It’s got Netflix series written all over it: “Grocery Delivery Wars.”
Imagine drones racing through the skies, festooned with NASCAR-like logos, laden with boxes of comestibles as cohort drivers on the ground try to outwit each other to drop Pop-Tarts and paper towels at people’s doors.
Seem too Sci-Fi? So does a novel virus stopping the modern world cold in just three months.
With digital firmly ascendant and the lure of taking market share from rivals irresistible, a tech-powered throwdown is cooking in the grocery delivery space. There’s no shortage of driving factors, from ongoing pandemic fears to mass unemployment re-popularizing frugal home-cooking. This confluence of forces has practically broken off the growth needle, with PYMNTS reporting July 6 on findings that “In the last 30 days … the number of online [grocery] sales grew over 9 percent, hitting a record of $7.2 billion. That’s up from $6.6 billion in May.”
Put another way, that’s an increase of $600 million in a single month. No wonder everyone from Amazon to Zomato is getting in on the action, either organically or through acquisition. Witness the just-announced $2.7 billion deal under which Postmates joins the Uber platform, and Just Eat Takeaway’s recent $7.3 billion bid to acquire Grubhub. Farther afield we have the Amazon-Deliveroo deal still being scrutinized by U.K. regulators, but considered likely to clear.
Various experiments are underway as players try to differentiate. Uber partnered with Chile-based startup Cornershop for grocery delivery serving select Latin American and Canadian cities. This is in addition to Uber’s previously noted deal for Postmates, which has launched a growing grocery delivery menu. Just Eat Takeaway’s bid to acquire Grubhub was a blow to Uber’s designs on the mobile order-ahead pioneer.
Creative approaches to bringing people back into physical grocery stores is the other side of this coin. To that end, retailers are responding with ingenuity. Walmart moved quickly, introducing its no-contact Express Delivery service in April, then unveiling plans to turn 160 of its parking lots into drive-in cinemas. Reporting a digital surge of 140 percent in the first quarter, Target said “more than 2 million customers used Target drive-up windows to take advantage of its order online/pickup services.” The company just announced it is adding 750 fresh and frozen grocery items for online ordering and contactless pickup at 400 stores this month and 1,500 by year’s end.
Amazon — whose Prime Day has now been moved to September — was swamped by the pandemic grocery surge, so set about hiring 175,000 workers and reprioritizing warehouse operations. For its part, Amazon subsidiary Whole Foods expanded contactless options and reserved special in-store shopping hours for people most at-risk for COVID-19 infection. The company announced it will continue offering shoppers free face masks in Whole Foods and Amazon physical locations, and has expanded unattended delivery options and hours for customers of Prime Now, Amazon Fresh, and Whole Foods Market.
Big Grocery’s big shift first defined itself in March, as PYMNTS research found that, “Among consumers who reported being ‘somewhat’ concerned about the virus and those who reported being ‘slightly concerned,’ 17.1 percent and 8.3 percent, respectively, reported fewer trips to the store to buy food.”
That report, How A Global Pandemic Created A Digital-First Customer In 12 Weeks, also found that close to 137 million consumers “…were grocery shopping less often as of April 11 than they did before the outbreak. And 48.2 million plan to permanently do so less often ever after the pandemic is over. Another 19.7 million will simply not go back to shopping for groceries in brick-and-mortar stores at all.”
Therein lies the opportunity, although the jury is still out on the profitability of grocery delivery services. Venture capital sees something to it, backing plays like Instacart — which uses personal shoppers to fill online grocery orders for delivery — to the tune of $225 million so far in 2020, and bringing the platform’s valuation to a staggering $14 billion.
PYMNTS’ latest Provider Rankings of Aggregators tracks the ups and downs of delivery aggregators, a number of which are adding groceries to their core restaurant order delivery business. The latest Provider Ranking scores the 5-way race for primacy between DoorDash at No. 1, followed in numerical order by Uber Eats, Deliveroo, Grubhub and Instacart.