Amazon/Whole Foods Merger Forcing Supermarkets To Take Delivery Seriously

With Amazon set to merge its massive delivery network with Whole Foods’ existing retail business, more supermarkets are beginning to realize they have to start offering food delivery to their customers.

While some chains already offer delivery in certain markets, the easiest answer may be to partner with an existing service, whether it’s a personalized shopping platform like Instacart or companies like Peapod and FreshDirect that act more like online supermarkets.

Now that Amazon is set to become a bona fide competitor, the Wall Street Journal reports that these services have been racing to make new or expanded partnerships with regional grocery chains.

 

Analysts believe that Amazon could eventually double Whole Foods’ 466 stores as distribution centers and cut prices to make goods more attractive to online shoppers.

“This gives them another way to drive up penetration in grocery purchasing and ultimately delivery,” Bill Bishop, co-founder of Brick Meets Click, an e-commerce grocery consulting firm, tells the WSJ.

Such a system could also incorporate or absorb Amazon’s current delivery services, Prime Pantry and Amazon Fresh.

Grocery delivery services, and their retail partners, aren’t planning to wait to find out just how Amazon plans to leverage Whole Foods, though. Many are already expanding their own reach.

For instance, Schnucks Markets is expected to become the latest supermarket to delve into delivery by teaming up with Instacart, which will cart groceries to customers’ homes in about 100 cities next month.

Likewise, Shipt plans to double its service, which includes delivering orders from Costco and Meijer among others, over the next year.

The WSJ reports that Instacart, which provides delivery from some Whole Foods stores, plans to increase delivery to 80% of U.S. households next year, a 11% increase from current availability.

Despite the services’ push for growth, they could face an uphill battle, but not necessarily from Whole Foods/Amazon. Food-service research firm Technomic estimates that delivery accounts for less than 2% of last year’s food-retail sales.

While online delivery of groceries accounts for a very small portion of all food-retail sales, that doesn’t mean it’s not growing. Data from Willard Bishop, a grocery consulting firm, found that the online sale of consumables increased by 21% in 2015.

by Ashlee Kieler via Consumerist