Virtual store banners - an emerging omnichannel trend

Kroger and Instacart are partnering on the new Kroger Delivery Now banner.

An online storefront is nothing new, but what if it represents a brick-and-mortar-style store brand?

As the lines between virtual and physical retail continue blurring, retail is beginning to see a new type of digital store that combines the curated assortment and quick fulfillment of a brick-and-mortar outlet with the connectivity and reach of a website or app.

On-demand delivery platforms DoorDash and Instacart, as well as grocery giant Kroger and a variety of quick-service restaurant retailers, are all operating in this unique corner of omnichannel commerce. Following is a closer look at how virtual store banners are developing as a new seamless consumer touchpoint.

DashMart - The O.G. online convenience banner
In August 2020, DoorDash took the pioneering step of opening its own online storefronts, stocked by participating retailers. Known as DashMart, this banner offers both household essentials and local restaurant products for on-demand delivery.

The DashMart assortment includes thousands of convenience, grocery and restaurant items, such as ice cream, chips, cough medicine and dog food, spice rubs, and packaged desserts. DoorDash is partnering with both national and local convenience, grocery and food service retailers to stock DashMart stores, which the company owns, operates, and curates.

In addition to creating a “chain” of online stores with a locally targeted and sourced product assortment, DoorDash says it launched Dash Mart with the intention of helping small businesses grow and succeed. This angle will also allow DoorDash to use DashMart as a back-door means of discovering new local businesses as potential customers of its third-party delivery services. 

Kroger Delivery Now – A different approach to online convenience stores
Kroger and Instacart are opening an online convenience store with on-demand delivery.

Known as Kroger Delivery Now, the new service features an assortment of 25,000 convenience items from Kroger’s inventory and fulfills orders from the grocer’s existing network of more than 2,700 stores across a variety of banners. Kroger first partnered with Instacart to provide online delivery from its stores in 2017.

Instacart customers will also be able to shop the Kroger Delivery Now convenience assortment for 30-minute fulfillment via the new Instacart Convenience Hub. Customers in nearly every major U.S. city can now shop for convenience products 24 hours a day, seven days a week, with free priority delivery in as fast as 30 minutes for Instacart Express members on orders over $10.

Rather than focus on individually stocked storefronts, Kroger Delivery Now and Instacart Convenience Hub fulfill from local Kroger stores, but offer a consistent national product assortment. However, the companies are still creating a more “store”-like experience with convenience-centric inventory and 30-minute fulfillment.

Quick-service – Brands without stores
Media reports indicate a number of leading quick-service chains are launching brands that exclusively serve customers using third-party delivery platforms. These subsidiaries do not have any physical presence, but offer limited menu items targeted at digital customers, such as pizza, chicken wings, and hamburgers.

Orders for these virtual brands are fulfilled from existing brick-and-mortar locations of the parent company. In some respect, the virtual delivery brand trend is similar to the rapidly-growing “ghost kitchen” concept.

The Cosmic Wings brand Applebee’s operates in partnership with Uber Eats, as well as the Denny’s Melt Down and Burger Den brands, and the Wingstop Thighstop banner (delivered by Wingstop and DoorDash), are all current examples of this model.

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