Are Grocery Services Profitably Delivering on Customer Experience?

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As someone with personal experience with various grocery delivery services during medical leave, I can attest to the healthy competition for customer wallet share that is driving grocery delivery services. Such services are endeavoring to slash prices, reduce membership fees, offer an optimal selection of quality products (including perishables), and provide the desired level of customer experience (CX), all while staying in the green.

The major players face and address these challenges in various ways via differentiated business models. A few examples:

Amazon Fresh—Amazon Prime membership plus $14.99 per month. This covers unlimited orders of $50 or more. Orders under $50 have a $9.99 delivery fee.

Fresh Direct—Operates in areas of New York, Washington, D.C., Philadelphia, New Jersey, and Delaware, with varying delivery fees. DeliveryPass membership provides free delivery for $79 for six months or $129 for a year. Tips are expected.

Peapod—Optional membership offered as three-, six- and 12-month subscriptions. Delivery minimum is $60 per order. Next day or up to two weeks in advance scheduling is available.

CUSTOMER EXPERIENCE CHALLENGES

Yet my experience with these services exposed some CX and service challenges. Employees often lacked the grocery expertise to select ripe avocados, firm tomatoes, and perishables such as yogurt or dairy products that have not expired. With one such service, I was instructed to take a picture of several yogurt containers with week-old expiration dates and email them to customer service to receive a store credit—which did nothing to resolve my desire for yogurt other than give me the option of placing yet another order and paying yet another delivery fee. In another instance, I was forced to accept a refund when the service ignored my replacement request (my husband was willing to go to a physical store to exchange the product). Policies such as these affect the quality of customers’ grocery delivery experiences, and not in a good way.

When items selected are out of stock, some of the grocery shoppers texted, others called. Nearly 40 percent of these communications seemed to indicate that the employee did not understand the replacement request made. Although delivery personnel are instructed to knock on the customer’s door and deliver the groceries, at least 50 percent of the time bags were left at the front door and a text that delivery was complete was sent after the shopper had left the driveway.

FOOD FOR THOUGHT

Grocery delivery service providers should realize that consumers are currently unable to understand exactly how to compare product and delivery costs in an apples-to-apples way (sorry). This complexity is the result of factors other than the basic price per product—the convenience of delivery times, delivery fees per order versus an annual membership fee, brand selection versus generic, quality of shopping experience, etc.

In short, grocery delivery services should provide some easily digestible level of upfront pricing and service guidelines. For example:

• What is the percentage mark-up per product? Is an apple or carton of eggs priced at a percent or more than in-store based on its geographic location?

• If the amount per order is greater than $50, is the delivery fee waived regardless of whether an annual membership fee is charged?

• How much per month is the subscription and/or annual membership fee per order? Is there a discount if the member orders more than twice or three times per month?

• What level of delivery service should consumers expect? Will the bags be delivered to the front door or directly handed to the customer for inspection and acceptance?

• If expired or damaged products are delivered (i.e., if bags are left on the front steps, the customer has no option to examine and accept delivery), will the service re-deliver at no charge or simply refund the cost? What type of proof must the customer provide?

Additionally, the quality of employees should not be overlooked. While managing costs toward profitability is critical, success will likely elude delivery services that fail to hire, train, and adequately compensate these customer-facing employees. Your brand reputation and repeat business depends on them, so invest wisely. 

©2019 Leslie Ament. Ament previously served as the chief research officer at Hypatia Research Group, serves on the editorial board of the Journal of Applied Marketing Analytics, and is currently on leave from her role as a research leader at Deloitte.

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