The US online grocery business is in a revival that may finally see it emerge from the shadow of the spectacular bankruptcy of Webvan after its failed bid to launch a national home delivery service almost a decade ago.

Retailers, including Walmart, the largest US grocery seller, and Kmart, the discounter, are expanding or testing new online services built around an in-store, pick-up model being embraced by a new generation of web-literate households.

Online grocery home delivery remains a niche business in the US compared with Europe, with only a handful of regional businesses providing delivery, mostly in urban areas, including Safeway in California, Amazon Fresh in Seattle and Ahold’s Peapod along the US east coast.

Walmart, which has more than 3,700 US stores and grocery sales of more than $130bn last year, has instead been testing a new “pay online and pick up today” service at some stores that includes items such as shampoo and toothpaste. The model is expected to provide the basis for an eventual move by Walmart into a full range of grocery and food products.

Walmart declined to give details of the scope of the tests, or a potential launch date for the same-day, pick-up service.

Kmart, part of Sears Holdings, is also offering a same-day, in-store pick-up service for groceries and other goods at more than 400 stores via its fledgling MyGofer network, a shopping portal that has formed partnerships with small local supermarkets to provide fresh items.

Kmart is also offering home delivery in cities including Boston, New York, and Chicago.

Publix, a successful regional supermarket chain, has also relaunched an e-commerce business based on store pick-up, after abandoning an early move into online sales in 2003.

Publix’s new service, being tested at stores in Atlanta and Tampa, was launched with support from MyWebGrocer, a provider of e-commerce systems and other services to more than 100 regional supermarkets.

Rich Tarrant, who founded MyWebGrocer in 1999, said the company had seen growing interest in the idea among shoppers, “particularly in the last 24 months”, amid greater broadband web access.

“The new young mothers in their twenties are now in family mode. They grew up on a PC and bought their books on Amazon and their music on Apple. So the expectation is that they will go online for their groceries too,” he said.

Webvan went bankrupt in 2001 after raising more than $1bn to launch a national
online grocery home-delivery business.

Online sales of groceries account for less than 2 per cent of total grocery sales in the US, compared with almost 4 per cent in the UK.

Get alerts on Retail sector when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article