Viewpoints

Start the Webvan, You’ve Got Deliveries to Make

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The supermarket industry seems poised to take its foot off the brake and have another go at home delivery.

Rumors and supposition have been swirling recently around a number of well-respected retailers. Trademark requests filed by Whole Foods Market indicate it’s looking into online ordering and home delivery, while analysts wonder if Amazon is finally ready to expand AmazonFresh outside of its home base of Seattle.

This isn’t the first time retailers have tried to master the extremely complex transaction known as online grocery. The road is littered with the abandoned hulks of past efforts like Webvan and Pets.com. So what’s different this time around?

It’s the consumer. A report released last October by IBISWorld found that online grocery sales enjoyed revenue of $6 billion in 2012, growing an average of 1.2%. Looking ahead, however, analysts are pegging growth at 9.5% through 2017. The jump indicates that shoppers are ready to push that last domino over and help food join the rest of e-commerce as a viable, even profitable, business.

The spring issue of SN Whole Health that came out last week profiles the rise of online retailers specializing in natural, organic, local and sustainable products. Several of them just received new infusions of capital and, as they grow, they’re seeing that mainstream retailers have a lot of catching up to do if they’re to meet this burgeoning demand.

In order to succeed, brick-and-mortar supermarket companies need to understand that online grocery is not just about logistics and technology. It is not merely an extension of the store. Facebook, Pinterest, Twitter and similar communities have cultivated a modern social experience around food that transcends the old “plan, shop, cook, eat” formula that retailers mastered long ago. Before today, the supermarket owned the “shop” segment. Today, technology has connected all of those elements into a singular experience — a recipe or a meal or a lifestyle, and any online effort is going to have to satisfy consumers on all four counts if they’re to get a second visit.

The IBISWorld report found that Ahold-owned Peapod and New York-based FreshDirect — two of the largest online grocery enterprises currently operating — each have less than 10% market share. The field is wide open for development, and there’s plenty of business to go around. Start your engines.

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Contributors

Julie Gallagher

Julie Gallagher’s delicious foray into coverage of the food industry was purely accidental. With a background in technology, she joined Supermarket News as associate editor of its Technology...

Mark Hamstra

Mark Hamstra is the editor of the Retail/Financial section of Supermarket News covering mergers and acquisitions, quarterly earnings reports, executive changes and other significant events and trends...
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In their Viewpoints columns, SN editors give their perspectives on current industry issues.

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