On Wednesday, Kroger launched a grocery delivery service in four US cities, a move Gartner L2 predicted two months ago.
In June, Gartner L2 analysis found that Kroger was in the process of testing a ship to home, non-perishable delivery program, in an attempt to further compete with Amazon and Walmart and their continued push into the food business.
Non-perishable grocery represents up to 40% of grocery sales in the US. It’s the “low hanging fruit” for e-commerce, as it doesn’t require the full “cold-chain” to get products to customers’ doors. One Click Retail estimates that Amazon’s Non-Perishable and Packaged Foods business generated $650 million in sales last year, up 48% year on year. With the acquisition of Whole Foods, Amazon now has every tool in its quiver (store-based fulfillment via Whole Foods, warehouse-based fulfillment by Amazon Fresh and Prime Now, and third-party inventory via Prime Now).
Previously, Kroger heavily relied on “store-based” fulfillment mechanisms, including Instacart, Shipt, and its proprietary “Clicklist” pickup system. But the recent announcement of a partnership with Ocado and the launch of this online direct-to-consumer parcel delivery program indicate that Kroger is attempting to expand its reach beyond the geographic areas where it and its subsidiaries have stores. Will Kroger be able to “out-Amazon” Amazon before it’s too late?