In an effort to win back share of the booming market for dry groceries and household essentials delivered online, Kroger Co. is launching a direct-to-consumer offering called Kroger Ship.
Kroger Ship is available now in Cincinnati, Houston, Louisville and Nashville, and the retailer said it anticipates rolling out the service to additional cities “quickly” in coming months – an indication the company is not waiting for the construction of dedicated warehouses in partnership with Ocado to more directly confront “pure-play” online retailers such as Amazon. Instead, Kroger Ship will use warehouses in North Carolina and Las Vegas currently used for Vitacost, the online vitamin-and-supplement business Kroger acquired several years ago. A spokesperson told WGB the company would also fulfill orders from a new warehouse due to open later this year in Kentucky.
The company said the service offers more than 50,000 SKUs, including a curated selection of 4,500 own-brand products currently not available online and bulk goods. Kroger said the assortment includes products its customers buy most, influenced by data and insights from its 84.51 degrees analytics arm as well as items not available in stores.
“Kroger Ship is our next step in creating a seamless experience that allows our customers to shop when and how they want,” said Yael Cosset, Kroger’s chief digital officer, in a statement. “Our new service is just one more way we are redefining the customer experience as part of Restock Kroger, bringing more convenience and options to shoppers across America. Kroger Ship complements and joins our 2,800 grocery stores, 1,250 curbside pickup locations and delivery service from 1,200 locations.”
The service comes at a time when brick-and-mortar based retailers such as Kroger are scrambling to address share loss of center-store goods to online retailers such as Amazon and accompanies an effort to reinvent physical stores reflecting lower demand for such items in that environment. Fresh food and foodservice that customers prefer shopping for physically can also be costly for retailers to fulfill online. These are aspects of Kroger's $900 million Restock initiative, announced late last year.
Recent research indicates supermarkets are poised to capture such sales given the right investment.
The offering includes promotional codes and pricing deals along with of a set-and-save subscription model, facilitating automatic replenishment in the style of “subscribe-and-save” offerings such as Amazon. During the launch phase, customers will receive free shipping with no minimum purchase and 15% off their order with a one-time-use promo code, Kroger said.
Kroger spokesperson Kristal Howard told WGB Wednesday that orders would be fulfilled from existing Kroger warehouses in Nevada and North Carolina, and use courier partners including FedEx, the U.S. Postal Service and regional shippers. Orders could be fulfilled as soon as the next day.
Kroger Ship offers free delivery on orders of more than $35, and what Kroger described as “competitive online pricing.” This likely indicates that prices would not necessarily be the same for like items in stores, which can vary by market and zone.
“Kroger Ship brings together the best of our digital, technology, logistics, 84.51 degrees, merchandising and Our Brands teams to deliver our customers convenient and curated food inspiration,” Cosset said. “Kroger’s e-commerce platform expands our offering beyond the physical store to include even more products. Along with staples and customer favorites, Kroger Ship will carry bulk and additional sizes, and focus on Our Brands, local and international food and flavors, specialty items, and health and wellness products – making it easier than ever before to be your family’s hero at mealtime, or anytime.”
“Kroger is building on our expansive logistics and fulfillment infrastructure to support the rapid rollout of Ship,” said Frank Bruni, VP of supply chain and procurement. “With the support of Our Brands, and Kroger’s manufacturers and suppliers, our vision is to build a seamless e-commerce system that offers our customers an ever-growing number of products and allows Kroger to ship nationwide, serving America through food inspiration and uplift.”
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