Grocery delivery: how retailers can deliver what Americans want

The grocery delivery sector is hotting up, with scores of providers vying to deliver goods to people in their homes or at work – in increasingly imaginative ways. 

From bikes that promise to reach you in 15 minutes, to deliveries direct to your fridge while you’re out, there are more and more choices for American consumers. But which are likely to win the most market share? 

We ran a nationally representative survey of 2,000 US consumers to find out, including people’s expectations around delivery times and costs, their payment preferences, and their willingness to invest in home delivery tech. 

Americans want groceries delivered by humans, not robots 

Growing demand for grocery delivery is likely to put increasing pressure on the gig economy. Some companies are reducing their reliance on cheap and flexible workers with robotic delivery solutions. 

Estonian technology firm Cleveron have unveiled a driverless, semi-autonomous delivery vehicle that can carry up to 500 pounds and travel within a 30-minute range of the warehouse or store at a maximum speed of 30 miles per hour. Teleoperators will be able to remotely supervise up to 10 vehicles at a time as they traverse low-traffic areas and roads.

Meanwhile, Walmart have partnered with DroneUp to make grocery deliveries by drone following a successful trial delivering coronavirus testing kits. The retailer says they are uniquely positioned to execute drone deliveries nationwide, already having 4,700 stores located within 10 miles of 90% of the US population. 

But while these solutions sound exciting, Americans show a strong preference for having their groceries delivered by humans. Only 13% would choose drone delivery given the option, while a self-driving vehicle would be the first choice for 15% of people. By contrast, 54% would opt for delivery to their home by a human.  

This is surprising given that people prefer to use a human-free checkout option when shopping in-store, as highlighted in our other report. Perhaps people have concerns about their deliveries reaching them safely or maybe they feel access to their home is unsuitable for drones or autonomous vehicles.

Other delivery options let people receive groceries at work (Lowes Foods is providing grocery pickup services at office buildings in North and South Carolina) or at a convenient centralized location (Minnow has recently secured $3m in seed funding for its automated food lockers).

While these options are less popular than receiving groceries at home, delivery to a convenient collection point would be the first choice for 10% of Americans, while 8% would prefer delivery to their workplace. Millennials (aged 26-40) show the most interest in these two options, while Gen Z (aged 18-25) over-index for delivery by autonomous vehicle and Gen X (aged 41-55) over-index for drone delivery.

American consumers expect delivery in 2-hours 

The ‘instant delivery’ space is becoming increasingly competitive – and valuable. goPuff, which delivers in 30 minutes in 41 states, has doubled its valuation to a staggering $8.9 billion. Meanwhile, New York City-based Fridge No More, is seeking to outdo them by delivering in just 15 minutes. But just how impatient are we when it comes to grocery deliveries? 

Our data shows that the single largest percentage of people (21%) are willing to wait up to two hours, while 18% will wait an hour. Only 11% expect delivery in half an hour and 8.5% within 15 minutes. The demographic least willing to wait are Gen Z, the single largest percentage of whom (20%) expect delivery in one hour. 

For the most part, though, offering delivery within two hours should keep shoppers happy – providing the price is right. Walgreens have announced nationwide delivery of 24,000 products in under two hours for a delivery fee of $7.99. According to our data, this is a bit on the expensive side.

Among Americans who are willing to pay for the delivery of grocery items – that’s 76% of the population – the single largest percentage (23%) expect to pay between $5-$6.99, while 22% expect to pay less than $5. 

Gen Z and Millennials are willing to pay the most for quick delivery, with a quarter of those aged 18-25 happy to pay $7-$9.99 and 23% of those aged 26-40. On the other hand, 43% of Boomers are unwilling to pay anything at all for delivery, which is the largest by some margin. 

EBT cards are an important payment option

When it comes to paying for groceries ordered online, credit and debit cards are the firm favorite but there are other payment options that retailers should not ignore. Accepting payment by Electronic Benefits Transfer (EBT) card is particularly important, as 16% of Americans would choose to pay this way. 

Publix is the latest retailer to join the government’s SNAP Online Purchasing Pilot, alongside Walmart, Aldi and Amazon, to enable their customers to pay by EBT card. In joint second place when it comes to payment preferences is PayPal, selected by 16% of respondents. Meanwhile, eWallet options including Apple Pay and Google Pay are only preferred by 7% and 4%, respectively.

We do see some notable variations when we look at the preferences of different demographics; Gen Z over-index for Apple Pay (13%) and Google Pay (8%), Millennials over-index for cryptocurrency (4%) and Gen X over-index for PayPal (18%).

Grocery delivery box will become a standard feature of American homes 

HomeValet is a startup that has designed a secure, temperature-controlled grocery delivery box to go outside people’s homes. Founder John Simms believes they’ll soon be a standard home feature, just like a mailbox – and it looks like he could be right. 

48% of people say they’re likely to invest in a grocery delivery box in the next couple of years (including 23% who are ‘very’ likely), while 7% already have one. Gen Z, especially, love the concept; 60% say they’re likely to buy one, while Millennials are most likely to say they already have one (10%). 

Other innovations that help people receive groceries when they’re not at home also look set to grow. For example, if you have a smart lock that can give delivery drivers one-time access to your home, they can enter your kitchen and put groceries directly in your fridge (it’s something Walmart is already trialing). Just over a third of Americans say they’re likely to invest in this technology in the near future, with 7% already owning it. 

Alternatively, for shoppers who aren’t comfortable with the idea of a stranger entering their home while they’re out, a smart garage door can let them leave deliveries in the garage. Amazon is providing this service to Prime members in more than 5,000 locations. Nearly 36% of people say they’re likely to invest in a smart garage door, while 7% say they already have it. Millennials over-index for being ‘very’ likely to invest in smart doors and locks in the next two years. 

The level of interest in home delivery tech suggests that e-commerce will continue to thrive post-pandemic. This means grocery retailers will need to place a big focus on growing distribution hubs and logistics in the coming years.