Will Curbside Pickup Growth Sustain?

Data Scout is Localogy’s series that curates and draws meaning from third-party data. Running semi-weekly, it adds an analytical layer to the industry data that we encounter in daily knowledge building. For Localogy original data, see the separate Modern Commerce Monitor™️ series.

Last week we wrote about how Starbucks is signaling the order-ahead era. It’s closing down locations and opening mobile-order-only stores which have better unit economics. Of course this is driven by social distancing, but the question is if it cultivates a consumer habit that’s semi-permanent?

If we extend this principle beyond picking up coffee, it applies to other key retail fulfillment models such as curbside pickup. In fact, it’s currently up 208 percent, led by retailers like Target that have offered it for a while and are now seeing a spike. Sam’s Club just rolled it out nationally.

Another area where this currently resonates is quick-service restaurants (QSR). Tech providers like Rakuten Ready are rising to the occasion with purpose-built software for restaurants to manage fulfillment logistics. For example: knowing when to “fire” an order so it’s ready at the right time.

One of the interesting dynamics is that these are sensible technologies that retailers and restaurants should be adopting in normal times. The irony is that it took a pandemic to accelerate their digital transformation. But the byproduct of that is that they’ll be much better off from the forced adoption.

Another way to think about this — particularly in retail — is that the “retailpocolypse” tore through the sector over the past half-decade, hitting tech laggards the hardest. Those that are now better equipped from pandemic-driven tech integrations may be more capable of fighting off Amazon.

Another notable angle is that order-ahead could finally be the killer app that mobile payments have been waiting for.  The technology fell short of the early 2010’s hype because paying with cash or credit card wasn’t really broken, and the value proposition (tap versus swipe) was underwhelming.

But mobile payments have gained traction where they address real consumer pain points, like saving them time. This is why Starbucks’ skip-the-line functionality has been so successful. Uber is in the same boat, given transactions that eliminate post-ride transactions and tipping. Just walk away.

These mobile payment success stories now take on new meaning because they support social distancing. Order-ahead has seen forced adoption via mandate. But through that process, as noted above, many consumers could realize its time-saving advantages and develop a new habit.

In other words, retail-enablement technologies are being given the chance to shine. These are not new technologies, but they’re now graced with new demand signals. The question is if current circumstances accelerate their adoption in ways that are positive and permanent.

That will happen if millions of shoppers get exposed to the merits of these streamlined options and like what they see. If so, these technologies — along with virtual-office enablement and eCommerce— could benefit from this period as a blessing in disguise for exposing their value propositions.

This follows the related trend that Covid-19’s economic fallout has a polarizing effect on business. Anything that’s high-touch is clearly suffering, including brick-and-mortar commerce. Quarantine-friendly fare like virtual office tech, e-commerce, and casual gaming meanwhile see usage spikes.

Somewhere between those endpoints are technologies that enable local merchants to operate under social distancing protocols. We’re talking all of the things mentioned above: curbside pickup and other various ordering and logistical engines for retailers, restaurants, and other local merchants.

That means anyone serving SMBs should begin to think about how the order-ahead and curbside pickup era could unfold over the coming months. We already know that SMBs have a greater receptivity now to new technologies. And that’s currently heightened for e-commerce specifically.

The latest wave of Localogy’s Modern Commerce Monitor validates this with 40 percent of SMBs that want to sell more online. The lesson: building or partnering to equip them to fulfill and execute could put any SMB SaaS vendor in a valued, and potentially locked-in, position.

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