1-Hour Online Grocery Delivery Has ArrivedAugust 22, 2017
By Octavio Blanco | Consumer Reports
For Kim-Chi Tyler Chen, a resident of the San Francisco Bay Area, online grocery shopping is essential. The 51-year-old independent video producer and mother of a son with strict dietary requirements has to travel frequently, often on short notice, which leaves little time to trawl through supermarket aisles.
“I hate shopping—it’s such a time suck when you have other things you need to juggle,” Chen says.
But with online grocery shopping, whether from your local supermarket or a digital-only store, you still have to wait for your food to be delivered—often for 3 hours or longer. That’s changing fast, though, and with a bit of planning, it’s possible to get much faster service, as well as better deals, from food retailers.
“The holy grail for online grocers is 1-hour delivery,” says Heidi Chapnick, a food and hospitality industry executive and owner of consulting firm Channalysis. “Shoppers, especially millennials, don’t want to wait a couple of days to get their groceries.”
This impatience is a key reason food retailers are seeking to shrink delivery times. But the scramble for quick turnarounds is also fueled by competition from Amazon, with its purchase of Whole Foods and the online giant’s move into home delivery of groceries.
Aldi, the European grocer, recently announced a partnership in Atlanta, Dallas, and Los Angeles with Instacart, an online grocery shopping app, which will offer 1-hour delivery for certain types of food. Wegmans has also announced that it will offer 1-hour delivery orders, also in partnership with Instacart.
These supermarkets, as well as online grocers, are playing catch-up to a few pioneering retailers that already provide 1-hour delivery for some items. Among them: FreshDirect’s FoodKick division and ShopRite. “Over time 1 to 2 hours is going to be doable,” says Burt Flickinger, founder of consulting firm Strategic Resource Group, which advises the grocery business.
Online Stores Go Wide
Still, it won’t be easy to achieve that 1-hour turn-around. To shorten delivery times, pure digital grocers, which lack a network of stores, will have to build warehouses close to their customers, Chapnick says.
Amazon, for one, is buying bargain-priced real estate owned by bankrupt shopping centers and supermarket chains. In 2014 the company purchased Pathmark Super Center’s distribution center in Woodbridge, N.J., Flickinger says.
A similar strategy is being adopted by FreshDirect, which relocated its New York City operation to a new, larger facility in a wholesale food terminal market in the Bronx. FreshDirect is also opening distribution centers in major markets nationwide, including Baltimore, Philadelphia, and Washington, D.C.
Big Box Grocers Cut Prices
Although fast delivery is an advantage, low prices are still key to attracting and retaining shoppers. On that front, big-box stores, with their large scale, have the advantage. Walmart and Target have already begun to offer online grocery shopping and delivery at reduced prices.
These discounts could grab market share from the traditionally more expensive online grocers. “If Walmart reduces the price on an item by 5 cents, you’ll see the other retailers quickly following suit to counter that,” Chapnick says.
For now, though, big-box retailers still struggle to provide the quality that consumers demand. Walmart scored low in Consumer Reports’ recent customer satisfaction survey, even though the respondents said the company offered more competitive prices. By contrast, online stores Amazon and FreshDirect ranked high in Consumer Reports’ latest grocery store and supermarket survey.
Smart Ways to Shop
The online grocery competition results in better opportunities for lower prices and improved quality. Here are three tips that will help you make the most of your store’s offerings:
Check the delivery fees. You’ll probably have to pay a delivery charge. Coborn’s, a Midwest grocery chain, charges fees ranging from $8 to $15 for orders of $50 or more. Smaller orders will get an additional $5 charge tacked on.
Look at the coupon policy. Your neighborhood supermarket typically accepts manufacturers’ coupons, newspaper coupons, and most coupons printed or downloaded from the internet. Digital grocers might not. For example, FreshDirect offers FD Coupons, which are digital coupons for select products but will not honor paper or digital coupons from other sources.
Go local. Many regional and local chains are also looking to speed deliveries. Albertsons, which operates in 35 states, is expanding its online services—its Safeway chain offers same-day delivery. With local stores, customers might have fewer worries over quality, says Flickinger, who recommends the Rosie app to shop at Dash’s Market in Buffalo and other local grocers nationwide.
Use online grocers strategically. Online food retailers may work best as a complement to traditional stores. At online stores, you are more likely to find better prices for some types of items, such as snack bars and specialty diet foods. It’s also a good option for bulky, nonperishable products.
But your local grocery is more likely to offer better deals on perishable items, such as frozen food, milk, fish, and meat. As for fresh produce, there’s still no substitute for checking out the fruit and vegetables yourself.
“For produce, I’d do online for lettuce or potatoes, those kind of staples, but not fruit or tomatoes. I’d rather choose those items myself,” says Jo-Anne D’amacco, who lives in New Jersey with her family. “Plus I really enjoy food shopping—if you’re not in a rush, it’s very relaxing.”
That might be part of the reason that, as a recent survey by the Food Marketing Institute and Nielsen found, some 80 percent of U.S. shoppers still go to traditional grocery stores.