Ultrafast delivery startups are coming for your customers.

Are you paying attention?

Can grocery stores create in-house solutions fast enough to prevent a total takeover?

JP Morgan warns that the heavily-funded grocery delivery sector will completely transform the supermarket industry as we know it. Ultrafast delivery companies like Instacart have made bold moves and acquisitions in recent months that have analysts wondering what’s next for the future of retail.

“This is a data war. He or she who has the data wins," warns Ken Morris, managing partner at Cambridge Retail Advisors. “This is the Trojan Horse [for] retailers. They're going to come in. They’re going to own the customer, and then they're going to compete…I think it's going to be very similar to Amazon."

Ultrafast Delivery Companies Plot a Total Retail Takeover

While running a busy supermarket, it can be difficult to keep up with the changing retail landscape. However, there are a number of aggressive players looking to take your slice of the grocery consumer pie. Let’s get up to speed with the recent events and emerging trends:

  • Consumers demand convenience. Bank of America estimates the market for home delivery groceries will increase from $66 billion this year to $156 billion by 2025. Currently, DoorDash leads the market share in convenience store ordering online, with GoPuff, Uber Eats, Instacart, and Grubhub lashing at its heels. GoPuff, for instance, has seen triple-digit sales growth each year of its existence and is currently opening one to two new storefronts daily. Meanwhile JOKR founder Ralf Wenzel minces no words in describing his ambitions: “We are building an Amazon on steroids,” he says, adding: “It’s not just convenience on demand, but a new generation of retail.”
  • Delivery gets faster. Remember when Amazon announced they could deliver some items in as little as two hours? Then Instacart showed up promising to deliver the goods as quick as it takes for a pizza to arrive. Fast-forward to this Winter: ultra-fast delivery startups are now offering doorstep dropoff in as little as 10 minutes. These companies not only own the logistics with employed fleets of riders and shoppers, but they’ve invested in “dark stores” — delivery-only fulfillment centers — that enable them to go the last mile in no time at all. Similarly, DoorDash and Kroger are building warehouses to increase 30-minute deliveries. Not to be outdone, Instacart plans to test 15-minute grocery delivery as soon as February 2022.  
  • Players consider how they can merge to dominate the market. Over the summer, there were alleged talks of an Instacart takeover by DoorDash, which ultimately fell through due to concerns about anti-trust regulations. “It’s a land grab. The jury is still out on who is going to be the winner,” Daniel Ives, who covers technology companies at Wedbush Securities, told CNN. “The Instacarts, the Amazons, the other behemoths, we expect them to chase this market. It could result in acquisitions.” Though Amazon competes directly with grocers through its acquired Whole Foods brand, Amazon is quietly partnering with grocery retailers to compete directly with Instacart by using Amazon Fresh couriers to provide delivery service.
  • Instacart invests in ecommerce with FoodStorm acquisition. On October 7th, 2021, Instacart acquired FoodStorm, which offers order-ahead and catering software, with a goal to encourage shoppers to choose retailers for more prepared foods and everyday meals like pizza, sushi, and birthday cake.
  • Instacart moves deeper into physical retail technology. On October 19th, 2021, Instacart acquired Caper AI, a startup that builds cashierless checkout technology and “smart” data-capturing, touchscreen-enabled shopping carts in a $350 million deal. This is the company’s first major move inside stores. The idea is that people can start their lists in the Instacart app, look up recipes and find coupons while they shop, and use Caper technology to automatically ring up items in-store. Meanwhile, Instacart gathers insights into what shoppers browse, add to lists, put in the cart, and take out of the cart.
  • According to MSN, Instacart just hired a top Walmart executive in order to further position itself to win.

But who owns the consumer data then? Not grocers, but Instacart — who uses this knowledge of shopper behavior to gain greater leverage in its digital advertising business, strengthen relationships with CPG brands, and ultimately keep you where they want you (wholly dependent on them and out of direct competition).

At this point, it’s still unclear what the outcome will be from these strategic moves on the chess board. Do customers really care whether their orders arrive in 15 minutes or 30? Will shoppers forego smart carts entirely  in favor of their phones? With billions in venture capital, there’s plenty of room to play around.

Must Retailers Pay To Play?

So, should brick-and-mortar grocery retailers partner up with ultrafast delivery firms? “You cannot afford to be caught napping,” says Jason Soar, CEO of ThinkThru consulting firm. “The consumer has more control than ever before, [and] speed and accessibility is the game we have to play today,” he explains. He suspects partnerships are likely as a way of testing the waters with new services before investing.

However, Neil Saunders, managing director of GlobalData Retail, suspects, “There will be even more… reluctance with Instacart, because Instacart isn’t just a pure technology company. It obviously is a company that has an interest in retail and potentially wants to get into retail itself at some point.” More data makes the fast delivery service company a “potentially very big threat.” At the moment they’re positioning themselves as a solution, while continuing course on a mission to become a retailer with dark stores and strategic technology acquisitions.

Executive director of New England Convenience Stores and Energy Marketers Association Jon Shaer believes that instant delivery service isn’t so much a direct threat as it is a call to arms to adapt and evolve. He’s urged members to find partners that can enable them to start their own deliveries and better compete over the long haul, rather than relying on fast, fly-by-night companies that cut into bottom line profits.

It’s important to remember this: while third-party delivery services can feel like a real threat, companies in the grocery business for decades still have value to quality-loving consumers. Your brick-and-mortar grocer knows how to keep produce fresh, train staff, and maintain standards for excellence. You have every capacity to collect your own data and deliver personalized convenience to consumers directly. You can churn a profit with your own cross-channel retail media advertising endeavors that also help you serve your customers better.

There’s Another Way To Survive the Rise of Ultrafast Delivery

If you’re in retail grocery, you have every reason to be skeptical of ultrafast delivery. While they promise access to expanded services and technology, they are not always your friend. At the end of the day, they own the customer experience and the data — not you. It may seem like the fight of your life to compete with the Venture Capitalist spend, the mergers and acquisitions, and the big data of these companies, but you can take back control when you work with Swiftly.

Here’s how our digital platform company is different:

  • We want YOU to achieve higher revenue and better customer engagement.
  • YOU can generate revenue to cover the expense and effort of upgrading your existing mobile commerce infrastructure.
  • Swiftly gives you the technology to compete: click-and-collect, subscriber delivery, in-store scanning.
  • Our team helps you unite the customer experience, including pre-shop, in-store, and post-shop.
  • Our all-in-one platform connects all the touchpoints throughout the customer journey, online and offline.
  • Inspire shoppers not just to order online or in-app, but IN STORE, where it’s most profitable.
  • All data collected through your Swiftly-powered universe is 100% owned by YOU, not us.
  • We are a true white label partner, committed to helping you build loyalty, value, and your future.

You don’t have to cave to Amazon, Google, or Instacart — you can get ahead. Contact Swiftly to learn how you can build your own retail platform & retail media network, with analytics and closed-loop reporting built in.

Now you can leverage your own customer relationships and data to own the shopping experience, creating loyalty and lasting value.

One Platform. One Experience.

Our platform connects retailers and brands to more customers ​where is matters most - in-app and in-store to drive sales.

Contact us to learn more.

Next > Part 3: Grocery Has a Loyalty Problem

Back > Part 1: 3rd-Party Delivery Services, Not Good For Retail