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Op-Ed: The push towards online grocery is all the rage right now

By Syra Sharif     Apr 6, 2014 in Business
It’s not hard to find whatever you need online, from electronics to clothes and furniture and now groceries through some companies.
While not as common, some people have bought groceries online with favorable results. Amazon, Wal-Mart and Trader Joe’s are among some of the companies considering some online grocery options. If done right, with local grocers getting involved in the effort then maybe it could be more successful though as it stands most people want to buy their own groceries and other necessary home items.
Most of the uncertainty comes from the fact that there is just so much involved. For example, take logistics. It can be hard to have items delivered on the same day, especially if there is a weather delay or the store is of some distance away. There is also the problem of food possibly going bad if there are perishable goods involved. A CNN Money/Fortune report noted that “until recently investors weren’t convinced that enough people would be comfortable with someone else picking out their produce to make for a big business.” People usually know what they want when they walk into a grocery store and having to wait for their order of food items might be inconvenient for those in a hurry. There are of course, those that might enjoy grocery shopping in person and are willing to try the online grocery shopping if they do everything else online.
Of course, investors also look to online grocery ventures which failed. Webvan at the end of the dotcom bust, which declared bankruptcy in 2001 had such great losses that it essentially put an end to any thought of a business of this kind for some time. The CNN Money/Fortune report points out though that while investors looked to Webvan as the proof they needed that this was bad investment it also “proved only that capital must be patient. Webvan grew too big, too fast, trying in the heady days of dotcom boom to behave like the information-technology startups that were it’s Silicon Valley neighbors.” Webvan was headquartered in Foster City, California and is now owned by Amazon. While it is a good example of what can go wrong with an online based grocery company, there are some companies which have had some measure of success.
One such company is getting attention for its unusual business practice. Instacart sends shoppers to grocery stores to fill orders, who pay full price for the groceries then deliver them by bicycle. Aditya Shah, head of expansion at Instacart, told Business Insider that “shoppers are trained well.” Meaning, canned foods are checked for dents and milk containers for the latest expiration dates. Each shopper is assigned to one person at a time to avoid mixing up orders. Instacart currently serves the San Francisco Bay Area, Boston, D.C., Philadelphia, Chicago, and recently New York. CNN Money/Fortune notes that Instacart has raised more than $11 million in venture financing, from big backers like Sequoia Capital who also backed the failed Webvan.
It seems like a promising idea for those that want their groceries delivered to them without going to the store themselves. On their website, Instacart claims to deliver groceries in 1 hour. The grocery store where the order is placed is not far or within range of where a person lives. Of course, that doesn’t mean that this is going to work and that everyone will just automatically start buying groceries online. In fact, it’s probably not something that most people will do. CNN Money/Fortune points out that: “In the absence of formal agreements with grocers, the service will remain pricey for customers and costly for Instacart, which says it’s “in talks” with grocers to forge formal partnerships.” Of course, Instacart is not the only such company. PeaPod is the oldest player in the online grocery market, having launched in 1989 and going public in 1997. Others include Good Eggs and Greenling.
Looking on Twitter to the reactions of users of Instacart and online groceries in general, the consensus is mostly positive. Who wouldn’t want to get groceries delivered to them is what some say while others say the discounts make it worth it. Others looks at what else besides food Instacart has to offer, including the sale of alcohol which launched in Philadelphia recently and cost $965 (a $265 license fee and a $700 filing fee). It’s not in all cities in the U.S., and while the company is likely hoping to expand those that use the service are using it when they need it most. This includes being unable to go to the store physically or let’s face it: Just being lazy.
Whatever your opinion, know that your groceries can be bought online. Amazon grocery trucks, AmazonFresh (out of what used to be Webvan), are doing fairly well after spending years experimenting with the service in their headquarters of Seattle. Last December, AmazonFresh launched in the San Francisco Area and some parts of Southern California. It is slowly branching to other cities, but wary of course of the need of such a service. It's likely though that if you want to order a few food items, they can come to your house fairly quick which is probably a positive. Of course, don't feel bad about not taking part in the whole online grocery store phenomenon at all because actual grocery stores are not going anywhere either.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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