Consumers who have run out of milk, eggs and Alaffia Coconut Reishi Chai Shower Gel can punch up an order on their phone or laptop and pick it up at the curb of their local Whole Foods in an hour or so for free, the Austin, Tex.-based chain owned by Amazon announced yesterday. But only if they live in Sacramento, Calif., or Virginia Beach, Va., for now. And only if their bill tallies up to $35; otherwise there’s a $1.99 fee.
“Want your chickpeas and arugula faster? Shell out $4.99 to pick them up in 30 minutes. If you’re really in a rush, use the Prime Now app to alert Whole Foods that you’re on your way, and the groceries will be ready when you arrive,” writes Melissa Locker for Fast Company.
The hed over Michael’s Corkery’s piece for the New York Times suggests that Amazon is “Playing Catch-Up With Walmart.”
“The latest move comes as Amazon and Walmart vie head-to-head for dominance of America’s shifting retail landscape. Amazon continues to rule pure online shopping, but Walmart has been making inroads by incorporating digital shopping with its vast network of super centers. Fresh food is where the competition is perhaps the most fierce because customers shop for it so frequently,” Corkery writes.
But Corkery cites a Morgan Stanley survey that finds that 65% of Americans who have never ordered their groceries online say they prefer to physically see and choose the groceries they’re buying, although “click and collect” is more popular than home delivery.
“American consumers have been slower to embrace online shopping for foodstuffs than other categories of goods. But Amazon and rivals like Walmart, which is rapidly expanding its own pickup and delivery options, are betting that is beginning to change,” observes Matt Day for the Seattle Times.
“In a survey of U.S. consumers by investment bank PiperJaffray earlier this year, 15% of respondents said they planned to use a delivery service to buy groceries in 2018, and 10% said they would use a pickup option like the one Amazon announced this week (87% said they would shop in-store),” Day reports.
“Different customers have different needs. Customers prefer the convenience to pick up groceries on their way home, on their way to the park or on their way to a friend’s house,” Tanvi Patel, head of business development for Prime Now, tells USA Today’s Ryan Suppe.
“The pickup option also makes multitasking easier, Patel said,” Suppe adds. “Staying in the car allows you to remain on a conference call or saves you the hassle of getting your kids out of the car and into the store.”
“Walmart’s service has been especially well-received by parents with small children, who don’t like the hassle of bringing them into the store for grocery shopping, as well as by others who just don’t have a lot of time to grocery shop,” confirms Sarah Perez for TechCrunch.
“The service has made sense for Walmart’s more value-minded customers, too. With grocery pickup, shopping can be more affordable because there’s not the overhead of running a delivery service — as with Instacart and Target-owned Shipt, where it’s costlier to use the app than to shop yourself. (Plus, you have to tip).”
Worse, you’ve got to figure out how much to tip.
“About 15% of digital food and beverage sales go to online grocery pickup, according to ratings firm Nielsen. Bulky items like beer, wine, frozen meat and cheese are the most frequently purchased, Nielsen found. ‘Click and collect’ customers tend to be less affluent than those who use online-only grocery services, Nielsen said,” Heather Haddon reports for the Wall Street Journal.
“Having customers pick up groceries they ordered online tends to be more profitable than delivering them because companies are spared the cost of transport to a customer’s home. It also keeps customers coming to stores, something traditional grocers are seeking to encourage to avoid losing more sales to online retailers,” Haddon adds.
It’s also another way to keep them in the ecosystem.
“Ultimately, the goal of the Whole Foods perks is to get more people signing up for Prime, and to get existing Prime members into Whole Foods,” writes CNN’s Jordan Valinsky.
“They believe this locks in the customer and induces them to buy more from Amazon,” Scott Neslin, a marketing professor at Dartmouth’s Tuck School of Business told CNN’s Julia Horowitz in May after the company announced that Prime members would get an additional 10% off sale items.
“But Amazon needs to convince Prime members that a recent price hike from $99 per year to $119 per year makes the membership even more valuable,” Valinsky points out.
As if Try Before You Buy weren’t enough.