Subscription Plans for Supermarket Delivery?

The Lempert Report
June 17, 2016

And what about mobile?

Amazon announced expansion in food delivery.  Uber Eats expands to 7am to 1am and test deliveries from farmers markets. Silicon Valley is hot on food delivery and plowing tons on VC dollars into start ups like Munchery who introduced its subscription dining plan for $8.95 per month or $85 per year in exchange for a 15-20% discount on entrees.  Postmates subscription plan is charging customers $10 per month in order to bypass delivery fees on orders of $30 or more from partnered restaurants. And Sprig charges the same $10 per month to bypass delivery fees.

So is a subscription plan the way to go for supermarket delivery?  The subscription model helps drive customer loyalty and encourages use of a the platform more often instead of turning to competitors.  And what about mobile? 

Starbucks turned to mobile order-ahead apps to extract higher sales, intensify customer loyalty, and heighten foot traffic. It worked. Taco Bell sees 30% higher average order values on mobile compared to in-store, and Starbucks' Mobile Order & Pay already represents 10% of total transactions at high-volume stores, directly contributing to increased company sales.

Mobile order-ahead is still in its early days, and supermarkets haven’t even put their toe in the water, except those using Instacart, but that leads to more retailer agnosticism.  

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed Mobile Order-Ahead Report that profiles the companies that have proved the mobile order-ahead concept and analyzes the trends contributing to this new industry's growth.

One key takeaway:  Mobile order-ahead apps — platforms that enable consumers to remotely purchase menu items for in-store restaurant pickup — are on the rise among quick-service restaurants (QSRs). He expects sales on these platforms to reach $38 billion by 2020, representing a five-year compound annual growth rate (CAGR) of 57%.

It’s time for supermarkets to realize that both the subscription model and order ahead platforms has a place in the aisles.