Grocery retailer Publix Super Markets Inc., which has had an on-again, off-again history with e-commerce services, will start a pilot program with delivery service Instacart Inc. to deliver online orders in parts of Miami.
The service area includes 37 ZIP codes in the Miami area, from Hallandale Beach to South Miami, the company said Wednesday. “We know this service is something our customers are interested in, and we’re excited to learn more as we move forward with this pilot,” says Kevin Murphy, Publix senior vice president of retail operations. “We chose Instacart because we believe the experience they provide aligns well with the needs of our company, associates and customers.”
Publix shoppers can place online orders via a dedicated Publix page on Instacart’s site, which is offering free delivery on the first order over $10 and delivery within an hour.
Privately-held Publix is the dominant grocer in its home-base of Florida, where two-thirds of its 1,118 stores are located. The chain’s remaining stores are scattered throughout the Southeast. Last year, the chain generated $32.4 billion in revenue, according to the company.
The Instacart arrangement marks yet another return to e-commerce for Publix, which exited online sales in early 2012 when it stopped accepting online orders for curbside pickup and, before that, in 2003, when it shut down its online grocery site. Four years ago, however, Publix launched online deli orders that allow shoppers to place orders on desktops or mobile devices, and then pick up and pay for their products at a designated spot at the deli department.
Instacart operates in 25 metropolitan areas in the United States and works with more than 100 retailers, most of which are grocery merchants, including Whole Foods, Costco Wholesale Corp., No. 8 in the Internet Retailer 2016 Top 500 Guide, and Target (No. 22) for same-day grocery delivery. Instacart supplies the technology to enable online orders as well as employees who pick groceries from store shelves and the drivers—mostly contractors—who deliver them in their own vehicles.
Instacart depends on delivery fees, customer membership fees and product markups for its revenues. It also receives a retailer-paid fee, which varies and is not disclosed, based on the number of orders Instacart fulfills from the store.
Typically, delivery starts at $5.99 per order, and all orders must be over $10. Instacart Express members, who pay $149 for an annual subscription, receive free delivery on orders of $35 or more if the customer chooses two-hour or scheduled delivery. One-hour deliveries are available for additional fees. Instacart also can institute a “busy pricing” fee, much like surge pricing often used by ride-sharing apps, during delivery times in high demand.
Supermarket chains have been expanding the reach of their e-grocery services. Kroger Co. (No. 83) will add ClickList, its buy online, pickup curbside offering to 20 stores in Dallas and Houston this summer. In June, Walmart.com (No. 4), rolled out e-grocery services, called Walmart Grocery, to stores in and around El Paso, Texas; Baton Rouge, La.; and New Orleans, bringing the service to more than 30 metropolitan areas in the United States. A year ago, Wal-Mart offered it in five areas.
A Harris Poll of nearly 2,000 consumers, taken via phone surveys in mid-June, found that 31% of U.S. consumers bought food online in the first half of 2016. Online-only food retailers also were among the fastest-growing e-retailers in 2015, based on year-over-year sales growth. NakedWines.com Inc. (No. 322), Boxed Wholesale (No. 405) and Blue Apron Inc. (No. 231) are among the top 25 fastest-growing e-retailers in the Top 500 Guide, which ranks the nation’s 500 largest e-retailers based on 2015 web sales.