The race is on to decide who is the best grocery delivery service. Less than a year ago, Amazon made the news for acquiring Whole Foods Market for $13.7 billion. Now, Walmart and Kroger are getting in on the food delivery game.
Amazon has knocked the supermarket industry off their game with an e-commerce approach to grocery shopping. While the news of the Amazon deal in June 2017 caused grocery stocks to plummet, Walmart and other grocery giants are getting in on the grocery delivery game.
In April, Walmart announced that it was bringing on board a new partner, Postmates. This is the third delivery partner for the retail giant, and Postmates is helping Walmart expand its online delivery options to 100 metropolitan areas. Walmart has already offered delivery options in seven cities through Deliv and Uber partnerships.
Amazon might not be the only delivery option in the supermarket industry, but they are making waves. The company’s two-hour Prime option offers deliveries in 30 different markets. Currently, it is unknown if they plan to expand this option to more areas.
Amazon’s largest competitor is Walmart, but they are not even close to beating the retail giant. Right now, Walmart has 10 times more locations than Whole Foods. An estimated 90 percent of American households are within driving distance of a Walmart store.
Amazon and Walmart have additional competition for food delivery. Target Corp. is increasing its delivery options. Recently, Target bought the last-mile delivery company, Shipt, for $550 million. Now, Target can offer same-day delivery of groceries and products from about 900 stores. By the end of 2018, this service will be offered in 180 markets.
Kroger Co. is the second-biggest grocer in the nation, and this company is entering the delivery market as well. They purchased the startup, Instacart, and expanded services to 1,200 stores. While the grocery giant only uses third-party resources for now, their size makes them a leading competitor in the delivery game. Kroger also has an issue in competing for upsell. While groceries are a low-margin product, other products at Walmart, Amazon and Target offer higher margins. These other stores can earn extra revenue when grocery customers buy non-grocery items. Because of this, Kroger is most likely losing money on their food delivery services.
While Amazon might not be winning the race, they are certainly driving competition. Since the online retailer started offering grocery delivery, every major grocery retailer has considered new ways to drive e-commerce. Right now, the biggest factor is finding a strategy that makes money off of delivery. The company that can drive revenue the best will become the ultimate winner of the supermarket home delivery race.