Amazon Instant Pickup and Aldi’s partnership with Instacart illustrate gains of online grocery shopping

By Elizabeth Crawford

- Last updated on GMT

Amazon launches Instant Pickup and Aldi partners with Instacart

Related tags Online grocery shopping Retailing Online shopping

The launch of Amazon Instant Pickup and Aldi’s new partnership with Instacart, both announced this week, propel forward online grocery shopping, which according to industry analysts is quickly gaining momentum despite significant lingering challenges.

Amazon, which is already making waves in the online grocery shopping channel with the planned acquisition of Whole Foods Market and its new meal kits, is now taking on the corner store for ultimate convenience by offering some Prime and Prime Student members an option to pick-up snacks, drinks and electronics “in two minutes or less.”

“Hundreds of need-it-now items like food, cold drinks, personal care items, technology essentials and Amazon devices”​ will be available at five of Amazon’s fully staffed pickup locations – Los Angeles; Atlanta; Berkeley, Calif.; Columbus, Ohio; and College Park, Md., according to the company.

As illustrated by the pickup locations, the new service is heavily aimed at millennials and college students who are more likely to impulse shop and embrace buying groceries online.

According to Euromonitor International’s Head of Retailing Michelle Grant, “the percentage of Americans between the ages of 20 and 29 who shopped online for groceries daily or weekly doubled in the past three years. With younger generations shopping more frequently online for groceries, it is likely this channel will grow.”

Aldi’s entrance to ecommerce is ‘milestone’

Aldi’s move into online grocery shopping also is a “milestone for the development of online grocery,”​ in that it shows “the platform isn’t limited to big box, one stop retailers like Walmart and Kroger anymore,”​ said Mike Paglia, director of retail insights at Kantar Retail.

He adds: “Smaller retailers with more differentiated value propositions can now tap into eComm’s rise. It just adds to the momentum and forces retailers and suppliers alike to take notice and give greater consideration to the platform.”

Aldi is doing this by launching a pilot program later this month with Instacart that will allow consumers to shop for groceries online and have them delivered in as little as an hour or up to a week later – whatever works best for their schedule, according to the retailer.

“We know consumers are looking for new ways to save time and money,”​ and partnering with Instacart allows Aldi to meet this need “at the click of a button,”​ the retailer said in a release.

Like Amazon Instant, Aldi will pilot the program in Atlanta and Los Angeles, but it also adds Dallas to the list.

Aldi’s foray into US ecommerce also is significant because it “could maximize visibility to Aldi’s price leadership, especially on private label,”​ Paglia said.

In the regard, he adds, if Aldi’s ecommerce play gets enough attention it “could effectively ‘reset’ price points on a lot of core items in shoppers’ minds. If that occurs, it’s only going to widen the price gap between private label and brands, and compel manufacturers to better justify ‘higher’ price points to shoppers.”

Ecommerce is growing exponentially

Both companies’ moves tap into Americans' growing acceptance of online shopping in general, which Euromonitor says is slowly filtering over to groceries.

“Food and drink sales through internet retailing … grew by 57% over the past five years,”​ and Euromonitor expects “another 60% growth in the next five years,”​ Grant said.

She added, “According to Euromonitor International’s Global Consumer Trends Survey, 25% of Americans shopped for groceries online at least once in 2013. The percentage increased to 38% in 2016.”

The frequency of online grocery shopping also increased in that time frame, she said.

But for the online grocery channel to really take off, it must overcome significant hurdles, Grant warned.

“Consumers tend to prefer the store experience, especially to inspect the fresh products. They also hesitate to pay for delivery and do not like waiting at home for the delivery,”​ she said, adding, “Another issue is ‘out of stocks’ that make for a less compelling customer experience.”

Despite these challenges, as indicated by Aldi’s and Amazon’s most recent moves, she said, “the race is on to crack this market.”

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