Woodman’s Markets grocery store’s first foray into online ordering and delivery has resulted in a 65-75% jump in new customers and an average order size nearly five times that of in-store customers, the company says.
The grocery chain, with 16 stores in southern Wisconsin and northern Illinois, launched online grocery capabilities last fall, offering home delivery to consumers in the Madison market and pickup at one Madison location. Since then, the average order online at ShopWoodmans.com has climbed 7.5% to $144 measured since Jan. 1 and from $134 in the four months it operated last year, a spokesman says. That’s 476% higher than the average in-store order, which is $25, says Woodman’s vice president Clint Woodman, great grandson of the founder. Woodman says many of the roughly 40 orders placed each day come from Millennials and college students, and the difference in average order value shows that these consumers are willing to spend more if they don’t have to cart home the groceries.
Woodman’s, along with grocers nationwide, face increasing competition in their marketplace, including with Instacart, Peapod, Hy-Vee and small grocers like Metcalfe’s On the Go and Fresh Madison Market.
Woodman’s is poised to expand its online service in the next few weeks from Madison, Wis., into Milwaukee, and expects to launch it into the Chicago region by early 2017. The retailer charges a $14.95 delivery fee per order no matter the order size. The retailer is mulling over whether that is the right delivery fee. Woodman says consumers place orders in the $300-$400 range daily, and a few $700-$800 orders come in every week.
“It’s great that the sales are large, but it takes a lot more time and resources to pick an order of that size,” he says of the $700-$800 orders that come primarily from senior citizen homes, day-care centers and other places housing large numbers of people. He is still deciding whether to introduce a sliding-fee scale based on order value.
Woodman’s sells the same 100,000 items online at the same price, plus the delivery fee, as it does in its 16 stores that each measure 240,000 square feet.
Woodman’s uses an online ordering platform from GrocerKey Inc. The vendor also picks and delivers consumers’ orders. Orders are picked at a warehouse at one of its stores in Madison. Woodman’s Markets was the lead investor in GrocerKey’s seed round of equity and convertible debt funding last spring, investing $500,000 in the total $690,000 financing round.
The e-commerce platform took about two months to set up, and Woodman says the biggest challenge was ensuring all 100,000 items and the accompanying photos were listed correctly. To keep all listings up to date, GrocerKey receives a daily item file from Woodman’s FTP server and cross-references each product with a backend database of products that GrocerKey has stored, says Jeremy Neren, GrocerKey founder and CEO. Each item includes an image and, when possible, a written description, allergen information and nutrition labels, Neren says.
Shoppers in Madison may place online orders from 7 a.m. to 9 p.m. daily. They receive a text message when the delivery leaves the warehouse the same day, a spokeswoman says. The delivery window is two hours. Shoppers may log into their accounts from a desktop, tablet or mobile device to track the delivery. Shoppers use their emailed receipt as confirmation for the in-person delivery, and may remove or change an item on their shopping list until three hours before delivery.
GrocerKey employees also pick online orders for customers who would rather collect them at the store—a service that will be expanded to other stores in the future. An attendant hands them their orders while they remain inside their cars. The pick-up fee is $9.95. Shoppers provide their order number and last name for pickup. The pickup times are 11 a.m.-2 p.m. and 4 p.m-7 p.m. seven days a week.
GrocerKey charges its retail clients a fee, usually 2.5%-5%, on each transaction conducted through the online store. Its other retail clients include Piggly Wiggly, Roth’s Fresh Markets and Willy Street Co-op.