Kroger sees rivals’ one-hour delivery and raises it a half hour

Discussion
Photo: Instacart
Jun 20, 2019
Matthew Stern

There was a time not too long ago when the only thing a person could hope to get delivered in 30 minutes was a pizza — and it didn’t always arrive on time. Now Kroger is working on a pilot to get select items to the doorsteps of online customers within that time frame.

The grocer is conducting a half-hour delivery pilot called Kroger Rush in Cincinnati, according to Supermarket News. The service is available through a dedicated Kroger Rush app and costs $5.95 per delivery, with the first one free for new users. Kroger Rush is available to customers within three miles of the test stores, targeting those who might find a sudden need for such items as beer, toilet paper and dinner supplies.

https://www.supermarketnews.com/online-retail/kroger-pilots-30-minute-grocery-delivery
Source: Kroger/App Store

Upping the speed on last-mile delivery has been a perennial theme as brick-and-mortar retailers try to keep up with and surpass the experience offered by Amazon.com.

In 2014, Amazon launched its Prime Now one- and two-hour delivery service for Prime members. More recently it extended the benefit to Whole Foods customers, allowing Amazon Prime members shopping at Whole Foods to receive either free two-hour delivery or one-hour delivery for $7.99 on orders exceeding $35 in select markets. Earlier this year, Amazon announced plans to make the Prime Now delivery perk available for shoppers in all 475 Whole Foods locations with plans to expand Whole Foods’ footprint in part to support grocery delivery in more markets.

In just the past few months, other retailers have also announced plans to add enhanced delivery offerings.

Target debuted a section on Target.com dedicated exclusively featuring products available via same-day delivery, according to TechCrunch. Same-day deliveries are fulfilled by the Target-owned Shipt.  

Target’s pricing structure for same-day delivery has also changed. Customers are now able to choose one-hour delivery for $9.99 rather than paying a $99 yearly subscription or $14 monthly fee to use Shipt.

Additionally, in May, Walmart announced the launch of next-day delivery for free on select orders of $35 or more, according to another article by TechCrunch.

DISCUSSION QUESTIONS: Is delivering grocery products consistently in 30 minutes something many customers are expecting from stores, and do you think Kroger can deliver on this promise? Should other retailers consider offering quick delivery on must-have essentials, and what would it take to make the service worth the investment?

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"The path to having seamless shopping experiences is something every retailer should have a strategy for. That said, it has to be within reason."
"Welcome to a world where unlimited possibilities will become expected realities."
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22 Comments on "Kroger sees rivals’ one-hour delivery and raises it a half hour"


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Jeff Sward
BrainTrust

It’s very hard to imagine that the demand for this service provides the opportunity for meaningful sales and margin growth. Does that mean it’s really about cultivating customer loyalty? It solidifies Kroger as the go-to grocery store of choice?

Bob Amster
BrainTrust

A pizza, maybe. But needing groceries to be delivered in 30 minutes is not an everyday occurrence. Therefore the question becomes, is it worth building the capability to deliver groceries in 30 minutes if most of the customers don’t need it?

Neil Saunders
BrainTrust

The biggest question is how Kroger intends to make money from this. A $5.95 delivery fee is an excellent price for the consumer, but how does it work for Kroger? I am not sure it will work out too well! That said, given that delivery is the new battleground for retailers, it is necessary for Kroger – and others – to keep pushing the envelope in terms of what they are able to offer. As this is an experiment, it may well change if and when it is rolled out.

Ken Lonyai
BrainTrust

This is an interesting pilot that makes sense for those times someone really needs something like diapers or an extra steak for a last minute dinner guest. I would argue that food, personal care items, and medication are about the only product areas that realistically suit rapid delivery and approach “needing” it. That said, Kroger might regret being so accommodating to its customers. Executing consistently over time will be a difficult and costly exercise that will backfire if they can’t sustain it.

Bob Amster
BrainTrust

Agree! At what price does this service come?

Phil Masiello
BrainTrust

There is the promise and there is the ability to execute on that promise. Thirty minute delivery may work sometimes, for some orders. But I would think it would lead to negative PR if they cannot execute it consistently. Think about an order of 25 or 50 items. The pickers need time to process the order, pick the order, bag the order, load the order and deliver the order in the 30 minute window. If they even hit the smallest amount of traffic or get stuck in the red light sequence, the 30 minutes is blown.

Customers want a reasonable window of time for an order to be delivered. Certainly one or two hours would be sufficient. Also, Amazon has the infrastructure and backbone of technology to execute on their speed. So trying to “one up” others with even faster delivery could have more negative repercussions than positives.

Oliver Guy
BrainTrust

Time as a method of differentiation fascinates me. We must have reached the point of diminishing marginal returns where every minute shaved off this costs more than the last one we shaved off. The point about delivery commitments is that is is easier to measure and advertise speed than “completeness” of order.

Delivery of grocery is rarely profitable – the places where it is are places where milk round type approaches are used – therefore we have to ask if this is a loss-leader or headline grabber.

Rob Gallo
BrainTrust

It’s a curated selection of items that don’t require much nuance (i.e. no produce, meat or seafood). It’s just consumer packaged goods. I could see it working in select urban markets. And perhaps it’s their strategy to move more folks into delivery of the full grocery selection. Worth a try. GoPuff does the same thing with a $1.95 delivery fee.

Mel Kleiman
BrainTrust

This sounds like a quick race to the bottom. Lots of promises but very hard to deliver. If you have been around as long as I have you will remember Domino’s 30 minute delivery window. If it was sustainable it would still be around. Problem is getting it done in 30 minutes but the more important problem is the legal one caused by somebody driving to make the 30 minute window and having an accident. How many accidents and lawsuits will it take to stop the insanity?

David Dorf
BrainTrust

Thirty minutes feels like overkill and only sets up the retailer for possible failure when the service level isn’t met.

Bethany Allee
BrainTrust

There has to be a caveat – surely there’s requisite time to fill the basket.

Kroger is an innovator and the tech they’re bringing into their stores is no only smart, it shows they have a comprehensive understanding of the transformation retail is currently undergoing. The path to having seamless shopping experiences is something every retailer should have a strategy for. That said, it has to be within reason.

I’m currently having flashbacks to bad PR around pizza deliveries causing car accidents in the ’80s.

Rich Kizer
BrainTrust

Expectations is the key word here. As a new program like this rolls out, customers may think that this is great; I’m sure they will in their time of need. But later it will become an “expected “standard.” And when it is “expected,” consumers tend to expect more, and competitors must move forward, and the wheel keeps turning. Welcome to a world where unlimited possibilities will become expected realities.

Georganne Bender
BrainTrust

Is it me or is the race to deliver customer orders getting out of hand? A 30 minute window is fast – and makes for good PR – but the fine print reads that Kroger doesn’t promise to always make that window.

The service is only offered to customers who live within three miles of a Kroger store. If I were that close I would probably run to the store myself. But there are times when that delivery service would be nice, and worth the $5.95 fee. Like the brutal winter we just had in Chicago when no one wanted to venture outside. As retailers continue to one up each other, the clear winners will be the customers who are to pay-to-play.

Gene Detroyer
BrainTrust

So, next week will be be talking about how Target or some other retailer is planning to implement 15 minute delivery?

Richard J. George, Ph.D.
BrainTrust

I’m not convinced this would be a game changer for customers. Plus the logistics and economic considerations might be a deal breaker for Kroger. Even Domino’s abandoned the 30 minutes or less guarantee for a variety of reasons, not the least of which was a public perception of safety.

Shep Hyken
BrainTrust

Wow! 30 minutes! Impressive, but is it realistic? It’s a good goal. It will be interesting to see how Kroger staffs for busy times. The “pick and pack/bag” time can eat into 30 minutes. Traffic after work and before dinner is typically high. I’m sure they have thought this through. The key is execution. The first time someone expects 30 minute delivery and it turns into an hour, that will erode confidence in the Kroger promise. Perhaps using an app so they customer can track their delivery will help. I hope it works and can’t wait for it to roll into my area.

Heidi Sax
BrainTrust

It seems like this is less of a promise than a PR move to remind everyone that Kroger provides competitive delivery windows. As someone who often uses Whole Foods Prime Now delivery, 2-hour service is far from guaranteed within popular windows. And yet, it doesn’t bother me one bit. I’m thrilled to avoid a painstaking weekend task and avoid Brooklyn’s overcrowded Whole Foods on a Sunday afternoon with toddler in tow. I’ll take the delivery when I can get it within a reasonably quick turn around. Additionally, I’m not sure offering only “must-have essentials” is the way to go here. Yes, Whole Foods Prime Now offers a limited selection of goods compared to the assortment in stores. But who’s to say your AA batteries are more urgently needed than my organic fruit snacks?

Craig Sundstrom
Guest

I hear rumour that a retailer will soon offer guaranteed yesterday delivery! 🙂

The race to the bottom — of sanity, anyway — continues.

Cate Trotter
BrainTrust

It will be interesting to see if this is a case of overpromising and underdelivering. It doesn’t matter if Kroger is not promising to make the delivery in 30 minutes (in that your pizza in 30 minutes or its free way) — the customer expectation will be that it should arrive within 30 minutes. If it doesn’t, or inconsistently does, they’re going to get frustrated and fed up.

With these convenience goods, like alcohol or snacks or nappies etc, you’ve got to convince people that ordering from Kroger offers more convenience than popping to the local corner shop. Some customers are willing to pay for that perception — if Kroger can make good on the promise. If it can it might position Kroger as the convenient option, but will it make customers convert to doing all their grocery shopping through the company?

Ken Morris
BrainTrust

It will be interesting to see how well they can execute on 30-minute delivery. It will probably require a dedicated team to pick and deliver on short notice. Even with at $5.95 delivery fee, it will be extremely difficult to make a profit on this model. The race for the shortest/fastest delivery time is getting out of hand.

Consumers’ expectations continue to rise and this perpetuates high expectations. I doubt there are many instances where consumers really “need” groceries delivered in 30 minutes.

Steve Dennis
BrainTrust

As my friend Seth says “The problem with the race to the bottom is you might win. Or worse, finish second.”

Shikha Jain
BrainTrust

Of course customers want their produce to be delivered fresh and their groceries delivered right when they are needed. The big question will still be, can Kroger deliver on this promise? Have they figured out the logistics on the back end to avoid customer complaints?

Kroger is paving the way to figure this out for others and has typically been at the forefront of transformation as evidenced by their partnership with Ocado. They continue to set the standard for the rest of the players.

wpDiscuz
Braintrust
"The path to having seamless shopping experiences is something every retailer should have a strategy for. That said, it has to be within reason."
"Welcome to a world where unlimited possibilities will become expected realities."
"Wow! 30 minutes! Impressive, but is it realistic? It’s a good goal."

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