With online grocery shopping steadily gaining traction, both Whole Foods and Amazon are stepping up their game. But experts say many of the emerging stars aren’t the expected behemoths, but smaller and more opportunistic players.
Whole Foods says it is the first national Instacart partner to offer both delivery (in as little as an hour) and convenient in-store pickup in 15 cities, and is kicking off the program with prizes and a free-groceries-for-a-year sweepstakes. And the San Francisco Chronicle reports that Amazon is partnering with the U.S. Postal Service in what is said to be a 60-day "operational test,” to assess the feasibility of grocery delivery. "We are always looking for new and innovative ways to deliver packages to customers," Amazon tells the paper. And it already works with the USPS for Sunday delivery in 17 markets.
“We had expected that the big guy, Amazon, would come rolling out of the West, and that that would be the disruption in online groceries,” says Bill Bishop, chief architect at Brick Meets Click, a retail consulting firm in Barrington, Ill. “But the real disruption has been the emergence of dozens of smaller online retailers, many of them regional.” That list includes much-smaller companies like Door to Door Organics; Relay Foods; Good Eggs, and Artizone, which makes deliveries in Chicago and Dallas.
“These online retailers have a well defined, curated offering that appeals to people who want a little more, and we are now anticipating that the growth in online ordering is going to continue, even before Amazon enters the market in a really big way,” he tells Marketing Daily.
He estimates that online spending on groceries has grown from 3.3% of the market last year to more than 4% this year, or about $27 billion.
Whole Foods is also testing the option of ordering groceries via Instacart and picking them up in-store, which it will test initially in Austin, Texas, and Boston.
And the Chronicle says the Amazon/USPS test started last month, and runs seven days a week in the early morning hours, when USPS trucks would normally be idle. Amazon has been experimenting with AmazonFresh since 2007.
Bishop says the Amazon/USPS partnership “is bold, and to a degree, audacious. It is looking to engage the power of the post office, and clearly, the post office wants to play. And who else goes to every home? We’re seeing Amazon put a lot of emphasis on solving the last part of the e-commerce problem.”
It’s also worth noting, he says, that such efforts as Instacart, Google Express and soon, Uber, have an inherent advantage too: “They can move much more quickly because they don’t have to make the investment in inventory and distribution centers that others do.”