The Kroger Co. has partnered with Instacart to launch Kroger Delivery Now, a virtual convenience store fulfilled by Kroger that delivers fresh groceries and household essentials in as little as 30 minutes. The service includes 25,000 items ranging from diapers to snacks to over-the-counter medication.
Kroger reached more than $10 billion in ecommerce sales in 2021, and the grocer aims to double both its digital sales and profitability rate by the end of 2023, according to CEO Rodney McMullen. Kroger Delivery Now, which was launched in anticipation of reaching this goal, will leverage the retailer’s network of more than 2,700 stores to minimize delivery times.
“Kroger Delivery Now is a differentiated solution in the ecommerce industry, not just the grocery sector,” said McMullen in a statement. “Our new service provides customers with one more way to shop with us and addresses the importance of convenience and immediacy. Operationally, this service reaches up to 50 million households and it’s an expansion of our thriving ecommerce model that demonstrates strategic interplay among our assets, expansive store network, supply chain and dedicated fulfillment centers and fleet, joined by Instacart’s unrivaled fulfillment model and last-mile technology to provide our customers with anything, anytime, anywhere without compromise.”
Additionally, Instacart has launched the Convenience Hub in the Instacart Marketplace to enable the delivery of convenience essentials 24/7. Instacart Express members can receive free Priority Delivery in as fast as 30 minutes on orders over $10. Convenience orders on Instacart are up more than 150% since May 2021, and nearly 20% of shoppers choose Priority Delivery at checkout.
Kroger and Instacart have been partners since 2017, when the companies launched two-hour grocery delivery and steadily expanded it over the following year. Kroger launched its own internal delivery service with 55,000 items in 2018, and expanded its collaboration with Instacart to include alcohol in 2019. Today, Instacart delivers alcohol from nearly 1,500 Kroger stores across 15 states.
Kroger and Instacart will face fierce competition in the convenience store delivery space. Virtual c-store Gopuff has raised more than $2 billion in new financing in 2021 alone on a valuation of $15 billion as it seeks to dominate “instant needs” delivery. However, Kroger has the advantage of scale — Gopuff primarily delivers from 250 micro-fulfillment centers, a relatively small number compared to Kroger’s massive store footprint.
Gopuff’s advantage may be on the data side. The retailer owns rideOS, a platform that provides access to proprietary technology for advanced routing, on-demand dispatch and fleet optimization. Additionally, the Gopuff Business Insights practice also regularly polls its users’ favorite items, and even their mental states, to help the company understand not just what its customers are buying but why.