Summary: "To Own Or Not To Own Delivery? Grocers Reassess The Instacart Dilemma"

It’s no secret that most things virtual surged during the pandemic, and one of them was online grocery shopping. In 2020, Instacart rapidly grew adding hundreds of thousands of shoppers to its workforce, and demand for its service in August soared to 500% compared to levels a year earlier. Sam Silverstein in this Grocery Dive article highlights examples of grocery retailers and how or if they are adopting third-party fulfillment companies like Instacart.

• Hundreds of food retailers are partnering with e-commerce fulfillment companies like Instacart and Shipt to manage the logistics of their delivery and pick-up services. But while these third-party companies drive traffic, is it at the cost of providing good customer service shoppers are accustomed to? According to Neil Saunders, managing director of GlobalData Retail, third-party partnerships are attractive to smaller retailers as building their own delivery function is expensive. However, in doing so, they lose control over factors like price differentials, customer service levels, and control over the staff doing the picking.

• Even companies, like Uber and DoorDash, that previously focused on food delivery from restaurants have jumped on the bandwagon and entered grocery e-commerce.

• Supermarket chains like Sprouts Farmers Markets and Kroger have opted for the hybrid solution. Sprouts accept online orders through its website while using Instacart’s order management technology as part of its e-commerce platform allowing them to control the customer experience. Sprouts also differentiate itself by using its own employees to pick and pack orders.

• Others like Giant in the mid-Atlantic market say there is no substitute for their own delivery service. Staffed by their own employees, it allows the company to build loyalty with customers by adding personal touches. For instance, drivers get to know the location of where people want their deliveries. “There’s all kinds of insights that we gather and build up over time by having that more personalized relationship, through our drivers, through our trained staff, and on the back-end side with customer service,” said Gregg Dorazio, e-commerce lead for Giant Food.
  
  
  
  The interest among some retailers in running in-house delivery services has boosted the market for technology that can help simplify the process of managing a squad of drivers.

• Onfleet, a San Francisco-based company that offers software designed to route incoming orders, track drivers, and communicate with customers, has seen strong interest in its technology this year as retailers in a host of industries opt to maintain control of their e-commerce operations.

Read more about the dilemma grocers are facing.