While the food delivery market has garnered its fair share of headlines in recent months, pick-up remains a powerhouse for grocery e-commerce.
That’s according to Brick Meets Click partner David Bishop, who recently joined The Food Institute Podcast to discuss the splits between grocery delivery and pick-up, growing competition in the delivery space will affect the industry, and why grocers may opt for first-party delivery going forward.
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Pick-Up vs. Delivery
According to Bishop, grocery pick-up still outpaced grocery delivery by a 40% to 37% ratio as of December 2021.
Bishop added that before COVID-19, many customers turned to online grocery shopping for hard-to-find items and favorites. Amid the pandemic, he said, delivery and pick-up have become much more attractive for a much larger portion of the market.
Also, Bishop noted that some urban regions saw grocery delivery become more popular than grocery pick-up for the first time in December, a major development “because the lion’s share of the U.S. populations sits in those large metro markets.”
Growing Competition in the Delivery Space
Overall, Bishop sees “15-minute” or “rapid” delivery companies encroaching on convenience store and mass-channel drug operators, and expects grocery operators to be somewhat insulated from the changes stemming from this fast-growing delivery category.
“The economics don’t support it from a grocer standpoint. I think the value proposition from the consumer standpoint wouldn’t position grocers as the natural place where 15- and 20-minute [delivery] would really dominate,” he said.
Bishop noted some of the uncertainties surrounding the gig worker economy and general labor situation were likely giving conventional grocers food for thought regarding partnerships with third-party delivery companies.
He said that online grocery includes three spheres: ordering, assembly, and distribution, noting that distribution offers the least control when utilizing a third-party delivery company. He offered an example of how most third-party delivery workers don’t have vehicles with different temperature zones.