Grocery Getters: WCPO puts home delivery services to the test

Delivery concepts starting small, growing fast
Posted at 6:00 AM, Jul 28, 2016
and last updated 2016-07-28 19:23:56-04

CINCINNATI - Six months after launching his home-delivery service, Grocery Runners, founder Bryan Melendez is convinced he made the right call.

“It’s gone wonderfully,” he said. “The passion level we receive from people who use the service is ridiculously high.”

Melendez said eight to 10 customers each day call Grocery Runners to pick up their online orders from Kroger’s ClickList system and bring those groceries their home. He expects the company to start making a profit in the next seven to 12 months.

“We’re nowhere near where we need to be yet,” he said. “But every month has been better than the last.”

Not to mention, more crowded. Grocery Runners is one of six companies now making home deliveries in Cincinnati: 

  • Amazon Prime Now launched a free two-hour delivery service in April for members of its Prime subscription service.
  • Entrepreneur Brandy Goss re-launched her 2-year-old company as Dashing Delivery in March, a companion enterprise to her gourmet cupcake company, Fashion Sweets.
  • Kroger’s Vitacost subsidiary offers organic canned goods and other non-perishable health foods with free two-day shipping on orders over $25.
  • Caring Hands Delivery Service is a personal shopper that will buy your groceries at multiple stores and bring them to your front door.
  • The oldest and largest player in the space is Green Bean Delivery, which specializes in weekly delivery of locally grown and organic produce.

Home grocery delivery “wasn’t even on the radar five years ago,” said Shane Towne, president of Green Bean’s Indianapolis-based parent, BEAN LLC. But now there are dozens of companies experimenting with various delivery formats nationwide. And Towne has thousands of Ohio customers receiving “tens of thousands” of deliveries each week.

“I think the sky’s the limit,” he said.

Online grocery shopping is approaching a tipping point in the U.S., according to a January report by Morgan Stanley. The investment bank predicts a 60 percent increase in the category this year to $42 billion. That’s only 6 percent of all U.S. grocery sales, but the percentage of shoppers sampling online grocery options is expected to triple to 26 percent.

“This spike in anticipated online grocery spending speaks to a shift in the way that consumers think about shopping for food,” said Brian Nowak, lead Internet analyst for Morgan Stanley.

The nation’s biggest grocery chains are testing online offerings. Michigan-based Meijer has 20 locations that offer curbside pickup of web orders, including four stores in the Dayton area.

Wal-Mart is testing a home delivery service in new partnerships with Uber and Lyft. The service is not yet available in Cincinnati. An Alabama company called Shipt said Cincinnati is on its radar after it expanded to Columbus in December.

“Consumers are just wanting home delivery, period,” Melendez said. “Besides the people who just use it for convenience, there’s a whole market out there that needs the service.”

Sizing Up the Market

The Kroger Co. has embraced ClickList as its e-commerce weapon of choice, establishing the online ordering and in-store pickup service at 269 stores in 25 cities so far. CEO Rodney McMullen told WCPO in June that there is no plan and no need to offer home delivery in Cincinnati at this point.

“It is very complicated and difficult to do,” he said. “I’ve been surprised by how many customers view it just as handy to be able to pick it up here as it is to have it delivered to their house. When I talked to some customers, it’s easy to understand.”

McMullen said he talked to friends from Indian Hill and Montgomery who order from Kroger’s new Marketplace store in Oakley and pick up groceries on their way home from work. For them, it’s a 10-minute diversion and more convenient than waiting for a delivery.

“If you have a 4-hour delivery window you have to be there. If something comes up, you’re toast,” McMullen said. With ClickList, “you sign up for a slot, but if you’re 30 minutes late, we’re not going to yell at you. It’s in a freezer, in a refrigerator. The product is taken care of, just like at home. It just gives the customer so much more flexibility.”

The home delivery services now operating in Cincinnati have adopted various techniques to address that flexibility concern. Green Bean Delivery brings its food in ice-packed bins that can hold their internal temperature for up to eight hours in 100-degree heat.

And while it’s not affiliated with Kroger, Grocery Runners brings an added feature to ClickList. You place the order. They pick it up.

“Is curbside pickup going to be enough to satisfy customers in a market that’s moving to home delivery? I don’t know,” said Melendez. “They probably have some very good reasons why they’re not answering the home-delivery market right now.

I think the consumers are going to eventually want home delivery, which is why we’re here and others are popping up.”

The locally based delivery firms are small companies that each run fewer than 50 trips a week to local customers, but all three are encouraged by their growth so far.

“I lived in New York City for about a decade,” said Dashing Delivery founder Brandy Goss. “You can get anything delivered there. I just see how the city is growing by leaps and bounds. I just felt like this would work now.”

Caring Hands founder Amanda Ward said she started the company because her aunt, who lived in a senior citizens home, kept calling family members to pick up things at the store. She looked for a service that could help with that chore and found none. So, she started one last November. Now, she gets about 20 orders a week from customers ranging in age from 25 to 88.

“It’s a convenience as well as a need-based service,” she said.

WCPO decided to test the region’s grocery fetchers by getting three secret shoppers to place grocery orders online and evaluate each service on a variety of factors. What service is best for you depends on how much you value speed, price, selection and customer service. Here’s a summary of our findings:

Delivery services ranked by factors

Each category has winners at the top then goes down to the worst at the bottom. 

  • Speed: The winner in this category, Caring Hands Delivery Service, brought its order 94 minutes after it was confirmed. Amazon’s Prime Now lets you order something at 9 a.m. and get it by 10 a.m., but our shoppers were not willing to pay $7.99 extra to do that. Amazon doesn’t deliver to Covington, but it brought two other orders in less than 2 hours, 30 minutes. Dashing Delivery’s fastest time was 3 hours, 45 minutes and Grocery Runners doesn’t control its timeline because it picks up the groceries you order separately on Kroger’s ClickList offering. Vitacost is a two-day shipper and Green Bean Delivery isn’t about speed. It’s trying to get you hooked on a weekly delivery of fresh produce.

  • Price: Dashing Delivery and Vitacost have no delivery charge for orders over $25, but the prices we paid for groceries were about 25 percent more than comparable items at Kroger’s Marketplace store in Newport. Green Bean Delivery brings items for free with a $35 order, but we found similar merchandise at Kroger for about half that price. Amazon’s “free” delivery requires a $99 annual Prime membership. But if you’re already a Prime member, you can find products priced below Kroger’s in-store goods. Grocery Runners’ delivery fee is $10 plus 4 percent of the grocery order total. Caring Hands charges $10 for most deliveries and up to $15 for certain zip codes. Its shopping fee is 10 percent of each order. Many of these companies are running promotions right now that reduce or eliminate surcharges for first-time users.

  • Selection: Caring Hands will shop at multiple stores and restaurants. So, this “personal shopper” service has the broadest array of choices. Since the typical Kroger store has 40,000 to 50,000 items, a ClickList order picked up by Grocery Runners comes in second. Amazon claims to have more than 10,000 items available at Prime Now. Vitacost has more than 40,000 items, mostly vitamins and supplements, but its food offering involves a smaller number of non-perishable goods that can be packed and shipped without refrigeration. Green Bean Delivery has 1,300 grocery items and 60 produce offerings that change weekly based on seasonal availability. Dashing Delivery has the smallest selection overall, with about 200 items stocked at its Spring Grove Avenue warehouse. But it’s the only place that offers a “Coco Chanel” Triple Chocolate Cupcake. This is no small matter, based on how quickly these treats disappeared in our newsroom. Dashing Delivery and Caring Hands both have liquor licenses, meaning they can bring beer and wine to your door.

  • Customer service: All companies did well in this category, but we ranked Dashing Delivery at the top because all three shoppers had a positive experience. “Best overall presentation. Food delivered in re-usable bag,” one shopper observed. Dashing Delivery and Grocery Runners both agreed to venture outside the delivery zones listed on their web sites. Green Bean Delivery called us after their weekly deadline to make sure our order found its way to that week’s delivery. Amazon erased all charges on an ordering mistake that was arguably our fault. Caring Hands lets you order by phone, a nice feature for those who aren’t web savvy. Its online orders are easy too, followed a phone call to verify the order. One of our three shoppers found the Vitacost website difficult to manage and noted the merchandise arrived in an unmarked delivery car. Another shopper had a “bizarre experience” with Grocery Runners. The delivery arrived early and the driver “let herself in” to drop off the goods.

  • Technology: This is not about which company has most advanced logistics or web design. It’s about ease of use from a consumer’s point of view. Green Bean Delivery was the only site that all three shoppers had no trouble navigating. The Vitacost site didn’t make it clear that an order was processed, leading to a double order. Amazon’s site didn’t ask for a first-time user code, leading to two orders (both of which were later refunded). One shopper found Dashing Delivery’s site “a bit of a bear to navigate.” Grocery Runners’ site was cumbersome enough that one shopper gave up on the order. Grocery Runners is the only site that requires you to place two orders with two different companies. That’s because the delivery service is not affiliated with Kroger. So, it directs you to Kroger to make a ClickList order. Then, you go back to Grocery Runners to schedule your delivery. Caring Hands was the only site that doesn’t require a payment when you order. They buy your groceries. You pay on a mobile device when they get to your home. All companies do a good job of tracking your delivery, but Amazon has the most fancy set up: A text lets you know when the delivery is close. Then, they call you if you don’t answer the door.

  • Clutter: If your goal is to simplify your life with home delivery, you don’t want a full can of shipping waste to accompany your order or an email account full of marketing offers, right? Vitacost came in last in this category by sending 11 emails in the first nine days of one order, including eight discount offers. It also killed at least half a tree with its cardboard and paper-wrap packing materials. Green Bean Delivery sent 4 emails, but only one for marketing. It also left a green bin that has to go somewhere until you place the next order – or cancel the service altogether. Three other companies created no collateral clutter. Amazon sent nine e-mails, but only for the purpose of confirming orders or addressing customer service questions. Amazon and Grocery Runner were light on packing materials. Dashing Delivery brought groceries in shopping bag that can help you avoid future clutter.