Grocery Delivery: The next big thing

Online shopping may be growing in popularity, but there's still a lag when it comes to grocery delivery.

Online shopping may be growing in popularity, but there's still a lag when it comes to grocery delivery. The big names, Amazon, Walmart, Peapod and Fresh Direct are all working hard to keep up with the convenience and service that time pressed consumers want. But these days, with the amount of insight retailers have into customer needs and metrics and more valuable experiences to draw from, could grocery delivery be more profitable not only for them, but for a multitude of regional and local operators? Could a successful formula include same-day service on a large scale? We at The Lempert Report, believe the answer hinges largely on the state of the economy, the value equation for consumers, the ease of ordering on mobile devices, cost controls, and the quality of execution by delivery services. So it may be interesting to watch as some of the big names try and amp up grocery delivery. For example, according to Reuters, Amazon Fresh, limited to Seattle since 2007, is California-bound and could be in as many as 40 major urban areas by 2014. According to Forbes, Walmart is pushing their "To Go Delivery" and the company aims to do $9 billion of its 2013 revenues on the Internet. Clearly, that includes food. And then there are the local players. Peapod has learned how to intercept commuters on their train rides home to secure delivery orders. And FreshDirect has a new 500,000-square-foot operating facility in the South Bronx, giving it “the capacity to more than double the size of its business,” says Direct Marketing News. And finally, the Entrepreneurs are pushing out some new ideas. For example: Instacart. A company that hires personal shoppers to buy and deliver groceries from Safeway, Whole Foods and Trader Joe’s. So…watch this space! According to IBISWorld, online grocery shopping will continue to grow 9.5% annually to reach $9.4 billion in 2017, up from $6 billion in 2012.