7/16/2013 8:15 PM ET|
Get ready for online groceries, v. 2.0
Amazon, Wal-Mart, Google and others are ramping up their efforts to compete with traditional supermarket chains.
My first experience with online grocery shopping came more than a dozen years ago and happened out of pure necessity. Between caring for a new baby and shuttling his big brother and sister to school, sports and dance lessons, I had no time to shop.
Luckily for me, my hour of need coincided with the first wave of online shopping, an era that saw the birth of grocery sites such as HomeGrocer and Webvan. Order groceries online and have them show up at my door? I was sold.
You may remember what happened next. In the dot-com boom of the late 1990s and early 2000s, HomeGrocer and Webvan grew rapidly, expanding locations and raising hundreds of millions of dollars from investors. They merged during the dot-com bust, only to see the combined business undone by mismanagement and technology snafus.
Those high-profile startups may have bit the dust, but in the years since, big regional supermarket chains such as Safeway and ShopRite have been quietly -- and successfully -- building their online offerings.
Now Amazon and other high-wattage Internet companies are getting into the game, a development being heralded as the second coming of online grocery shopping.
It’s all good news for shoppers as the increased competition means even more options for ordering, delivery and savings.
Amazon expands online grocery pilot
After years of operating a pilot online grocery business in the Seattle metro area, Amazon this summer expanded its AmazonFresh service into Los Angeles and is expected to move into San Francisco by the end of the year, according to Reuters.
Amazon bought robotics company Kiva Systems for $775 million last year, and there is speculation that the purchase was intended to bolster its growing grocery business.
AmazonFresh is being launched as a free, 90-day trial in select Los Angeles ZIP codes for subscribers of the Amazon Prime premium membership program. After the trial, an AmazonFresh membership costs $299 a year for free same-day and early-morning delivery on orders of $35 or more, according to the company’s website. AmazonFresh will offer Los Angeles customers 500,000 items – including perishable goods and other Amazon inventory – and will deliver food to customers from local restaurants, according to the company.
Other Internet and retail heavyweights are jumping into the home delivery business. On July 9, Yelp said it was starting a local delivery service that shoppers can use to order food directly from its website or mobile application. The service will start in San Francisco and New York in conjunction with food delivery startup Eat24 and Delivery.com, before expanding to other markets and types of deliveries later this year, according to various sources.
In March, Google launched a same-day delivery pilot program in the San Francisco area with a limited number of customers who can sign up for a free, six-month membership. Google Shopping Express users can order groceries and other items from nine participating Bay Area retailers, including Target, Raley’s Nob Hill Foods and Blue Bottle Coffee Co., pick a delivery time, and get the items delivered by a Google courier.
Wal-Mart is also testing same-day and next-day online grocery and general merchandise delivery in the San Francisco area and runs a grocery delivery business in Britain, according to a Reuters report.
Bigger selection, mobile apps and more
Internet-based grocery shopping in 2013 has evolved from the early days of the business, when the national brands lining the shelves of your neighborhood supermarket weren’t always available online.
Today, if e-groceries’ inventories don’t match what’s in a physical store, they come pretty close. That includes meat, deli items, fresh produce, nonperishables and, depending on the state, wine, beer and other alcohol. Winder Farms, a 133-year-old company that started out delivering milk and offers online grocery shopping in Utah, Nevada and California, sells a range of dairy, frozen and grocery items as well as prepared foods. Niche companies such as Organic Kingdom and shopOrganic deliver fresh and nonperishable organic and gluten-free goods.
At many online grocery websites, shoppers create accounts that they can link to store loyalty programs. Many also offer online specials. Safeway, which also operates the Vons, Randall’s and Dominick’s Finer Foods grocery chains, offers buy one, get one free and other online deals, and gives first-time customers a promo code for free delivery of orders of $49 or more.
Following the march to mobile, online grocery services also have introduced free shopping smartphone apps. ShopRite customers can use the store’s iPhone and Android app to update a saved grocery list, look at the store’s weekly specials and add coupons to their PricePlus loyalty card. AmazonFresh also has free iPhone and Android apps for shopping, changing orders, setting up lists, picking delivery times and using a smartphone to scan barcodes on pantry items that need restocking.
While some Internet commerce companies and supermarket chains are expanding their online grocery businesses, at least one brick-and-mortar grocer has gotten out of the business – twice. In January 2012, Publix ended a pilot project at two Atlanta locations that let shoppers order groceries online and pick them up curbside at the stores. The program didn’t have enough customers to expand, a company spokeswoman told the Atlanta Journal-Constitution. Publix previously experimented with online grocery shopping in the early 2000s, according to the report.
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Just because YOU want to get out of the house and interact with others, doesn't mean everyone else does. Besides, online grocery shopping is a timesaver.
I think there will be a lot of competition in this industry. Many questions such as:
1. What is the cost of the service?
2. Can coupons be used or is that up to the service provider for them to save money?
3. How will it be localized?
4. Cost associated with zone areas such as zip codes or zones in radius to the grocer?
I think the time is right for such a service and there will be a rush to provide service and create a new service industry.
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