Third-Party Delivery Apps Are Stealing Your Customers. Here’s How to Regain Control

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Think grocery’s biggest problem is inflation? It used to be. These days, it’s third-party vendors like Instacart who impact your results in an already margin-thin business. Add in retail giants like Walmart, who are rolling out their own grocery delivery services as new services continue to pop up, and that impact becomes even greater.

The simple truth is that, when grocers allow third-party services through their doors, they hand over valuable ad revenue and—more importantly—customer loyalty and relationships. The good news? There is a solution.

It’s time for you to regain control of your customer relationships and advertising dollars. If you want to remain competitive with third parties and retail giants, you need to own the customer journey, increase basket size, and recapture your customers’ loyalty.

Don’t Let Third-Party Services Put Your Reputation on the Line

When a customer purchases through a service like Instacart, they don’t communicate directly with the retailer — meaning you lose the chance to personalize your messaging, products and coupons. Instead of collecting first-party data and loyalty memberships when a customer places an order with you, your valuable data ends up in the hands of these third-party services.

This communication gap then snowballs into concerns around price perception. Often, grocers need to raise prices through these services to offset fees, but third-party apps don’t highlight that the increased prices are specifically due to delivery. This leads to a mistaken belief by consumers that the grocery store is more expensive than others, hurting their reputation and stifling the chance to build affinity. On top of that, grocers using these apps lose the chance to leverage relationships with CPG partners to monetize retail media opportunities.

For some, the convenience of these apps far outweighs the damage they do to grocers’ dollars and reputations. But there is a solution to the challenges they create — and it starts with investing in your digital relationships.

3 Steps to Regain Customer Loyalty and Revenue

The immediate challenge that arises when using a third-party app is that they often send customers to other grocery stores. This results in customers becoming loyal to the app — not to you.

But there’s still hope. Consumers largely still shop in stores — 80% prefer to buy groceries in physical stores. So, you can use the brick-and-mortar locations to your advantage to create an optimized retail operating platform that works directly for you.

The trick to regaining dollars and customers is to offer an innovative omnichannel experience unmatched by e-commerce retailers and third-party apps. How do you do it?

  1. You own the digital customer relationship. Don’t give third parties the chance to gain your customers’ loyalty — take control of the customer journey. You can bring the convenience of online shopping to the in-store experience and recapture customer data by creating your own retail app. By doing this, you give customers access to the digital components they’re looking for (like product reviews or online ordering and curbside pickup) combined with the experience of a brick-and-mortar store where they can explore purchase options or enjoy the convenience of immediate pick-up.
  1. You personalize the shopping experience. An engaging and personalized shopping experience needs to be a top priority. Taking back control of customer relationships also means you have the ability to better customize your messaging — and that can help solve price perception issues or threats to your reputation before they even start. For example, if you offer grocery delivery services through your platform, you control the narrative on pricing and delivery fees. You can also tailor messages and offers based on customers’ browsing and buying patterns, and push promotions that incentivize customers to shop in stores. Personalized and relevant offers can also help increase basket size and drive more sales.
  1. You take back your ad dollars. You get the margin-rich retail media dollars boosting revenue and profitability, not the third-party app. If you own the digital customer journey, you can enable the brands you carry to craft their own marketing campaigns on your app, saving your marketing team time and effort. A solution with closed-loop reporting can also help you discover what customers look at online compared to what they’re buying in stores. Closed-loop reporting also measures return on ad spend, which helps you justify investment from brands. By tracking online-to-offline spend, you’ll gain the insights to serve more relevant ads and offers to customers. Additionally, you’ll have the tools to tap into national brand marketing dollars and recapture your share of the digital ad revenue market.

The bottom line is, while convenient, third-party services can undercut your revenue and customer relationships. The key to taking back both is to own and elevate the customer journey. Arm yourself with everything you need to offer a strong, personalized shopping experience that helps you regain ad revenue, drive more sales, and build lasting, valuable customer relationships.

Henry Kim is CEO of Swiftly.