The Grocery Delivery Wars are Upon Us

The LocatorX Team

September 27, 2019

September 27, 2019

Food is a sacred experience with no true parallel. It’s a tie that binds us across our genetic, cultural, and political differences. This includes the grocery shopping process all the way to sharing and eating meals.

In a tech-crazed world, grocery stores are still a largely analog industry, where people gather to browse and shop for food. But for millions of consumers, grocery shopping is a chore that cuts into family time and requires stressful commutes. The tradition of food shopping has been slow to evolve in the Digital Age, and 50% of consumers say grocery stores haven’t figured out how to adopt technology like other retailers.

That’s all about to change.

Online grocery delivery has been around as far back as 1989, when the Chicago-based Peapod launched its service in conjunction with local grocers. Today, 30 years later, several of the largest companies in the world — along with some buzzworthy startups — are making grocery delivery a major priority, enabled by groundbreaking software and hardware.

As these technologies continue to be refined and scaled, the real challenge for these companies now lies in convincing consumers to choose one service over another. The Grocery Delivery Wars are officially upon us, as the $840 billion grocery industry faces its biggest transformation in history. 

Back in June, Walmart unveiled its InHome Delivery service, which allows customers to have their groceries not only delivered but also placed safely in their fridge/freezer by delivery associates. This is the latest chess move by the largest company in the U.S., which already offers home grocery delivery in 200 metro areas. The retailer plans to offer same-day grocery delivery from 1,600 stores by year’s end, while the InHome service continues to spread into different markets.

Not to be outdone, Amazon is testing a two-hour delivery program in 30 cities that leverages the company’s acquisition of Whole Foods. Customers in these test markets can order food directly through the Amazon website and have it delivered from their nearest Whole Foods location, without the need for an additional app. 

The online retailer has offered grocery delivery of sorts since 2007 with its AmazonFresh subsidiary. But after a $13.7 billion dollar deal to acquire Whole Foods in 2017, Amazon is looking to make itself synonymous with grocery shopping, and has the resources and brand reputation to do so. 

With that being said, there’s more to this burgeoning battle than these two heavyweights. Grocers and tech startups alike have been making continuous strides in the grocery delivery game, with noteworthy innovations and successes along the way.  

For example, the Nuro robotics company — in a partnership with Kroger grocery stores — has launched autonomous delivery pods that allow for unmanned grocery delivery. Initially, the service relied on a fleet of modified Toyota Prius vehicles. With the introduction of a proprietary delivery vessel, Nuro is proof positive that advancements in the space are not limited to the world’s richest retailers.

"Our autonomous delivery pilot with Nuro over the past few months continues to prove the benefit of the flexible and reliable technology," said Yael Cosset, Kroger's chief digital officer, in a statement quoted on CNET. "Through this exciting and innovative partnership, we are delivering a great customer experience and advancing Kroger's commitment to redefine the grocery experience by creating an ecosystem that offers our customers anything, anytime, and anywhere."

Similarly, the Massachusetts-based Stop and Shop worked with the San Francisco team at Robomart to introduce driverless grocery vehicles in the Boston area earlier this year. Rather than deliver complete grocery orders, this service allows customers to request pre-stocked vehicles to arrive at their front door. Once these mobile storefronts arrive, customers can choose what they want from the shelves, and be automatically charged for their selections through RFID “check-out free” technology. 

“Robomart adds another element of convenience as it is the first to actually bring the grocery store to the customer and let them shop right at their doorstep,” said Stop and Shop Director of External Communication, Jennifer Brogan, in an interview with Forbes. “It helps meet a clear demand among customers to hand-select their own fresh produce — without having to travel to the store.” 

There are a number of digital companies that have helped to shape the grocery delivery space up to this point, as the mainstream has gradually come around to the concept. FreshDirect, for instance, hit the scene in New York City back in 1999, with home delivery of groceries from its own distribution center rather than an existing grocery chain. Fast-forward and the company generated between $600 million and $700 million in 2017 alone, while moving into a state-of-the-art 400,000-square-foot headquarters in 2018.

Startups like Instacart, Postmates, and Burpy contributed in their own way over the past decade, with on-demand personal shoppers who travel to nearby grocery stores and fulfill customer orders. Instacart, which went live in 2012, was recently valued at $7.6 billion. In a recently announced partnership, the San Francisco-based private company will help Walmart expand its delivery capabilities across Canada.

According to a recent consumer survey, 81% of American adults have yet to order from a grocery delivery service. But online grocery shopping in the U.S. is projected to double from $14.2 billion in 2017 to nearly $30 billion in 2021, and this momentum is exemplified by Amazon and Walmart’s respective plays for power.

Grocery delivery is not only a step forward for convenience, but also energy conservation. University of Washington research shows that these services can cut carbon emissions by at least half when compared to individual trips to the store. If the sustainable packaging movement is any indication, these benefits may be central to the Delivery Wars, and inspire those on the fence to invest in these services. 

The in-store experience will continue evolving right alongside the grocery delivery space, with automated checkout and AI-assisted “micro-fulfillment centers” gathering steam. Grocery delivery, though, may be the talk of the industry for the foreseeable future. In the next few years, we will find out if delivery is just another option for consumers or if it will become the preferred choice, putting brick-and-mortar grocers on the chopping block.

Food remains the most sacred, unifying item in our lives, and is not something you can replicate with technology. How we acquire food, though, is long overdue for an update. As the Grocery Delivery War heats up, it will be an exciting time for shoppers and retailers alike.

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