Table of Contents
- Introduction
- The Shift into Grocery Delivery
- Addressing Consumer Behavior and Omnichannel Preferences
- Supply Begets Demand
- Competitive Advantages
- New Verticals: Beyond Groceries
- The Importance of Loyalty Programs
- Early Successes and Future Prospects
- Conclusion
- FAQ
Introduction
In the rapidly evolving world of online grocery delivery, Grubhub's recent moves are setting the stage for a significant transformation in their business model. At a time when competitors like Instacart, Shipt, DoorDash, and Uber Eats have established strong footholds in the market, Grubhub's Vice President of New Verticals, Craig Whitmer, is optimistic about the company's future trajectory. By leveraging key partnerships and entering untapped verticals, Grubhub plans to become a formidable player in the space. This blog post delves into Grubhub’s strategy, its early successes, and the potential implications for the grocery delivery market.
The Shift into Grocery Delivery
As online grocery shopping becomes increasingly popular, Grubhub is pivoting to not only meet but exceed consumer expectations. The company recently launched a nationwide grocery service in partnership with Albertsons, one of the largest food and drug retailers in the United States. This launch complements Grubhub’s initial foray into grocery with Mercato, a delivery service specializing in small, independent stores. By balancing partnerships between large national chains and smaller regional players, Grubhub aims to provide comprehensive market coverage.
Addressing Consumer Behavior and Omnichannel Preferences
Understanding consumer behavior is crucial in the grocery delivery sector. Grubhub recognizes that shoppers increasingly prefer omnichannel options. According to PYMNTS Intelligence research, 52% of grocery customers shopped both online and in-store last year. This trend underscores the importance of offering seamless shopping experiences across multiple channels.
Grubhub is tapping into this demand by providing a diverse range of shopping options. Whether it's picking up weekly groceries or last-minute items, consumers now have the flexibility to choose how they shop.
Supply Begets Demand
Whitmer highlights a cardinal rule in the grocery delivery business: supply begets demand. As Grubhub expands its grocery offerings, it anticipates that existing loyal customers—such as those enrolled in Grubhub+—will adopt this new service. Early indicators suggest that the average basket size has surpassed initial expectations, reflecting broader shopping habits rather than just sporadic, last-minute purchases.
Competitive Advantages
What makes Grubhub confident in its ability to catch up quickly with its competitors? For starters, the company’s core restaurant business already establishes a solid customer base. By integrating grocery delivery, Grubhub is not only adding another vertical but also strengthening its core offerings. Loyal restaurant customers are likely to become loyal grocery customers, making more frequent purchases across both verticals.
Additionally, integrating with third-party grocers allows these brands to retain their loyal customers while also gaining insights into their shopping behaviors. This synergy benefits both Grubhub and its partners, creating a win-win situation.
New Verticals: Beyond Groceries
Grubhub is not stopping at groceries. The company is eyeing other retail categories that promise high basket sizes and frequent purchases. These include alcohol, pet supplies, beauty products, office supplies, and discount stores.
Whitmer teases significant upcoming expansions in the alcoholic beverage sector, despite the various regulatory challenges. By investing in a universal product catalog to manage grocery and retail SKUs, Grubhub is laying the groundwork to efficiently scale these new verticals.
The Importance of Loyalty Programs
Grocers understand the significance of loyalty programs in retaining customers. With more consumers gravitating towards third-party marketplaces, integrating existing loyalty programs with Grubhub’s platform becomes a strategic priority. This integration allows grocers to capture valuable customer data, offering personalized experiences that drive loyalty.
Grubhub’s approach recognizes that while consumers have their preferred grocery stores, convenience and additional perks provided by third-party platforms like Grubhub can shift shopping behaviors.
Early Successes and Future Prospects
The collaboration with Albertsons and Mercato is already yielding promising results. These partnerships, alongside the company's broader strategy, have set the stage for rapid growth in the grocery sector. Early achievements also suggest that customers who start using Grubhub for groceries are more likely to increase their restaurant orders, enhancing overall customer loyalty to the platform.
Whitmer's optimistic outlook hints at more significant developments in the pipeline, including potential expansions into numerous retail sectors and partnerships with large national brands.
Conclusion
As Grubhub continues to expand its verticals, the company aims to transform how consumers think about on-demand delivery. By leveraging strategic partnerships, understanding customer behavior, and integrating loyalty programs, Grubhub is poised to become a key player in the online grocery and retail sectors.
With growing basket sizes and increasing customer loyalty, the company's initial successes suggest that it won’t be long before Grubhub catches up to its competitors. The future certainly looks promising for Grubhub as it adapts to the dynamic demands of modern consumers.
FAQ
1. What are the main partnerships that Grubhub has formed for its grocery delivery? Grubhub has teamed up with Albertsons and Mercato, balancing partnerships between large national chains and smaller regional players.
2. What is the significance of Grubhub+ in their grocery strategy? Grubhub+ members, already loyal to the platform for restaurant orders, are expected to adopt the grocery service, increasing overall purchase frequency and loyalty.
3. How does Grubhub plan to address different consumer shopping behaviors? Grubhub offers an omnichannel shopping experience, catering to both online and in-person shoppers, thus meeting varied consumer preferences.
4. What are Grubhub's plans beyond grocery delivery? Grubhub is exploring other high-basket, high-frequency categories like alcohol, pet supplies, beauty products, and office supplies.
5. How does Grubhub integrate with existing grocers' loyalty programs? By partnering with grocers, Grubhub enables the integration of existing loyalty programs, retaining customers while gathering insights into their shopping behaviors.
