Can Supermarkets Profit From Delivery? The Challenges Of Groceries On The Go

Mar 28, 2017 - Who ever thought so much choice can go into a banana? Ripe or green? Organic or conventional? Pickup or delivery? These are the choices presented to shoppers who purchase groceries online. They also are the demands more supermarkets must meet if they want to remain relevant.

This intensity of service can be expensive, but increasingly non-negotiable when it comes to competing as a major supermarket chain. As online merchants — notably Amazon — offer fast grocery delivery, traditional supermarket chains are pressured to do the same or risk losing market share. The challenge, however, is not just in execution; it’s in cost controls.

Shipping groceries is generally more complex than shipping electronics, shoes and other items, largely because food is perishable. Every melted pint of ice cream or bruised banana nibbles at what are already cracker-thin margins. Add the expense of hand-selecting, packaging and delivering these products and even industry leaders face serious cost issues.

Yet major chains from Walmart to Meijer are exploring ways to deliver groceries while keeping expenses, and prices, down. These options range from third-party home delivery to curbside pickup.

Not all strategies are cost-effective, however. Indeed, it appears some merchants are willing to take the hit on some programs in favor of greater competitive appeal.

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