- Effects of Coronavirus Pandemic on Food Delivery Businesses
- ‘Leave at my door’ deliveries surge
- Blue Apron makes a comeback
- For more resources from the U.S. Chamber of Commerce:
- Meal Kit Services: A Rise in Consumer Demand | AdRoll Blog
- Flexibility Above All Else
- Be Prepared for Supply Chain Woes
- Maintain Engagement With Personalization
- Expect to See a Continued Surge — and Rapid Churn
Effects of Coronavirus Pandemic on Food Delivery Businesses
Instacart's “Leave at My Door Delivery” feature, initially designed for customers not home at the time of delivery, is also a convenient feature for customers during COVID-19.
For as many people among us who are panic-buying toilet paper and toothpaste (and flipping out at the sight of empty shelves), there are thousands who are skipping the in-store experience altogether and shifting to delivery apps for everything from groceries to lattes and lunches.
In fact, there have been a record number of downloads in the past week alone, according to data from Apptopia, an independent research firm that analyzes the app marketplace.
At the same time, an unprecedented number of restaurants have shuttered across the country.
Analysis from the data science team at Womply of transaction trends year over year at 400,000 local businesses across the country, including 48,000 restaurants and 4,600 bars, revealed that revenue on March 13 was down 19.
6% year over year. “With many restaurants closed or only open for takeout, that number should continue to drop rapidly,” the firm found.
By contrast, “Driven by consumer panic, grocery stores saw their highest daily revenues for 2020 last Friday, with consumer spending up 87.4% year over year,” the analysts said. Relatedly, curbside pickup is also on the rise.
These huge swings on both sides beg the question: Can delivery apps not only help keep us healthier, but also help save the economy during the coronavirus crisis?
“U.S. consumer interest for restaurants has fallen by 54%, and for nightlife businesses by 69%,” according to Yelp’s data science editor Carl Bialik.
“Pizzerias, fast food restaurants, grocery stores, and fruits and veggies shops are all grabbing a much bigger share of the pie than they were a week ago (up 44%, 64%, 160%, and 102%, respectively, in share of daily U.S. consumer actions,” he wrote.
Apptopia’s data suggests that the surge in downloads may prove fruitful. Their report found that March 15 was a new record for Instacart, Walmart Grocery, Shipt and Target that represented an increase of 218%, 160%, 124% and 98%, respectively, over the average number of daily downloads in February.
Now that residents in major cities such as San Francisco have been directed to “shelter in place,” that is, stay home unless they have a medical reason or to obtain necessary supplies, those numbers may get a further boost.
Watch the replay from our latest Roadmap for Rebuilding event, where the panel offers the strategies you need to build a cohesive and productive team, even in this new normal of remote work.
‘Leave at my door’ deliveries surge
Instacart, for one, has taken extra measures to ensure that deliveries can be made as safely as possible.
In a Medium post, the company said, “We've worked closely with a panel of health and safety experts to develop a robust set of guidelines to ensure you’re able to continue shopping safely.
Our goal is to make sure you have the resources you need to take the appropriate preventative actions and make use of precautionary food handling measures.”
That includes its “Leave at My Door Delivery” feature, which the company said was originally designed to provide a more flexible option for customers that may not be home at the time of delivery. In the first week of March, for one, “we observed a significant surge in consumer adoption and opt-in usage of the feature,” Instacart said in a statement.
During that time period, more than 25% of all orders utilized this feature, the company stated.
The following weekend, “Instacart experienced the highest customer demand in its history in the amount of groceries sold on our platform,” the company said in a statement.
“The average customer’s purchase is up more than 20% month-over-month and includes items hand sanitizer, vitamins, powdered milk, diapers, face masks, and canned goods.”[Instacart may have been making safety and convenience a priority for its customers, however, the company's gig workers, who handle the in-store shopping and delivery, are saying otherwise, planning a nationwide walkout on March 30.
They say Instacart is failing to provide hand sanitizer, disinfectant wipes and soap to them for free, nor will it provide hazard pay of an additional $5 per order, the workers say.
Until Instacart provides these things as well as extends paid sick leave to at-risk workers with pre-existing conditions, those participating in the walkout won't be reporting for duty.]
Hungryroot, an online grocery service has also experienced significant growth in both customer acquisition and reorder rates recently, and they expect the uptick in demand to continue.
“We're also making notable changes to both our supply chain and delivery model (e.g.
, same day delivery) to ensure we can continue meeting the demand for those customers in need,” the company said in a statement.
Meal delivery service Blue Apron has experienced stock surges and an increased demand for meal kits as a result of the coronavirus pandemic. — BlueApron.com
Blue Apron makes a comeback
Both Blue Apron and Waitr Holdings meal delivery services experienced stock surges, as demand has increased for their meal kits. Waitr stock increased tenfold.
To meet this demand, Blue Apron’s CEO Linda Findley Kozlowski said in an emailed statement: “We are hiring for temporary and permanent positions in our Linden, New Jersey, and Richmond, California, fulfillment centers and hope to create employment opportunities for individuals who may have been displaced by the restaurant or foodservice industry.”
For it’s part, Starbucks has moved to mobile ordering and takeout only as of March 15. The company declined to provide details on the number of app downloads or business metrics at this time.
Not all delivery options are experiencing this surge. Even with contactless delivery, Uber Eats, Grubhub, DoorDash and the are reportedly slowing down, in part as consumers reacted to both the expense of ordering prepared meals from restaurants and the relative safety of knowing how their food was prepared at home.
The upshot, according to Bain analysts, was that it’s unclear whether the economy of food will carry us through these uncertain financial times.
As Marc-André Kamel and Joëlle de Montgolfier wrote, “Few businesses could hope to predict the course of the pandemic with any accuracy.
However, retailers do have the power to quickly develop and roll out contingency plans to address the crisis head-on and ensure business continuity, while playing their role in minimizing the virus’s spread.”
For more resources from the U.S. Chamber of Commerce:
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Published March 30, 2020
Meal Kit Services: A Rise in Consumer Demand | AdRoll Blog
Last updated: April 29th, 2020
Since the coronavirus outbreak, there’s been a profound, necessary shift in consumer behavior. Shoppers are making fewer trips to grocery stores and are instead turning to apps to replenish their food supplies and essentials. They’re also unable to go out to their favorite restaurants and are instead left to fend for themselves in the kitchen.
With that extra time (and extra appetite for delicious, comforting food), more people are turning to meal delivery services. Companies Blue Apron and HelloFresh are already seeing a surge of new customers as an indirect result of this trend.
While this is excellent news for meal kit services and those who can pivot into the space, this industry has historically struggled to retain customers long-term.
Brands, now more than ever, will need to bring a customer-centric view to their product, marketing, and business model to improve this trend and maintain this growth even long after the crisis is over.
Flexibility Above All Else
Because a lot of living situations are temporary, and many people are finding themselves in uncertain territory with their finances and jobs, customers need to know that brands are willing to work with and around them. According to Guy Marion, Co-Founder, and CEO of Brightback:
One of the most attractive things meal kit services could be doing right now is offering flexibility.
“Flexibility” means expanding delivery options, free access to other offerings from the company, creating a loyalty program, or credits that a customer can use in the future. It also means giving customers the power to control their subscriptions without having to hop on the phone. There should be an easy way for people to skip deliveries or pause subscriptions without penalty.
In short, you should always do right by the customer and operate in a way that makes their lives easier.
For more on how to create a loyalty program:
Customer Loyalty Programs: Engage Your Customers
Be Prepared for Supply Chain Woes
However, flexibility doesn’t mean you shouldn’t be prepared. For instance, let’s take a look at Blue Apron. While they’ve historically struggled to retain customers and stay in business, they’re now seeing a huge boom in new customers — and many other retailers, they’re struggling to keep up with the intense demand.
In a post, Linda Findley Kozlowski, President, and CEO of Blue Apron wrote: “Within the span of 48 hours, we saw an increase in orders that surpassed the staff we had in place to fulfill this higher-than-expected demand, and this caused some challenges in our fulfillment process.
Even with streamlining our operations, we had to delay a subset of orders and informed some customers that we would not be able to send them a box until the week of March 30.
We had to make some changes faster than we were able to communicate them to you and understand the frustration this may have caused.”
And it’s not just Blue Apron that’s caught off guard — HelloFresh has also struggled to meet demand and deliver meal kits on time. Many customers recently received emails informing them of delays due to supply chain disruptions.
Of course, it’s impossible to completely avoid sudden changes we’ve experienced with COVID-19, but there are a few things brands can do, and it all comes back to alignment.
To avoid these hiccups, it’s essential to align your marketing initiatives with the entire supply chain. This means being mindful of your advertising efforts and what you put out there.
For example, if you’re unsure of whether you can accommodate a certain amount of customers, avoid going on an ads spree to reel in more business than you can’t handle.
And if your business finds itself in an unfortunate situation? Honesty and transparency are both key in communicating disappointing news, that the meals they selected won’t be there on time.
Keep your customers in the loop — be proactive with your statements, and let your customers know what you’re going to do to make it right.
Then, going forward, let your customers know exactly what they can expect and why.
For supply chain and manufacturing resources:
Manufacturing Resources: Plugging Supply Chain Gaps Left by the Coronavirus Outbreak [LIST]
Maintain Engagement With Personalization
Today’s customer expects personalization whenever they interact with brands — and that means more than just addressing emails with their first name. According to Nicole Amsler, Vice President of Formation.
ai, “To keep customers engaged, brands need to focus on increasing the relevance of their offers and communications.
To do this, these companies need to have access to real-time customer insights and leverage technology artificial intelligence (AI) and machine learning to speed and scale up the process of understanding what customers want and developing and fine-tuning promotions that address these motivations.”
For meal delivery brands, that might play out with customized meal recommendations, automatic reorder notifications with custom recommendations previous behavior, or personalized offers to encourage customers to refer or purchase additional products.
For personalization tips:
Personalized Marketing: 7 Actionable Tips
Expect to See a Continued Surge — and Rapid Churn
While experts suggest the peak of the virus has passed, there’s still an expected surge of new sign-ups for delivery and meal kit services throughout the rest of the year. However, as social distancing restrictions loosen, these companies should prepare for potential rapid customer churn. Brightback’s Marion thinks:
The winners will be those that successfully retain the new customers they’ve gained this year. There’s a lot to learn from an influx of new customers, and the companies that commit to finding these answers and making changes will survive that future transition.
Throughout this year, meal delivery brands should focus on retention and serving the customers they currently have while intentionally scaling their ability to handle more customers. Here are some examples of the processes and initiative that might include:
- More focus on personalized, agile email communications
- Better feedback loops from customers to the right teams
- More focus on gathering and using customer data
- Identifying weak points in the customer lifecycle where customers are ly to churn and finding solutions to plug the holes
- More alignment between supply chain and marketing teams
The brands that win will be those that are closest to their customers, most able to pivot intentionally, and most aligned internally.
Now that you’ve read about the rise of meal kit services, let’s explore why the online grocery industry is changing.