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Online Grocery Grows in Bits and Bytes

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If there were any doubts about the legitimacy of the online grocery format, let one simple fact put them to rest: Wal-Mart’s doing it. Last month, the world’s largest retailer began a test run in northern California of Walmart To Go, an online ordering and delivery service that emphasizes fresh food and an assortment of groceries.

foodbox.jpgIt’s unclear how consumers will react to the polarizing retailer’s latest foray, but elsewhere the competition is gaining momentum. Just this week, luxury goods purveyor the Gilt Groupe, which offers flash sales on clothing and travel packages, launched Gilt Taste, an online market offering high-end artisan foods. A sampling includes: wagyu beef sliders ($64), California caviar ($222), white truffle oil ($39), and jumbo white asparagus ($36). (Full disclosure: My wife works for Gilt, in another division.)

There are more down-to-earth options, as well as those that go the farmers’ market route by offering local foods. Indeed, what ties together most online grocers and differentiates them from brick-and-mortar stores is their fresh, adventurous appeal. Fresh Direct, based in New York City, is experiencing 20% yearly growth by delivering produce, signature meals and groceries to city dwellers and those in surrounding states. Green B.E.A.N — the acronym stands for Biodynamic. Education. Agriculture. Nutrition — delivers local products to customers in Kentucky, Ohio and Indiana.

Besides Wal-Mart, supermarkets large and small are delving into online shopping. Stop & Shop has seen its Peapod business through some ups and downs, and it now operates in the Midwest and on the East Coast. In Columbus, Ohio, The Hills Market, a single-store operation, just debuted its slick new ordering and delivery service, “Hills On the Go”. Among other products, Hills offers “fresh produce, hand-selected by our Professional Foodies just for you.”

Whether retailers should experiment with online ordering or not depends on local market conditions. The real takeaway here is what Fresh Direct and others are delivering on: freshness, convenience, and a good dose of food adventurism. Supermarkets are pretty conservative operators, and many in the new “foodie” consumer class have grown bored with their offerings. Perhaps that’s just the way of things — not everyone can be Whole Foods, after all. Or perhaps it’s a challenge for retailers to step up their game a bit and do more than just cover the bases with regards to local, organic and artisan fare.

(Creative Commons photo courtesy of Nick Saltmarsh)

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