For every parent who has dragged a screaming toddler through a grocery store and every tired commuter who forgot to pick up dinner, the rise of seamless grocery delivery has been a gift from the internet gods. And grocery delivery shows no signs of letting up, with more and more brands either offering their own delivery services, or partnering with delivery platforms and online grocery sales predicted to reach $100 billion by 2022.
According to recent news out of Amazon, the mega-retailer more than doubled their AmazonFresh delivery orders year over year in the fourth quarter. However, Walmart launched Delivery Unlimited in the fall, and an increasing number of brands are also offering digital grocery shopping options. The grocery wars are heating up.
Amazon’s Grocery Options Resonate With Certain Audiences
Amazon’s dominance across retail sectors is evident, but their rise as a grocery delivery service has been more circuitous. The retailer offers two different grocery options: Prime Now and AmazonFresh. The biggest difference used to be Amazon Fresh charging a monthly fee, but, after Amazon dropped the fee in late 2019, both services are now free for Prime members.
The differences remaining between the two Amazon grocery delivery services involve what stores Amazon uses to fulfill fresh grocery orders (Prime Now offers Whole Foods), delivery times and add-ons, but insiders speculate that the two services may merge soon since they are so similar and can be confusing to shoppers. Amazon’s grocery services, particularly Prime, generally attract shoppers with higher-incomes than average Americans. Amazon dropping the AmazonFresh monthly fee, particularly since it happened at the same time Walmart announced the expansion of its grocery service, could indicate that Amazon is trying to expand audiences.
As Grocery Memberships Increase In Popularity; Walmart Introduces Delivery Unlimited
Touted by Walmart leadership as the next step in Walmart’s “online grocery journey,” Delivery Unlimited is an annual or monthly subscription which delivers to 200 markets across America. “By pairing our size and scale and these [grocery] services we're making Walmart the easiest place to shop. Combine that with the value we can provide, our customers can't lose,” said Tom Ward, Senior VP of Digital Operations at Walmart.
Expansion of Delivery Unlimited has gone very quickly since the four-market pilot program in June, indicating customer enrollment was probably high. Even prior to the launch of Delivery Unlimited, Walmart led all grocery delivery services in online grocery sales, courtesy of their robust online delivery fulfillment and the sheer number of stores the retailer has across the U.S. offering pickup service.
Memberships for grocery delivery services are on the rise, as consumers continue to adopt the subscription-based lifestyle, particularly when they are frictionless and offer trustable, turn-key experiences. Grocery Dive explains, “Delivery plans and memberships may soon become the status quo in grocery delivery. In addition to Prime, Delivery Unlimited and Albertsons' yet-to-be-named plan, memberships for unlimited grocery delivery have been a foundation for online grocers Instacart and Shipt. While some shoppers may initially balk at paying the price, these memberships can solidify shopper loyalty, encourage repeat purchases and drive bigger baskets.”
Instacart Adds A Pickup Option To Increase Convenience For Shoppers And Revenue For Retailers
Instacart, a grocery delivery service that allows shoppers to pick from a variety of different grocery stores to fulfill their orders, experienced significant growth over the last several years. Recently, Instacart added a pickup product called Instacart Pickup. According to a TechCrunch article on the new offering, “The grocery pickup service has been steadily growing alongside Instacart delivery, having tripled the number of states and doubled the number of grocery partners offering a pickup option in 2019.” Nilam Ganenthiran, President of Instacart, attributes the 15% growth in customer basket size to Instacart Pickup. With Ganenthiran noting, “Our pickup product is also becoming a significant revenue contributor for our retail partners.”
Target Makes Same-Day Grocery Delivery Even Easier Through Shipt
Target’s acquisition of Shipt in 2017 allowed the big box retailer to offer same-day grocery shipping. In mid-2019, Target added a dedicated same-day shipping page to the Target website, finally integrating with Shipt after previously requiring shoppers to download the Shipt app. Now, by going to target.com/sameday customers can browse the 65,000 items, including groceries, Target makes available for same-day delivery, and Shipt will handle the delivery. Currently, Target lags behind Walmart as a destination for grocery shopping. The addition of a new private-label grocery brand and easier delivery options are all intended to move the needle for Target and Shipt as grocery delivery options.
The Grocery Wars May See Audiences Divided On Which Service Is “The Best”
Kroger, Albertsons, Peapod, Fresh Direct and organic grocery delivery service Thrive Market are also vying to capture their pieces of the online grocery delivery pie. For grocery brands to connect with audiences, and also keep them buying and coming back, brands must place an emphasis on frictionless, fast, fresh service and a membership program that encourages loyalty and engagement may be the answer to winning the grocery wars.
Are You Looking For Innovative Ways To Connect With Audiences?
Digital Media Solutions® (DMS) offers customized, performance-based, martech-enabled customer acquisition campaigns, designed to effectively engage target audiences and achieve the unique customer acquisition objectives of our clients.