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Online grocery services adjust amid competition
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Online grocery services are growing quickly in the US as shoppers become more comfortable with buying grocery products online.
But the market is filled with competition and as these companies try to gain market share, they're having to adjust their business models to maintain an edge.
Here's what a few services are doing now:
Instacart announced it's cutting back hours for its in-store cashiers in New York City, reports Quartz. Instacart has both in-store shoppers and cashiers on staff. Until recently, the shoppers were only responsible for picking the items for the order, while cashiers solely handled the checkout process. However, with cashiers' hours being slashed to cut costs, shoppers will now be responsible for both picking and packing, as well as checkout.
Postmates lowered its minimum order size for subscription customers, reports TechCrunch. The company's subscription service, Postmates Plus, has traditionally offered free delivery on all orders from Postmates Plus partners (i.e. retailers) that are priced over $30. The subscription costs $9.99 per month. To attract more customers, the minimum required for free delivery will now be $25. Postmates Plus is also coming to six new markets: Atlanta, Austin, Dallas, the East Bay Area of San Francisco, Houston, and Philadelphia.
AmazonFresh launched in Boston, according to a separate article from TechCrunch. The online grocery service is available to Prime members only for $299 per year. With this most recent foray, AmazonFresh is now available in nine US markets. It's also serving London where it launched just a few weeks ago. But even with its impressive expansion, we expect the high annual cost of AmazonFresh has driven some potential customers to competitors like Instacart and Postmates.
These services are adjusting as the demand for online grocery services begins to grow in the US.
Until recently, many online shoppers were hesitant to buy online because they like to see and pick out their own items. But consumers are beginning to move online as more services become available — 41% of US consumers have purchased groceries online at least once, according to a report from Brick Meets Click. And the number of shoppers who say they've bought groceries online "in the past 30 days" nearly doubled from 2013 to 2015.
We expect to see these companies continue to make adjustments as it becomes clearer what consumers want from an online grocery service.
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