Amazon announced their intention to buy Whole Foods and the grocery store industry is all shook up. Stock prices for all other chains, including Target and Wal-Mart, took a dip. But what does this mean for shoppers? Could this be what it takes to make grocery store delivery services mainstream?
The Past, Present and Future of Online Grocery Shopping
In 1996 Webvan was the first online grocer. They couldn’t pull it off though. Customers were slow to warm to the idea and the cost of maintaining a fleet of vans, warehouses and inventory cause the company to buckle. Since then, we’ve seen established grocery store chains dabble in delivery but nothing’s really stuck. Locally, here in Louisville, KY, there’s been some buzz about Kroger’s new ClickList service. Shoppers order their groceries at home and then cruise by the store to pick up their already-bagged purchases. This represents the middle ground between traditional grocery store shopping and a delivery service.
Instacart is a grocery delivery service. Wired magazine covered them a few years ago, highlighting how this lean startup is different from Webvan. One of the key differences is that their users select their groceries from the stores they already know and love, so Instacart doesn’t have to deal with inventory or storage space.
Around the same time as the Wired piece was published, Amazon rolled out AmazonFresh to select cities. AmazonFresh allows shoppers to order groceries the night before to receive them in the morning or in the morning to receive them by evening. They also partner with local places like bakeries. Users must spend at least $50 per order to avoid a delivery fee and pay a $299 annual fee for the service. It’s likely that with the purchase of Whole Foods, AmazonFresh will be able to cater to a larger sector of the country and, perhaps, at a lower price point, too.
Also, single unit reception boxes – That’s us! – and multi-unit boxes like Amazon locker are making it more affordable for grocers to roll out their own delivery programs. They can save as much as 45% to 55% and 55% to 65% of costs respectively.
Is Grocery Delivery Better For the Environment?
Once it’s more commonplace, grocery delivery will have a positive effect on the quality of life of many demographics, such as the elderly, people with disabilities and those who rely on public transportation. But should every make the switch? Is grocery delivery greener?
According to a 2013 study, yes: “A lot greener — the study found that delivery-service trucks produced 20% to 75% less carbon dioxide than the corresponding personal vehicles driven to and from a grocery store. If the delivery service employed routes that clustered customers together, to minimize trips, the savings were even higher.”
So, the more you and your neighbors embrace the ease of having your groceries delivered to your door, the better it is for the environment. But are we ready to try something new and leave behind the way we’ve always done our grocery shopping? If meal-kit delivery services like Blue Apron are any indication, then the answer is yes.
Blue Apron and Others Making It Mainstream
Last week, it was announced that Blue Apron is going public. The startup has been valued at $2 billion. While Blue Apron isn’t without its challenges – like retaining customers and business fluctuating by season – it has created substantial brand awareness and proven that many people are open to trying out the ease of having food delivered to their homes. There are now a handful of companies playing in this market, many targeting niche communities like the Beyoncé-approved vegan meal delivery service 22 Days Nutrition or Martha Stewart’s Marley Spoon.
Target and Wal-Mart are already responding to the Amazon-Whole Foods news with interesting, new initiatives. Wal-Mart is getting creative by offering employees the opportunity to make extra money by delivering packages on their way home and creating convenient grocery store kiosks in their parking lots. Shoppers can pre-order their groceries then use a special code to retrieve themselves without the assistance of a Wal-Mart employee.
Target going to compete directly with Amazon’s Prime Pantry program with a new Restock program currently in pilot. Restock gives you the convenience of next-day delivery on all the household items you use on the regular without requiring a Target – And delivery is $1 less than Amazon’s.
What are your predictions for the future for grocery shopping? Tweet us your thoughts.