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Since the early days of the dotcom era, companies have been attempting to crack the code on a way to sell groceries online for home delivery. Many companies have tried and failed, but a new breed of startup, along with a new internet savvy group of young shoppers may be ready to break the cycle. FreshDirect, along with Amazon, Kroger, Walmart, and other companies are using new technologies to make groceries ordered online work for American consumers. Jennifer Smith at The Wall Street Journal reports on FreshDirect:
FreshDirect launched its online-only service in 2002 in New York. Its green and orange trucks now provide next-day delivery to customers across the New York-New Jersey, Philadelphia and Washington, D.C., metropolitan areas, with plans to expand into Boston next. The private company says it generated between $600 million and $700 million in annual revenue in 2017.
It declined to disclose the cost of the new facility, which was financed with the help of a $189 million investment round in 2016 led by J.P. Morgan Asset Management, direct funding and incentives from state and local governments.
Online sales remain a sliver of the more-than $700 billion-plus U.S. grocery market. Market-research firm Kantar Worldpanel projects that U.S. e-commerce sales of food and alcohol will reach roughly $40 billion by 2021, up from $14.1 billion last year.
Some of the biggest names in retail want in.
Amazon, Target Corp. and other large companies have invested hundreds of millions of dollars to expand food delivery and build out their grocery e-commerce operations. Supermarket chain owner Koninklijke Ahold DelhaizeNV’s Peapod unit, the longest-running online grocery service in the U.S., has expanded to 24 markets and is investing in technology to cut its handling and delivery costs.
Walmart Inc. said this month that Jet.com, the online retailer it bought two years ago, will open a fulfillment center in the Bronx this fall to help roll out same- and next-day grocery deliveries in New York City.
The grocers are trying to solve one of the toughest problems in home delivery: Getting food to doorsteps in the same condition consumers would expect if they went to the store themselves. Delivering perishables is trickier than dropping off paper towels or dogfood. Fruit bruises, meat spoils, eggs break. Botched deliveries can upend dinner plans, leaving customers angry, and hungry.
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