Online grocery articles are focused on “Can delivery of groceries be done profitably?” but the bigger question is “Does online grocery mean delivery?” as delivery will not work everywhere.
There are markets like San Francisco and New York City where delivery has become table stakes. If a store does not offer delivery they will be at a great disadvantage, losing current customers and greatly reducing their ability to get new customers.
But online grocery does not require delivery and there are many stores across the country that have had outstanding success with pickup or “click and collect”. Delivery is inherently more expensive since a delivery order requires all of the steps of a pickup with the added complexity of keeping the order at temperature and delivering on time with weather, traffic and other challenges.
Costs for Online Grocery include:
- Platform for online shopping
- POS data flowing to the online shopping
- Equipment to pull and stage orders, including devices, totes, racks and signage
- Personnel to pick and stage orders
- Personnel to fulfill curbside
- Personnel to deliver
Retailers should consider their customers, competition, parking, store staging areas and delivery options to determine the best approach to commerce. One recommendation: start with pickup and speak with specific customers that are demanding delivery, allowing them to order for pickup and to put a note in the order requesting delivery. With this method you can offer delivery without opening the floodgates. Once delivery is offered most stores will see orders move mostly to delivery, even if the customer had previously done pickup.
Our recommendation: build out your pickup business, learning the best way to stage orders and getting your team trained, then add delivery if needed, even if at just a select set of stores in your banner.
If you are exploring pickup and delivery please reach out to brian@freshop.com to have a detailed conversation of your needs and how online grocery with Freshop can help your business.
