The Branded Pantry

The big guy finally started to play his cards.  Walmart announced Project Titan, their online grocery shopping effort at the beginning of the month.It is rumored to involve grocery delivery in the San Jose area.

The press is covering the project with some enthusiasm mentioning WebVan, Home-grocer and other failures while at the same time offering some positives by looking at Walmart’s own ASDA online grocery delivery experience in Britain. 

Online grocery shopping, and other online grocery activities (promotions, other marketing efforts) have been successful in the U.S. as well as in Britain, Sweden and other areas.In the U.S. online ordering with “drive by pickup” is the preferred method in all but the most densely populated urban areas.   Walmart has no small amount of experience in this model, albeit with non-grocery items having been the focus over the last few years as they have continued to tinker with the service.   Chances seem very high that they will offer this pick-up option in addition to delivery on grocery.  With their current store based expansion plan including smaller formats (smaller super stores, more supermarkets and their new convenience effort) they will have more touch points convenient for consumers on their way home. 

The addition of the non-grocery assortment to the offering online for the shopper gives Titan a real advantage on the margin game, if they can convince the shopper to toss in a pack of socks or a can opener.   That and the CPG ad revenue will be substantial through this new channel. 

So far traditional grocers have not reacted much to current (Amazon, Amazon Fresh, Sears-Kmart, Netgrocer, Alice, Fresh Direct etc.) businesses trying to move into the grocery space.  A few physical grocers offer full online shopping services include Safeway in select markets and a number of regional and independent players as well as Peapod through a number of Ahold banners.The number of stores offering is limited, under 600 in total out of a universe of 30,000 supermarkets.    The size of the business is relatively small based on dollars but is growing much more rapidly than the store based business, as has been the case in every other industry where online is a viable channel. 

So, why aren’t more traditional moving more aggressively to protect their turf?   This is most assuredly NOT your father’s WebVan.

What a wild ride this last month or so.   It’s like that frenzy of making sure you have a date or several, lined up to go to the prom. 

There has been a great deal more activity in the last six months than the transactions circled above.  However these three are of particular interest aren’t they?

While Walgreens has posted some pretty impressive numbers over the years, they have had a tough time breaking out of being seen as …well as a drugstore.    They have done a great deal to re-merchandise and remake their front ends to capture the up and down the street, milk and bread shopping trips from the gas stations and the supermarkets.  They are even putting in some meal solutions in case you want to consider them as an alternative for dinner, on the way home (huh?) 

They also have a pretty nice online presence and a great new mobile application in their own right.  So why buy Drugstore.com?  I don’t have any crystal ball into the strategy but if it doesn’t involve the two most important assets this combination can bring…they are missing the boat. The assets?  DS.coms customer base and that vast real-estate empire.  7,000 pickup locations with pickup facilities already in place.  Yum!  My experience in the online grocery biz indicates that most consumers prefer to pickup their groceries while running their errands (don’t make them get out of their car though) rather than having the groceries delivered.  

 Morrisons bought a chunk of Fresh Direct in New York.   They purportedly bought the share in order to gain access to a better set of online tools than they could assemble using their own resources.  They are certainly looking to try and gain their fair share of the growing consumer dependency on the web and mobile apps to inform, influence and generate sales of groceries and other sundries (whilst tossing in the odd t-shirt for profit enhancement).   I am not sure they are going to get their $50million worth.  Building a successful shopping application for mainline grocery is a very tricky business.  Lots of folks have tried, most have failed.   Fresh Direct always was a great experience for a first, second and third time grocery shopper.  Then the consumer wanted to move to an app that actually understood the week in-week out grocery shopper.   Further, the secret of bricks and clicks grocers is the ability to move back and forth between applications that drive coupons, or the weekly circular or a recipe, and loyalty offerings and ….well you get my point.  FD is one dimensional in that regard. 

Finally we have ebaY adding to a very curious assemblage of capabilities by purchasing GSI, the many retailer online backbone.  Add this purchase to Red Laser and Milo and you have a very, very interesting capability IF……If they are thinking grocery and if the plan is to make ebaY the odd man (or application) out in the plan.    Done right, this might be my favorite of the bunch.