Having an ecommerce channel available was 'a blessing' when the city shut down during the coronavirus pandemic and consumers started stocking up on essentials.

When Grace’s Marketplace decided to start selling online, the family-owned, upscale grocery retailer had no idea New York City—the location of one of its two stores—would be the epicenter of the coronavirus outbreak in the United States. But when the pandemic hit, Grace’s was ready with a service many of its customers wanted. 

Daniel Soares, strategy manager at Grace’s Marketplace

Grace’s opened in 1985, but the family has been in the grocery business for more than a century. In 1916, family patriarch Louis Balducci founded Balducci’s Produce Market. Later, Balducci, along with his daughter Grace Balducci Doria and her husband Joe Doria, opened New York City’s first modern grocery store with produce, pantry staples, and a butcher shop and fish shop in one store.

In recent years, Grace’s saw ecommerce as a natural step toward reaching new customers and remaining competitive in a changing retail sector. “The family recognized that ecommerce was something that had to be done,” says Daniel Soares, strategy manager for Grace’s and grandson of Grace Balducci Doria, the company’s namesake.

Deciding to sell online

But going online was never going to be simple, Soares says. The retailer’s business practices were “quite antiquated” and inventory tracking was not computerized, he says.

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The business practices were fixable—and in fact, the grocery retailer has taken steps toward modernizing the way it tracks inventory, Soares says. However, the trickiest part about moving online wasn’t technical, but cultural. Grace’s was determined to retain the intimate shopping experience customers expect when they shop at Grace’s Upper East Side store in Manhattan, or the retailer’s location in Greenvale, New York.

Building a standalone ecommerce operation would be too expensive and technically challenging, Soares says. Plus, partnering with a delivery company like Instacart would mean delegating order-taking, picking and packing to a third party that did not know Grace’s stores or its customer base. 

“Our goal is intimacy at scale,” Soares says. And he could not think of a way to achieve that unless his staff received the orders and packed them. He also wanted Grace’s employees to retain their ability to call customers directly about substitutions and other kinds of questions.  

Online partners that care “about quality and service”

To accomplish all that, Grace’s went online in early February via Mercato Inc., an online marketplace launched in 2015 that offers same-day delivery of groceries and specialty foods from 1,049 independent retailers in 6,765 ZIP codes in the United States. 

“We were looking for an online partner that cared about quality and service as much as we did, and also provided the ecommerce tools we needed to offer delivery of prepared foods and our vast inventory of hard-to-find, curated items,” Soares says. “Mercato checked all the boxes.” 

“Day-before-Thanksgiving” sales

For now, Grace’s is maintaining modest ecommerce ambitions. It offers a “curated assortment” of about 1,400 items online from its Manhattan store and about 1,100 from its Greenvale location on Long Island. Since the February roll out, ecommerce represents about 1% to 2% of total revenue, Soares says, but he thinks it could grow to as much as 10% as the retailer gradually adds a bigger assortment of goods online. The stores typically stock about 4,000 to 6,000 SKUs, Soares says.

Having an ecommerce channel available “was a blessing to us” when the city shut down during the pandemic and consumers started stocking up on essentials, Soares says. On March 20, the governor’s office issued an executive order closing down nonessential businesses. Grace’s busiest day of the year is usually the day before Thanksgiving. After the lockdown started, Soares says Grace’s experienced day-before-Thanksgiving volume for about 18 straight days. 

“Mercato helped us streamline the ecommerce process and scale up relatively quickly,” Soares says. “I would attribute that to the fact that it takes nearly half the time to process a Mercato order versus a phone-in or email order. That’s not to say the influx of demand wasn’t challenging, because it absolutely was, but Mercato made it manageable.”

Not only did Mercato help Grace’s handle the extra volume, but it also helped the retailer reach new customers at a time when consumers were seeking out new options, Soares says. “For our Upper East Side store, over 40% of our ecommerce sales come from outside our neighborhood. Pre-crisis, that number hovered around 30%,” he says.

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To use the Mercato service, New Yorkers can click the “Order Online” button on Grace’s homepage, or visit Mercato.com, which lists Grace’s among hundreds of other merchants in their area.

Customers also have the option of signing up for two kinds of Mercato Green membership plans. The Mercato’s Neighborhood plan covers deliveries up to three miles from the store and is $8 per month or $96 per year. Mercato’s City plan covers up to 10 miles and is $19 per month or $228 per yearBoth plans come with a 30-day free trial and Mercato plants a tree for every order placed by a Mercato Green member.

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