US grocer Albertson’s Inc has expanded its online grocery delivery service this week to consumers in Los Angeles, Orange and Riverside counties, and the company says it is using a strategy to ensure it does not incur the infamous losses of other e-tailers.
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Analysts have argued that bricks and mortar grocers are more likely to be able to work an online service profitably because of the infrastructures already in place, the warehouses and order pickers, for example.
Banking on these lower overheads, Albertson’s believes that it will be the service to make the Southern California market work; an area with an affluent, but widely spread population, a mild climate and more supermarkets per capita than anywhere else.
Importantly, Albertson’s has linked up with Aliso Viejo-based small delivery company WhyRunOut.com, which currently delivers food from Stater Bros. This will eliminate the need to invest in trucks and drivers.
The fees for the service are reasonably high, however. While Albertson’s says its time pressed customers will pay the extra, analysts are concerned that the grocer is not covering its costs. To make up the difference, Albertson’s said it will attempt to sell more (and more higher-margin) products.
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By GlobalData
