are evolving as fast as ever. In many ways, that's accelerating. I think of it as they're redefining convenience…at a time when c-stores are looking to maximize revenue per square foot, maximize productivity of their fixed cost investments, etc. So, the challenge is that some of the necessary tasks with delivery, with digital, scale at the store level…
Lewis: By the sounds of it, retailers really kind of often debate between building their own delivery channels versus relying on third-party platforms like DoorDash and Uber Eats. What's the right mix and how can retailers really optimize both channels?
Jackson: Yeah, so I don't know that I have the perfect answer for the right mix between the two, but I can tell you what we see: at the best of the best [chains], they probably do about 50% of their orders from first party. And it kind of trails off from there. We see folks doing, you know, only 10 to 15% from first party and I think they can get better over time. I think the key though is you got to do both. And what we see with most retailers is starting with third party gets the orders flowing.
Lewis: I want to talk a little bit about pricing strategy and how critical that is. How do retailers avoid excessive discounting and maintain their competitive edge?
Jackson: I would say that the value in delivery is not pure cost. So, let's start there. This isn't like whoever's going to have the cheapest. I mean, I guess if you're in a commodity business and you're saying, you know, all my customers are going to want Snickers and some ice cream and a six pack of beer, you do run the risk of a race to the bottom in that sense. But what we're seeing work really, really well is figuring out what you can be known for—figure out what's different about your brand and your store. It could be prepared food, which we see works a lot… And what we see is that when a customer goes in, orders, like ‘I have to have that pizza, I have to have that burrito or that burger.’ [At that point,] they're less sensitive to the price they're paying in terms of a markup for that six pack of beer or the 20-ounce bottled beverage that goes along with it. And I think that's one of the biggest advantages that convenience stores have is that if you go to a restaurant and you order a burger, you're like, I'm going to get the burger and the fries. I can get some cool sides, maybe one of three or four desserts and I might get a fountain beverage... But when you can order from convenience and they serve food, you can get an awesome prepared food selection, but you have the whole store to select from. And so, you can get something for everybody. And I think that's what we're seeing is like the differentiator is how do you build that overall basket selection for customers and lead it with something really cool and different.
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