Grocers Are Racing to Fulfill Your Online Orders
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What is the main topic discussed in this episode?
Here's your money briefing for Friday, December 13th. I'm J.R. Whalen at The Wall Street Journal in New York. Grocers are betting you'll be doing less shopping in the produce aisle and more shopping on the company's app. Wall Street Journal reporter Jaywon Kang will explain how grocery companies are spending millions on building new warehouses to fulfill online orders fast. First, some money in market news you should know. PayPal is suing the Consumer Financial Protection Bureau over the agency's new regulations for prepaid payment cards. The rule requires that those cards that allow users to load funds directly without having a bank account must cover fraud and unauthorized charges. But the agency is also extending those rules to digital wallets, and PayPal is not happy.
Which grocers are building micro-fulfillment centers to speed up online orders?
The company argues that digital payment tools such as PayPal, Venmo, and Google Pay are fundamentally different from prepaid cards, and the new rule could hamper their ability to offer credit products to consumers. For example, the regulation bans consumers from linking a credit card to a digital wallet for the first 30 days after they acquire the card.
Grocers have been late to the e-commerce game, but in the era of order it now, need it now, the nation's largest stores are spending millions of dollars on warehouses used to fulfill online orders. But can grocers fill online orders fast enough? Wall Street Journal reporter Jaywon Kang joins us to explain. So, Jaywon, which grocers are taking this step of building small fulfillment centers?
Why are large grocery chains investing millions in warehouses for online fulfillment?
A bunch of them are looking to build smaller warehouses that are either inside their stores or nearby. Albertsons is making a pretty big push to do that, as are Walmart and some of the regional chains like Meyers.
Now, these fulfillment centers are expensive, but do the grocers see upside in the online grocery business?
Absolutely. So figuring out grocery delivery has become really critical for food retailers that are searching for new products.
Who are grocers competing with in the online grocery and delivery market?
areas of growth and grocers are making bets to make sure that they're well positioned for the future.
Who is their main competition in the online grocery space?
Amazon obviously is becoming a bigger and bigger player in the food delivery space, particularly after acquiring Whole Foods three years ago. And for the most part, they're honestly kind of competing against each other to make sure that they're capturing as many consumers as possible as people become more open to ordering food online.
So why have food retailers been slower than others to embrace e-commerce?
Yeah, for the most part, I mean, you know, consumers still want to go to stores. physical grocery stores to check out how fresh their produce is, what their meats sort of look like. And for that reason, food has been a little bit slower to adapt to all of these changes compared to some of the other categories like electronics, books, and even apparel.
Is there a difference in how much consumers purchase when they're in the store versus home delivery?
Why have grocery retailers been slower than other categories to adopt e-commerce?
So far, research indicates that people spend more in the stores compared to when they're just purely ordering online. But I think a lot of retailers are sort of anticipating that number to increase as delivery becomes more common.
A lot of these big fulfillment centers being built will be offering next-day delivery. But is that fast enough for what consumers want?
Definitely not. I think a lot of people are learning to expect their food to get delivered within an hour or two hours. In other parts of the world, like Europe especially, next-day delivery has kind of become the norm. But in the U.S., the move is definitely shifting towards same-day delivery.
But smaller grocers are taking a different route than the larger grocers to serve customers.
Smaller players, whether they're regional or local, simply just don't have the capital that's needed to build out these businesses. warehouses and fulfillment centers. So what they're doing is partnering with third-party services providers like Instacart that can handle everything for them.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:50
2
Which grocers are building micro-fulfillment centers to speed up online orders?
0:50–1:40
3
Why are large grocery chains investing millions in warehouses for online fulfillment?
1:40–2:11
4
Who are grocers competing with in the online grocery and delivery market?
2:11–3:21
5
Why have grocery retailers been slower than other categories to adopt e-commerce?
3:21–4:43
6
Can next-day or same-day delivery meet consumer expectations for grocery speed?
4:43–5:41
7
How are smaller grocers serving online shoppers without building fulfillment centers?
5:41–5:52
Speakers
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