There are now over 2,300 cities and towns across the US where Amazon offers free same-day grocery delivery for Prime members. This means a 2-hour delivery from an Amazon Fresh or Whole Foods Market. And apparently, 90% of what people buy this way is perishable, namely, fruit. Perishable food purchases also increased 30x this year, according to the company.
When it comes to online grocery shopping, this falls under what is typically referred to as the "delivery" bucket. There are three main shopping categories. The delivery bucket, which is now the largest category, gets fulfilled through a local grocery store. It's an Instacart worker or someone else collecting your food and delivering it to your home.
The next largest bucket is pickup, or click-and-collect. This is where a consumer buys what they want online and then picks it up in person. Lastly, there's the ship-to-home category. This is typically for non-perishable products, and the difference here is that the goods are coming from a distribution center, as opposed to a local grocery store. Think of it like a typical purchase from Amazon.
The grocery model continues to evolve rapidly. But local stores — and the real estate that houses them — seem to be remaining central to it. In Toronto, I don't normally shop at Whole Foods Market, but there is one very close to Parkview Mountain House that I like shopping at when I'm in Park City. And every time I go, it feels more like an Amazon store.
There's special pricing and deals for Prime members. The Amazon One palm scanning technology is at every register. And there's an Amazon return facility in the store to deal with that thing you erroneously ordered from China. It's all becoming seamlessly integrated with the broader Amazon ecosystem.
So from a real estate standpoint, the brick-and-mortar store is not being supplanted in the way that people once speculated. The physical store is just continuing to evolve to meet a changing omnichannel landscape, acting as a grocery store, distribution center, physical customer service center, casual restaurant, and more.