Internet Grocery Shopping Slowly Gaining Ground

bakreule writes "Online grocery shopping, once the laughing stock of the internet, has quietly started gaining ground. It seemed that the idea had been killed shortly after the bust as being just another bomb. The article has some good interviews and details to show how this industry is developing and whether or not this surprising growth can continue. I'm interested in seeing how grocery product advertising will be affected in this highly competitive industry."

Comments

Yeah, I'll pick you some NICE tomatoes ;-)

[Scumbag Tracker]

I always wondered how these places stay in business. Do you really think the vendor's actually put a lot of thought into finding the perfect tomatoes, freshest eggs and milk, and softest loaves of bread?

Or do they sell whatever the oldest crap they can get away with selling?

Personally, unless I'm buying books or CD's, I'll stick to real-life visits to the local grocery store. ;-)

Re:Yeah, I'll pick you some NICE tomatoes ;-)

[sckeener]

Selling you the oldest crap they can get away with selling doesn't work so well for customer retention.

that's pretty much straight out of the article (so RTFA)

When I was using online groceries, they used restaurant quality produce. After restaurants get their pick, they go to groceries, so picking produce at the local grocery is picking the restaurant rejects!

If you want fresh groceries that you pick, you are going to have to go to a road side produce mart.

Re:Yeah, I'll pick you some NICE tomatoes ;-)

[woodhouse]

Online grocery shopping is already well-established in the UK. I've actually been using Tesco online for groceries for the past 3 years or so, and in my experience, yes, they do pick out good quality stuff. My only complaint is that they do occasionally screw up and deliver the wrong thing, but they've always given a full refund when that has happened. They're very keen for people to use their service, so they put a lot of effort into these issues.

Tesco charge 5 for deliveries (~$8), which works out pretty well IMO if you're doing a big shop. My only gripe is they don't put the stuff away for you (You need a maid/wife for that, and I hear they're expensive)

FreshDirect

[turnstyle]

Some people, when looking for a new apartment here in NYC will ask: "does FreshDirect deliver here".

Interesting

[RazzleFrog]

I live outside of a major city but too far to get this right now but even when I lived in the city my biggest problem with the idea was stuff like produce. I love cooking and I am very picky about my fruit and veggies and cuts of meat. According to the article, however, this seems to also be a big concern of the companies. They even claim that they would do a better job. I would have to see that.

I actually enjoy grocery shopping sometimes (ok call me a freak) but I would to pull up a recipe and have the ingredients delivered.

Overlooked demographic

[Anonymous Coward]

I think most people who are surprised that these companies can stay in business and who don't see the appeal of the service are overlooking those people (a lot of students) who don't have cars. I used Grocery Gateway often as a student because it meant I could buy more food than I would be able to stuff in my backpack to carry home.

Re:Overlooked demographic

[pklong]

Yes, excellant point. Of course this could also include the elderly if they could get over their technophobia and love of the free supermarket bus (if it goes their way.)

The other solution used by many students is to go together and get a taxi back. If the distance is short enough ( and it usually is ) the cost is not too high, and it will certainly beat the cost of running a car.

Online Grocery Marketing

[LilMikey]

As to the submitter's question about online grocery marketing, I don't think it will change too much. I for one go to the aisle of what I want to buy and look for the little yellow sale tags... then buy that one. I don't think website shopping and flashy ads will change that so much and at 10$ per delivery, I don't think you're going to have a lot of hunt and peck shoppers getting their 69 cent soup from one grocer and their 3$ microwave pizzas from another.

Not to mention at 10$ per delivery people like me who spend maybe $40 a trip on the high end will be willing to spend another 25% for delivery. That's where competition needs to happen. Drive those delivery costs below $5 and I can eliminate my single social burden!

"In America"

[Vanders]

I think you mean "In America, Internet Grocery Shopping.." because certainly here in the U.K, it's pretty big business. My wife and I have been using Tescos once a week for two and a half years with no problems. Tesco and several other large stores who provide online-ordering and delivery are also turning a tidy profit in addition to their regular brick & mortar stores.

Schwans

[SpiceWare]

Schwans delivers frozen foods. I've been using them ever since GroceryWorks went under and have been very pleased with their product quality.

One thing I really like is my food arrives frozen. The nearest grocery store to where I live is 10-15 minutes away and frozen foods tend to defrost a bit by the time I get home due to the hot Texas sun. Melted/refrozen ice cream from the grocery store isn't very good.

Schwan's

[FunkyRat]

I don't know about mainstream America, but here in rural upstate NY, food delivery certainly has caught on. It seems like every other house gets delivery from Schwan's. The reason for this I think is that there are no grocery stores within 15 miles. It can be damn convenient to have that Schwan's truck stop by every other week.

Now, the problem I have with this service is that the food (not counting the very high priced steaks, etc.) is, to my mind, almost totally snack food. Some of it very good snack food (ummm... Tacquitos) but snack food just the same. A steady diet of this stuff and you're probably not going to be doing yourself any good.

Also, of course, only a couple of (frozen, of course) vegetable and fruit items.

Delivery is Everything

[4of12]

From the article:

The key struggle for grocers is to make their service convenient enough and the cost low enough -- most charge less than $10 for delivery -- to change decades of shopping habits. Online grocers also need to operate in cities with high population densities and heavy Internet use.

Delivery costs are probably what most limits this kind of service.

If delivery costs could be reduced, say by taking the human (driving a two ton gas guzzler 10 miles each way) out of the loop, then this service would really take off.

The technology is almost here for cost-effective robotic delivery vehicles. With liquid fuel costs increasing dramatically, automated delivery will be here even sooner.

There should be less and less reason to send someone in car on a Go Fetch Errand to pickup groceries, a new hard disk, etc.

Heavy, pre packed items.

[jedrek]

I live on a 5th floor walk up in Warsaw, Poland, without any really good shopping places in my immediate vicinity. So every couple of weeks, I'd take the bus to a large supermarket, buy stuff for 2-3 weeks and take a cab home. Now, I save both time and money just by putting orders through a local grocery store.

For fresh produce, meat and fish, I still go to the local market. But for name branded goods with freshness seals, it's online shopping all the way. Last weekend I ordered just beverages - 60l of juices, water and pop. That's about 70kg of weight (counting bottles + packaging), so I was more than happy to not have to carry it up.

There are some things I will never buy online - fruit, veggies, meat (they don't sell them anyway) - but for the other stuff, it's a great solution.

I love it.

[Dman33]

I use FreshDirect in New York and it rocks. The produce is generally better than if I picked it out at the store. Things are fresher, and I can get a better selection of brands. Oh, and including delivery charge, ($3) it ranges 8 - 10% less than the ghetto-style grocery store at my corner! No lines, no cramped aisles, no moody checkout clerks, no overcharging...

The delivery times are really good and it is next-day service. I will never go back to regular shopping again. This is like when I got my Tivo; completely revolutionizes everyday tasks.

I use SimonDelivers - I'm not going back

[bshroyer]

Here in the Twin Cities (Minneapolis/St. Paul Minnesota) we have one internet grocer, SimonDelivers competing in a particularly tight grocery market. Here's my findings after a year of internet groceries:
(We're a family of five, including three kids age 5. 5. and 4.)

• Cost: on a per item basis, significantly higher. I estimate that we spend 5% more, on average, per item than if we were shopping brick and mortar. We'd be spending even more if we weren't watching for sale items - it still pays off to "stock up" on pantry items when they go on sale.
  
• True cost on a weekly basis, significantly lower. Purchasing from my desk at work or at home in the office, I only buy what we need. We don't buy junk food any more. We get really good produce, with little wasted, as we tend to buy less each week. (I don't know why this is... It's as though you feel pressured to buy more in the brick and mortar grocery store. Is it because of the effective visual marketing, or because of the desire to eliminate a return trip next week? I hope I never find out.) Traditional grocery shopping used to be 3x per month, at $185 per trip. (Thanks for the stats, Quicken.) Simon Delivers is 1x per week (every Thursday night) for $80. Meet the $80 minimum, and delivery is only $5.00. We usually have to buy a few canned goods to get it up to $80. Where did all that extra money go? We used to buy junk food. And we used to throw out a lot of produce. Now, our refrigerator looks bare, but there's always enough quality food in there for the week.
  
• Time no brainer here. We spend about 1/10th the time grocery shopping that we used to. After a couple of months, everything you're ever going to order, you've already ordered. It's on your "favorites" list. Just browse down your favorites list, noticing items on sale for stock-ups, and click to add to the shopping cart. Literally, ten minutes later, you're done.
  
• Delivery Simon Delivers brings the groceries out in big totes, with both refrigerated and freezer versions. They'll leave the delivery if we're not home. Cold/Frozen foods stay that way for about six hours in those totes. The following week, they pick up last week's totes. Couldn't be easier.
  

I can't imagine going back to traditional grocery shopping. I've seen the light - and I'd gladly pay an additional 10% to keep buying my groceries online.

Grocery Gateway

[Inexile2002]

One of the big outfits for online groceries in Canada is Grocery Gateway. At my last job I worked with them for a couple of weeks (mostly looking at some of their IT systems - they run a tight ship and have good IT people if that matters) and got a good understanding of their business from the inside.

Essentially, they started out as, and still are, a shipping company. They don't just ship groceries, but pretty much anything that you would normally think to pack into a truck and ferry off somewhere. They partnered up with some grocery supply companies and basically inserted themselves as a delivery company and website. They don't really charge much for delivery, but they don't have to to stay profitable. Bulk buy directly from the wholesalers and distributers, mark up items so they're competitive with the grocery stores and charge a nominal fee for delivery and bang, you've made money.

As for the quality of the foods, they partner up with Sobey's for much of it, and the produce is about the same quality as what you'd get off the shelf in a good Sobey's. (For non Canadians, or people who don't live near a Sobey's - Sobey's is a grocery store that can definitely boast well above average quality produce.) I'm not a shill for these guys, and I don't work with them any more, but I can say that the quality isn't bad at all.

One of the other things I've done is try out Green Earth Organics and Fresh Piks. (No link because their site is down. Fun fact: When it couldn't find the server, M$'s built in auto search suggested www.Fleshpics.com as an alternative. Not the best suggestion when looking for an organic fruit and veggie delivery company. Probably a fun site though.) Both provided better produce than anything I ever bought in a grocery store, it was delivered and since I didn't want to waste anything I ate more fruits and veggies, and cooked more than I ever did at any other point in my life. If I weren't living in Spain now (where restaurants prominently feature recognizable animal parts where they cut the meat from and many don't serve salads at all) I'd still be getting a weekly delivery from these guys.

Someone has to pick stuff out and ship it to the store, why the hell not have someone pick it out and ship it directly to me. They know that if they drop the ball on quality I'll take my business elsewhere so they do better than the grocery store does. Anyway... I think that this is something that was a long time coming...

For the elderly

[MonkeyDluffy]

It's really tough for many elderly people to go grocery shopping - some are too old to drive a car safely, many grocery stores don't have powered carts so you have to walk the store, and the bags are heavy. Unfortunately, there are no online grocers where my parents live (both are in their mid 80s, and have the above problems). I was worried that the concept was going to die when Peapod and (I think it was called) Homerun ran into problems. But it sounds like it's catching on.

-MDL

Change Your Model

[nicktripp]

Schwan's got it right in the U.S. They've been doing home grocery/food/meal delivery for years. When Internet popularity rolled around, they took advantage of technology to improve their business rather than to create it.

Re:I miss WebVan

[Snowdog668]

That sort of reminds me of a problem we had back when I worked at the big M making cellphones. The plant I worked in built the transceiver for bag phones (yes, this was quite some time ago). A position that I worked for about a year was to drive seven screws that held the circuit board into the chassis. Someone figured that they could save money by buying a big honking robot to put at the position that would have seven torque-drivers and do all seven screws at the same time. They installed the 'bots on two lines with two 'bots each without ever testing the concept. On paper it looked good. In real life it never really worked. On a good day the things scrapped about 25% of the boards that went through. It was a "dumb" bot that just drove the screws, no matter if it wasn't lined up properly. Their fix to that was to have a person standing next to the machine to make sure that everything was lined up before the board went in. Then they found that boards were failing because three screws had to be screwed down first to make sure that a certian piece of the board was flush. Their fix to that was to have the person checking the boards screw in the first three screws and then let the 'bot do the other four. Eventually it was found that a person with any time at that position could do the job in a third of the time it took the machine. Eventually the machines were disconnected but they were never taken out until that line was scrapped to make room for a new production line.

I had a point when I started this message. Somthing about testing before putting something into a production environment. :)

Re:Online food

[jskiff]

Ironically, I ate much healthier when HomeGrocer.com was still in business. Since I rarely had time to go to a grocery store, I used to always eat fast food or quick instant/boxed meals. When I was getting groceries delivered, I found myself eating more fruits and vegatables, since their quality was always pretty good.

I for one would really be pleased if grocery delivery took off again.

They still have some kinks to work out

[markdj]

I've used Acme's online ordering and delivery twice so far. Both times there were errors in what they delivered versus what I ordered. The driver/delivery guy did not want to spend the time for me to make sure that I checked the order (he was nice enough, but he acted like he was in a big hurry), and both times I had to call the toll-free customer service number to get a refund or redelivery with the right stuff. To their credit, they made it right both times. Until drivers take the time to ensure that what they deliver is what was ordered, and they have the authority to fix the problem on the spot, there will still be some bad word of mouth press.