Technology/Services

The Good, the Bad, and the Future of Last Mile Services

Photograph courtesy of Intouch Insight

Precipitated by the rise in health and safety concerns in 2020, brands worked quickly to roll out any and all alternative shopping methods they could in order to connect with their customers. But, despite the availability of these services, consumers were somewhat slow to adopt these additional methods of purchasing from their favorite convenience stores.

In fact, the usage of these services even dropped in the fall of 2021. However, this past summer, there was a 47% increase in consumers reporting having used alternative shopping methods such as curbside pickup and delivery to complete a purchase from a convenience store.

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Opportunity around prepared food

The growing adoption of alternative shopping methods continues to make brands more accessible to consumers. While curbside pickup has remained an important service, the increased use of last mile services can be mostly attributed to ordering for delivery.

For convenience stores, this presents an opportunity to grow their market share, especially around prepared food. When asked what they typically purchase in-person from a convenience store, consumers listed gasoline as the leading item, with prepared food coming in fifth. However, prepared food was the top item purchased from convenience stores when shoppers were using alternative shopping methods.

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Competition with third-party services

While consumers have increased their usage of store’s websites and first-party apps when completing a purchase for delivery, the biggest jump has been in the use of third-party apps. These third-party services not only mean ongoing service fees for operators, but they also add an additional layer of separation between brands and their consumers—giving control of the customer journey and relationship to that third party.

Brands that want to retain a direct relationship with their customers will need to ensure they are driving them towards their own first-party apps. The good news is a recent mystery shopping study conducted by Intouch Insight revealed that first-party apps are actually outperforming third-party apps. The bad news is that the competition is very close.

First-party vs. third-party app performance

Overall, consumers gave an 89% satisfaction score to third-party mobile apps, compared to 90% for first-party ones, showing just how close the experiences are. Consumers even gave a slight lead to first-party apps when asked if they would use them again, but the difference was only 3%. The problem is therefore not that first-party apps are underperforming third-party ones, but that they aren’t outperforming third-party apps by a wide enough margin to ensure the majority of consumers choose to use a brand's first-party app.

The rise of third-party services for mobile ordering and delivery has allowed brands to quickly offer these services to their customers, but they are best viewed as a temporary solution. While first-party apps require a heavier up-front investment from brands as well as ongoing management, they ultimately offer brands complete control over their customers' mobile ordering experience—something that will prove important as nearly half of consumers plan to continue to use alternative shopping methods and another 20% could be swayed either way.

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Looking to stay up to date on the latest trends impacting convenience stores? Download Intouch Insights 2022 Convenience Store Trends Report, covering competition with quick-serve restaurants, how convenience is driving coffee sales, making the most of in-person interactions and opportunities around customer loyalty for free here.

This post is sponsored by Intouch Insight

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