Cub Partners with Capstone Logistics for Grocery and Liquor Delivery

Customer Profile

Cub is an American supermarket chain operating stores across Minnesota and Illinois.

Project Snapshot

The Capstone and Cub solution for grocery and liquor home delivery created efficiencies that lowered total operating costs and enabled Cub to improve the end-to-end customer experience.

The Challenge

Supermarket News projects that online grocery sales will grow to 21.5 percent of the total U.S. grocery market by 2025 (Source). The most popular channels for grocery e- commerce are delivery apps like Amazon Fresh, Instacart, and Mercato. Grocery delivery apps are convenient for shoppers but can threaten retailers’ profitability and customer service.

A study by Incisiv found that 86 percent of grocery retailers are dissatisfied with their online profitability and 56 percent lose money or make less than 10 percent average margin per online order. The study projects that grocers could lose $14 million in gross margin per billion dollars in sales by 2025 with current business models. Moreover, 84 percent of grocery retailers believe they will lose touch with their customer base because of grocery delivery apps (Source).

In the face of this grim reality, it is critical that grocers find a way to offer omnichannel fulfillment while protecting their margins and customer relationships. Cub needed to create a digital shopping experience that was intuitive for customers, logistically frictionless, and profitable. They were relying on a popular grocery delivery app for their direct-to-home delivery service, but the solution was expensive (10 percent per order) and took the end-to-end control and branding out of Cub’s hands. To address this challenge, Cub turned to Capstone Last Mile who built a branded solution that gives Cub total control from online ordering through final delivery.

The Solution

Capstone supplies the necessary tools and support without stepping between the retailer and their customers. To help Cub create a profitable grocery delivery service, Capstone deployed 300 independent contractors to handle deliveries from 80 grocery stores and 26 liquor stores. Using their proprietary platform, MileZero, Capstone optimizes route planning and batches deliveries to multiple customers, lowering the overall cost.

Through a Cub-branded app built by Capstone, shoppers can order like they would on any grocery delivery app. They see driver details, receive text and push notifications, and can tip drivers directly in the app. The biggest difference in working with Capstone is that Cub has access to all the shopper data. Through the app and product label scanning, Cub receives real-time details on their customers’ orders as well as daily, weekly, and monthly service dashboards that track important data points like customer satisfaction (tracked through driver surveys in the app) and on-time delivery percentage.

With Capstone, Cub’s grocery delivery service is no longer a separate entity—it’s an extension of their brand. By investing in an in-house solution, Cub is lowering their operating costs, strengthening brand integrity, nurturing customer loyalty, and growing market share.

The Results

By quickly implementing dependable transportation solutions, the Shipper’s pharmaceutical products have continued to arrive safely and on-time at receiver locations. Because they did not have to turn to the transactional spot market or run the risk of dealing with non-trustworthy carriers, the Shipper’s costs remained aligned with forecasts, and life-saving products remained available on store shelves when consumers needed them.

Because Capstone has quickly become a proven carrier for the Shipper, they are now handling more contracted and dedicated opportunities as a Preferred Truckload Carrier Partner. In fact, they are one of only four total carriers that have earned this designation.

Capstone continues to execute on the Shipper’s most high-visibility opportunities and problematic lanes that other carriers simply cannot handle.

Benefits of Partnering with Capstone

The Partner Owns Their Customer / Transaction Data

Unlike digital marketplaces, partners own all their customer data and can leverage it to inform logistic decision-making and marketing.

Capstone Provides Dedicated Drivers at Store Level

Creates familiarity between Capstone, the partner’s store, and their customers.

Partner Branding is Used from Start to Finish

Drivers are branded by the partner to enhance the relationship between store and customer.

Capstone’s Delivery Model Lowers Miles & Increases Efficiency

Drivers deliver to multiple customers with “loops” to create efficiencies and reduce costs to the store – fewer miles driven and simplified returns.
Stores are grouped by territory and serviced by the same drivers to further increase productivity and group low volume stores with high volume stores.
Flexible handling (warm / cold devices, bagless, etc.)

Capstone Last Mile versus Crowd-Sourced Grocery Delivery Apps

Cub chose Capstone because their operational strength and technology enhances the customer experience. Capstone can provide Cub with more control, more efficiency, and lower costs than competitors.

The Results

The Cub and Capstone grocery delivery pilot program was tested on 80 grocery stores and 27 liquor stores in Minnesota. Capstone completed between 400 and 500 orders each week and maintained a 99.2 percent on-time percentage throughout the pilot. Due to the success of the program, Capstone received the green light to onboard their solution at more Cub sites and ramp up orders to 6,000-7,000 per week.

Grocery Stories in Pilot Program

Liquor Stores in Pilot Program

400-500

Orders Per Week in Pilot Program

99.2%

On-Time Delivery in Pilot Program