Shop Talk: Grubhub’s Grocery VP Says ‘We’ll Catch Up Very Quickly’

At a time when its competitors were announcing new grocery options by the hundreds, Grubhub appeared to be hanging back. Still, as it enters the fray, the aggregator sees a path to quickly regain its competitive footing.

In an interview with PYMNTS, Craig Whitmer, vice president of new verticals at the Just Eat Takeway.com-owned on-demand delivery aggregator, discussed how the company’s nationwide grocery launch with Albertsons comes as part of a broader plan to become a key player in the space.

“The early results are incredibly positive for overall growth for a business, and it gets our core restaurant business, even stronger,” Whitmer said. “… The thing is, we know what we need to do to get on par with our competitors. We’ve been almost later in this space than others have. But I feel confident we’ll catch up very, very quickly.”

He argued that the Albertsons launch complements Grubhub’s initial grocery partner, Mercato, an aggregator specializing in small, independent grocery stores. Whitmer emphasized the importance of balancing partnerships with both large national chains and smaller regional players to achieve comprehensive market coverage.

He noted that there is a “very big middle ground” in grocery, with regional chains playing a major role, such that, as the aggregator aims to gain a share in the category, these brands are key to winning over large segments of the country.

“If you don’t have those, those chains on your platform, you’re not really grocery in those areas,” Whitmer noted.

Overall, consumers tend to want omnichannel shopping journeys. PYMNTS Intelligence research reveals that, as of last year, 52% of grocery shoppers made purchases online and in person. In comparison, just 43% did so in person only, and less than 6% did so purely via digital channels.

‘Supply Begets Demand’

The grocery category is an important one to have a strong presence in as aggregators compete for consumers’ on-demand delivery spending. Whitmer noted that the total addressable market (TAM) is “probably the highest” in grocery, even more so than restaurants.

Initially, Grubhub anticipated smaller basket sizes for grocery orders, typically consisting of last-minute items rather than full weekly shops. However, Whitmer explained that basket sizes have been “larger than expected,” with purchases containing products “closer to core weekly shopping,” as opposed to simply last-minute needs than anticipated.

While there are many players now offering grocery delivery, such as Instacart, Shipt, DoorDash and Uber Eats, Whitmer noted that consumers who are already loyal Grubhub customers, such as those enrolled in the brand’s paid subscription membership Grubhub+, “tend to stick with us.” As such, once the option is available, they will tend to adopt it.

“In this space, supply begets demand. So, as we add more grocery partners, as we add more non-grocery and convenience and alcohol and core retail, that consumer that tries Grubhub maybe for restaurants, … then we start to hook them in and get more loyalty.”

He noted that early indicators suggest that consumers make more purchases as the aggregator grows its new vertical offerings. Additionally, those grocery customers often order more from restaurants, becoming more loyal to the platform.

Speaking of loyalty, many consumers have their existing ties to certain grocers, and Whitmer argued that retailers will take an if-you-can’t-beat-’em approach, where they will “fully recognize that third-party marketplaces such as ourselves are just going to have a loyal following of folks that are going to go through us.”

As such, he expects that more grocers will integrate their own loyalty programs with third-party channels so that they do not lose out on these opportunities to retain their customers and to gather data about their behaviors.

The Booze Opportunity

Beyond grocery, Grubhub is eyeing other retail categories with high basket sizes and frequency, such as alcohol, pets, beauty, office supplies and discount stores. Grubhub has invested heavily in developing a universal product catalog to manage the complexity of grocery and retail SKUs, and having this groundwork laid is crucial for this expansion.

Whitmer noted that the alcoholic beverage space is a major opportunity and teased expansion in the category soon, though it is a tricky one to navigate, with the varying regulations from state to state.

“I can’t name names, but we’ve got a handful of large nationals, kind of coming online in the near future, … but I’m excited about that, because it’s a huge TAM,” Whitmer said. “…[A year from now], I would very confident that I would be talking about a lot of large national brands on our platform at scale across multiple new verticals, based on what I’m seeing in our pipeline.”