When I moved to New York City seven years ago, one of the first shocks was the grocery stores. I grew up in Connecticut, land of clean, well-lit Stop & Shops with huge parking lots, wide aisles and every kind of chip imaginable. In Manhattan, meanwhile, grocery stores tend to be dim, crowded and expensive.
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Yet the city is also well known for certain institutions that came to make me a big fan of grocery shopping in the city. For four years, I lived on the Upper West Side, blessed by a trifecta of famous stores — Fairway, Zabar’s and Citarella — that more than satisfied my grocery needs. While most of my household shopping has moved online — and you’ll never catch me dragging home paper towels and trash bags from Duane Reade again — I was reluctant to give up the analog grocery shopping experience.
Recently, though, we moved to a new neighborhood where there aren’t as many good supermarkets. So I wondered if it was time to start shopping for food online. FreshDirect is the most popular service in the city; launched in 2002, it now has over 600,000 customers in the tristate area. Stop & Shop’s Peapod, which operates in 24 markets nationwide, started delivering in Manhattan in 2011 and aims to fight against FreshDirect with lower prices and free delivery for new customers. Amazon (s AMZN), too, is looking to get into the space, though its AmazonFresh is only available in Seattle and Los Angeles for now. And a few startups, like Blue Apron and Instacart, are starting to focus on grocery delivery in certain niches.
It’s a hot space, with Forrester estimating that online food shopping will be a $21 billion industry in the U.S. by 2016. After experimenting with a variety of services, here is what I like and don’t like about online grocery shopping, and why I think the area is ripe for innovation.
Forget serendipity (and impulse candy purchases)
People always say not to grocery shop when you’re hungry, and there’s no doubt that my customary post-work shopping time has led to a lot of questionable purchases (“I haven’t had rainbow sherbet in forever!”). One benefit of online grocery shopping is that you can plan out your shopping list more carefully. If you want candy, you have to search and add it; you can’t just grab it and throw it in your basket. That could lead to healthier food shopping and more money in your pocket.
On the other hand, one of my favorite parts of grocery shopping is the chance to wander through the aisles and stumble across new products (which is the reason that my husband hates grocery shopping with me). In person, you can also buy according to what looks good and check the freshness of perishable stuff like meat and produce. This is true of all types of shopping, of course — if you’re buying a dress online, you obviously can’t rub the fabric between your fingers or check for deodorant stains — but it seems more pressing when it comes to stuff you’re putting in your stomach.
It’s not cheap, it’s not green, and you usually can’t clip coupons
I haven’t done a super-detailed price comparison of online versus physical grocery shopping, but in general, I’ve found that you will pay a little more if you shop online for groceries. That’s different from shopping for other stuff, where prices are often better online than they are at physical stores. Part of the higher cost of online grocery shopping is due to delivery fees, which vary by service but are usually a few dollars per order. FreshDirect also offers an unlimited delivery pass for $69 per six months, and Amazon is offering a “Prime Fresh” membership to customers in Los Angeles: For $299 per year, they get unlimited grocery deliveries, including same-day, on orders over $35, plus all the other benefits of Prime. (A regular Prime membership is $79 per year.)
Coupon-clippers are also generally out of luck with online shopping: FreshDirect does offer some e-coupons and weekly specials; Peapod seems to have more weekly specials, offers gas rewards to Stop & Shop card members (not particularly useful in urban areas where a lot of people don’t have cars) and lets you give printed coupons to your delivery person so that they can applied to your account. If you’re a devoted bargain-hunter, though, online grocery shopping likely isn’t for you.
One final quibble: Like most other types of online shopping, these services aren’t green. Food comes in cardboard boxes and plastic packaging (an exception is AmazonFresh, which delivers most groceries in reusable temperature-controlled totes) and your reusable shopping bags are of no use here.
Is there a better solution from a startup? Not yet
FreshDirect and Peapod are both over a decade old, and shopping on them in 2013 feels the same as it did in 2003. Their websites are still clunky and dated-looking (especially Peapod’s). Both companies have mobile apps that have garnered three-star ratings on iTunes (s AAPL) — and while that’s not terrible, I’m ready for a few modern, mobile-friendly startups.
The problem is that a grocery delivery service requires a lot of infrastructure, including refrigerated warehouse, trucks and delivery people; also, in general, groceries are a low-margin business, meaning most supermarket chains are unlikely to be able to add this level of service and remain profitable. Amazon is in a great position to compete here, and I’m anxiously awaiting AmazonFresh’s rollout on the East Coast (a date hasn’t been set). Because of these limitations, however, smaller startups may have a harder time launching.
That’s not to say that some of them aren’t trying. For example, Blue Apron, a Brooklyn-based company that delivers via UPS on most of the East Coast and in some other states, offers a once-a-week subscription that delivers all the ingredients needed for three meals. Shipping is free, but the service itself isn’t cheap: It’s $9.99 per person per meal, so three dinners for four end up come in around $120. That costs about the same as takeout, so you’ll need to look at what you’re already spending on pizza and Chinese to see if it’s worth it.
When I tested the service, I found the recipes themselves fairly basic and a little boring (one example: plain tilapia on a bed of plain sautéed vegetables). But the ingredients, including meat and produce, were high-quality and packaged to stay very cold.
There’s also the Y Combinator-backed startup Instacart, which will send a personal shopper to Whole Foods, Trader Joe’s, Safeway or Costco to pick up your groceries and deliver them to you. It’s only available in the San Francisco Bay area for now, and it sets its own prices rather than charging the price the store charges, but it is certainly a way to get your Joe’s O’s without having to leave your house.
For now, online grocery shopping seems best for the well-organized person who hates grocery stores. Because of the services’ delivery fees, this isn’t a cost-effective way to grab groceries for just one dinner: To get the best value, you have to plan out your meals a few days in advance and order all the ingredients at once. Even when I have tried to do this, I usually forget a couple things and have to make a separate trip to a physical store anyway. And once I’m at that store, smelling the cookies in the bakery section and eyeing the produce, I remember the reasons I like grocery stores in the first place.
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Photo illustrating this post courtesy of Shutterstock / Lisa S.
FreshDirect boxes: Flickr / Chris Morran