The race for home delivery

All grocers are looking to get home delivery right—which ones will succeed?

Canadian Grocers have woken up to the realization that they’re falling behind when it comes to e-commerce. The spark was Amazon’s purchase of Whole Foods Market last summer, with Amazon’s world-leading expertise in home delivery raising the bar for grocers everywhere.

Experts say home delivery is the future of grocery retailing. Yet in Canada, aside from a few exceptions, we’re really still at the experimentation stage.

One of the more fully developed grocer-organized home delivery systems in Canada is run by IGA in Quebec, where around 300 individual stores respond to online orders and deliver product.

Then there’s Grocery Gateway by Longo’s in Ontario. Initially founded as an independent e-grocer in 1999 and taken over by Longo’s in 2004, Grocery Gateway was an early entry into the online grocery delivery space in Canada. It now delivers from a large dedicated distribution centre and the company says it keeps on growing and expanding.

Sobeys also recently announced it was partnering with U.K.-based Ocado Group, an expert in online grocery delivery, to build its own innovative home delivery system. The trouble is, it will take at least two years to get the service up and running as it requires a large distribution centre and robots to do the picking. Some analysts say two years is too long in the fast-moving digital world. In the meantime, several third-party home delivery services, such as Instacart and InstaBuggy, are already servicing customers in large Canadian cities.

I’ve personally tried three grocery delivery services in Toronto: Grocery Gateway, InstaBuggy and Instacart. Here are my observations:

With Grocery Gateway, you can access online hundreds of grocery products including Longo’s own private label. You can order for specific delivery times, usually the next day (some customers, however, don’t want to wait for next-day delivery). The service costs $9.99 for orders over $50 and can include beer and wine for a small extra charge. Drivers are professional and polite. I have had no problems at all.

With InstaBuggy, the drivers can do the shopping at multiple stores including Sobeys Urban Fresh, Costco, Safeway, Pet Smart and Coppa’s Fresh Market and the service is now available in Toronto, Ottawa, Vancouver and Calgary. Deliveries can be made in as little as one hour. Customers pay a  “packing, picking and delivery” fee of $19.98 on every order, no minimum purchase required. There’s a $9.99 fee for each additional store, with delivery fees for LCBO orders in Ontario rising to $19.99. Again, I have encountered no problems.

Loblaw recently partnered with Instacart—a U.S. company that has now launched in Canada—for home delivery in as little as one hour. For me, there have been couple of glitches ordering from Instacart. With my first order, I got two packages of ground pork instead of ground beef. I was later given credit. Another order came short by four items, but the key items were re-picked and delivered in about two hours. Fees vary, but if you pay an Instacart Express annual membership fee of $99, you can get free delivery on all orders. The price of products is very close to the actual store price.

With home delivery in one or two hours, grocers trying to provide their own solutions will need to be very creative in order to outdo some of these third-party companies.

This column appeared in Canadian Grocer's March/April 2018 issue.

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