Albertsons readies digital marketplace for vendors

Albertsons Cos. on Tuesday said it was preparing to expand its online grocery offerings with a new marketplace that will allow vendors to sell directly to the retailer’s customers.

The marketplace is currently open to general registration for vendors. It is scheduled to open to consumers this summer.

“This offering takes our assortment size to the next level by making the aisle practically infinite,” said Narayan Iyengar (left), senior VP of digital marketing and e-commerce at Boise, Idaho-based Albertsons. “This is another example of the rapid strides we are making on building digital capabilities that serve our customers, and shows our determination to play a prominent role in the digital food and wellness eco system.”

Albertsons said the system would benefit vendors by giving visibility to their niche or hard-to-find food and health and wellness products. It will also provide front-end e-commerce functions including search, product description and ordering.

In addition, the new offering will generate proprietary data on product trends in different markets, which the company said will help vendors evaluate products for potential rollout to brick-and-mortar stores and offer insights into where distribution capacity should be built out.

Albertsons said it would collect a commission on the sales — what an Albertsons spokeswoman described as a “small fee” — as it processes the payment form the customer, and then would deposit the funds directly into the vendor’s account. Vendors would then ship the product directly to consumers.

Vendors will be responsible for customer service management using Albertsons’ platform, and Albertsons said it will mediate disputes.

The marketplace will launch as a separate website destination at first, but will be integrated into Albertsons’ overall digital/e-commerce experience over time, said Lynda Friesz-Martin, the Albertsons spokeswoman.

She said the marketplace will be open to all sellers of grocery and health and wellness products, and that a team at Albertsons will curate sellers that fit the company’s business.

The creation of the marketplace comes as Albertsons expands its own e-commerce offerings through both its in-house delivery service and through third-party delivery provider Instacart. Albertsons also acquired meal-kit subscription service Plated last year.

The new marketplace could be seen as a means to capture a share of the direct-to consumer CPG sales that might otherwise have gone through Amazon or through the manufacturers themselves.

In a recent report on food technology trends, software provider CB Insights predicted that as food retailers increasingly invest in and expand their private label offerings, branded manufacturers would seek out alternate distribution channels.

While Amazon has been an outlet for vendors to pursue online sales, that company too has increasingly emphasized its own private label as well, leaving CPG manufacturers to turn to platforms such as BigCommerce and Magento, which offer retailers all-in-one e-commerce platforms, according to the CB Insights report.

“Since 2017, several major traditional food brands have invested in startups that give brands direct access to consumers through home delivery,” the report stated, noting as examples Nestle’s acquisition of meal delivery startup Freshly, and meat producer Smithfield’s $25 million investment in meal kit startup Chef’d.

Other channels by which manufacturers can bypass the retailer include SnackNation, which distributes emerging snack brands to offices, and Cargo, which distributes packaged products through ride-sharing auto services.