Dive Brief:
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An online grocery startup called called StorePower uses an array of technology to enable retailers to electronically let customers place orders and either pick them up or have them delivered without having to download a third-party app, according to a story in TechCrunch.
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The software-as-a-service package works for grocery stores of any size, letting customers even place orders by text messages. On the retailer side, the platform offers features like indoor mapping and multi-order picking to help stores manage packing and preparing orders. The platform also allows third-party shoppers who are preparing orders to bypass the checkout line.
- CEO Richard Demb told TechCrunch that StorePower has received an undisclosed amount of funding from Exigent Capital and individual angel donors. The service has agreements with a few individual grocery retailers in New York and Los Angeles, as well as with four yet-unnamed chains.
Dive Insight:
Online grocery sales comprise about 6% of the total $675 billion annual food spending market, according to Morgan Stanley research. Analysts expect that percentage to grow as time goes on.
However, it may seem as though someone maybe has invested too much in technology for a tiny section of the grocery market. With other third-party apps, it seems that grocery retailers are also encouraged to hand over a share of their (already) slim profit margin to someone else.
Even though people tend to move to urban areas, the grocery delivery market is now, and is likely to remain, a limited one. Despite some evidence to the contrary, Americans seem to actually enjoy their food-shopping outings, particularly as they age (and have more “spare” time, and welcome opportunities to meet, the in the store, and chat with friends).
Online shopping and home delivery of groceries also can never appeal to more than a relatively small segment of the population: those with predictable schedules that can sync with those of deliverers.
There's also the fact that a large sector of the population couldn't, if the thought ever crossed their minds, afford the add-on costs of having food delivered to them.
Third-party grocery delivery services, like Instacart and Postmates, make their money through delivery and membership fees, marking up grocery prices that appear on their apps, and charging the stores for the partnerships. Additionally, these services are only available in urban areas. However, enabling online ordering and delivery or pickup through the store itself could help keep everyone’s costs down.
Anyone in today's supermarket environment, be it a store or a third-party service, seeking to make profit – with a delivery service is going to need a really sharp pencil, because getting the numbers to balance is, and forever shall be, a delicate balancing act.