Shipt grocery shops for clients so they don’t have to.
INDIANAPOLIS — Joelee Smith starts her mornings by sending busy parents the best text message they’ll see all day.
“Hi, this is Joelee,” she types on her phone. “I’ll be your shopper today. If you think of one or two items you forgot, I’ll grab them.”
Then Smith hits the aisles of an Indianapolis-area Meijer, filling up a cart with groceries, standing in line for deli orders and searching for bananas that are the exact shade of green or yellow that a customer wants — and, if she can’t find them, she’ll ask store employees to look in the back. After grabbing everything she needs, Smith loads the groceries in her car and delivers them to someone’s home.
Smith is a courier for a startup called Shipt, one of several fledgling companies navigating the final frontier of online shopping: grocery delivery. As consumers have grown accustomed to ordering books, mattresses, underwear, razors and virtually everything else online, groceries have remained a tough sell because of logistical challenges and customers’ unique preferences for perishable goods.
But the growth of online grocery shopping is expected to accelerate in the coming years, especially if Amazon.com Inc. completes its acquisition of Whole Foods Market Inc. That deal, announced in June, would put more pressure on grocery chains and startups to win over customers before Amazon has a chance to dominate yet another retail category.
The Midwest has been slower to adopt delivery than cities on the East and West coasts. But options have been increasing. Grocers Meijer and Fresh Thyme have launched delivery services, joining companies such as Peapod and Green Bean, which have brought groceries to Indianapolis-area customers for several years.
Meijer last year formed a partnership with Shipt, which is headquartered in Birmingham, Ala., and hires workers on a contract basis akin to ride-hailing companies Uber and Lyft. Meijer and Shipt began offering the service to Indianapolis-area shoppers in April.
Smith, who also works a full-time job caring for adults with disabilities, has made hundreds of deliveries while working for Shipt.
“I get a lot of grateful customers,” Smith said. “When I started doing this, I thought I’d be doing this for the elderly, people who can’t get out. It turns out it’s a lot of young families, young moms with young kids. It’s so much to take toddlers to the store and so I get there, and these parents, these moms, are like, ‘Oh my God, thank you so much.'”
Meijer is offering delivery to 582,000 Indianapolis-area households through Shipt. Art Sebastian, Meijer’s director of digital shopping, declined to provide performance numbers on the chain’s delivery business but said the company has been “pleasantly surprised” by demand.
“Our only goal right now is to make it available to all of our customers,” Sebastian said. “If you look at what we’ve done in the last few months, we’ve been moving aggressively to make (delivery) available to all customers in the Midwest.”
Meijer is not the only grocery chain partnering with an outside company to launch delivery services. Fresh Thyme in October started delivering its products through Amazon Prime Now, the one- and two-hour delivery service that’s available to Prime members.
Fresh Thyme CEO Chris Sherrell in October called the partnership a “huge step in better serving our communities.” Fresh Thyme declined comment for this article.
It’s unclear whether Amazon would continue to partner with companies such as Fresh Thyme after it acquires Whole Foods. An Amazon spokeswoman said the company will “continue to expand the service rapidly and add more selection from local stores and restaurants for Prime members.”
While Amazon has been dabbling in grocery delivery for about a decade, buying Whole Foods would shake up a business that’s still in its infancy. John Talbott, associate director of the Center for Education and Research in Retailing in Indiana University’s Kelley School of Business, said any grocery chain that doesn’t already offer delivery should move that up on its priority list.
“The Amazon-Whole Foods (deal) is probably going to accelerate the attention that grocers are focusing on delivery,” he said. “Whatever the pace was, it probably just picked up.”
Amazon has “essentially infinite resources,” Talbott said, noting the company remains a Wall Street darling despite almost never turning a profit. Amazon’s size and distribution capacity make it a threat to smaller companies that already have mature delivery businesses.
“The Amazon-Whole Foods (deal) is probably going to accelerate the attention that grocers are focusing on delivery. Whatever the pace was, it probably just picked up.”
John Talbott, associate director of the Center for Education and Research in Retailing in Indiana University’s Kelley School of Business
Bean LLC, an Indianapolis company, has been delivering fresh produce from Midwest farms for about a decade. Green Bean CEO Matt Ewer said increasing competition, including from Amazon, has the potential to drive down prices in a business that already has a razor-thin profit margin.
“Companies are seeing more and more competition, but there’s also a price-point competition,” Ewer said. “(Companies) are selling products cheaper and trying to compete with one another.”
The key for smaller companies such as Green Bean is to differentiate themselves from Amazon, he said. Green Bean seeks to do that by sharing its local bona fides. The company buys its products from farms in nearby towns including Sheridan and Mason, Ohio. Ewer is an Indiana University graduate.
“I think it’s important to understand not only what products you’re buying, but also think about who owns that grocery store and are they local community members as well,” Ewer said.
Green Bean also has been investing in technology, releasing a new app earlier this year. In addition to Indianapolis, the company delivers food in Louisville, Ky., St. Louis, Cincinnati and Columbus, Ohio.
Skokie, Ill.-based Peapod Inc. has been delivering groceries in Indianapolis since 2010. Carrie Bienkowski, Peapod’s chief marketing officer, said longevity has positioned the company to compete against newcomers.
“We have already spent decades mastering how to deliver food successfully and efficiently to people’s homes,” Bienkowski said.
The company is generating “double-digit new customer growth in our markets,” she said. Those markets include several large and midsized cities in the Midwest and on the East Coast.
“While the past few years have seen new players in the online delivery space, we actually think that’s proof of the rising interest from consumers and are excited to continue to do what we do well,” Bienkowski said.
Grocery delivery remains a small slice of the e-commerce pie — which, itself, is a small, yet growing, percentage of all retail activity.
E-commerce sales in the U.S. topped $340 billion in 2015, accounting for 7.2% of total retail, according to U.S. Census Bureau data. A report by Nielsen and the Food Marketing Institute projects that online grocery shopping could become a $100 billion business by 2025.
For the grocery business, major change has been a long time coming. The most-discussed trends in the Indianapolis market lately have been the dominance of Kroger Co. and the long decline — and bankruptcy — of Marsh.
“Really, grocery hasn’t innovated in 150 years,” said IU’s Talbott. “I think Amazon will push the envelope and ultimately make it better for consumers. I think they’ve compelled a lot of others to up their game in terms of consumer experience.”
But major grocery chains are taking a cautious approach to delivery. Neither Kroger nor Wal-Mart Stores Inc., the first- and second-largest grocers in Indianapolis, have started offering delivery options. But both chains are touting programs that let customers place orders in advance and pick up groceries at the store.
“The Kroger team is continuing to study the delivery concept, but right now we have no plans to launch such a program,” Kroger’s Central Division said in a statement to IndyStar. “If customers like that service as much as they like ClickList (where shoppers can order groceries online and have their order waiting at the store), it will be a hit — whenever it starts.”
Meanwhile, Meijer is the latest company to start delivering groceries in Indianapolis. The Grand Rapids, Mich., chain is not only acclimating more people to grocery delivery, but also creating jobs opportunities through Shipt.
Julie Coop, Shipt’s chief marketing officer, said the company encourages people to use Shipt “as a side hustle.”
That has worked for Smith, 47, who, in addition to her full-time job, will work up to 30 hours a week through Shipt and has earned as much as $600 in a week delivering Meijer groceries. Smith had never worked in the grocery business before, but thought she could put her grocery knowledge — built on years of shopping for her family — to use.
“I try to keep the produce together. Of course, I don’t put the tomatoes on the bottom,” she said. “It’s just common sense for when you’re grocery shopping. I treat it how I would do my own grocery shopping.”
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