Dive Brief:
- Hy-Vee has partnered with Instacart and Shipt to grow its grocery e-commerce footprint in more than two dozen Midwestern markets.
- The company said these partnerships will not affect Hy-Vee Aisles Online, its online shopping service that offers home delivery and store pickup. Instacart and Shipt will expand Hy-Vee’s delivery areas and same-day delivery to reach more customers, company officials told the Des Moines Register.
- In a statement, Hy-Vee's executive vice president of e-commerce Matt Ludwig said, “As online grocery marketplaces experience rapid growth, Hy-Vee is matching pace to provide our customers a variety of personalized grocery delivery options.”
Dive Insight:
Hy-Vee has been offering Aisles Online for nearly three years, but the partnership with delivery experts Instacart and Shipt should accelerate the grocer’s delivery presence in key markets as the online channel surges. According to the Food Marketing Institute and Nielsen, nearly half of Americans now buy their groceries online and that number rises to 61% for millennials. That number is expected to increase to 70% by 2022.
Shipt will begin delivery in August in cities such as Iowa City, Dubuque, Waterloo, Cedar Rapids, Davenport and Mason City. The service also will be available in larger cities in Minnesota, Illinois, Nebraska, Missouri and Kansas. Instacart, meanwhile, will begin delivery in metro Des Moines in August. Hy-Vee plans to expand delivery to even more cities this fall, the Des Moines Register reported.
Both services are price competitive with each other, offering comparable delivery fees along with membership deals that can offset those fees. That doesn’t mean the actual experience between the two services is the same, however, nor does it mean the experience is similar to Hy-Vee’s brand experience. This disparity can pose a risk – consistency is important in e-commerce, both from a branding and a user-experience perspective.
So why two delivery service companies, and why not just expand its Hy-Vee’s Aisle Online business? By partnering with delivery specialists, Hy-Vee is able to scale quickly while also tapping into the brand awareness both services carry. As consumer demand for online shopping increases, grocers want to be able to cast the widest net possible.
At the same time, the growth of Aisles Online may eventually overshadow Instacart and Shipt. The company is already putting e-commerce fulfillment centers in place to support its growth, and it no doubt prefers the branding and operational control its in-house service offers. As with all the other retailers they service, Instacart and Shipt will need to keep evolving in order to prove their long-term value.