In earlier days, small neighborhood grocery stores were situated on every corner while supermarkets were expanding rapidly. Competition wasn’t so fierce then and the little family-owned neighborhood stores, which focused on offering good service, never marketed themselves in newspaper ads or by any other means except word of mouth.

One of the best services neighborhood grocery stores offered was home delivery. A customer would call the store and read a list of items over the phone to the clerk. The store would select all the items and then deliver the groceries to the customer’s house in a wagon, and the process would repeat itself the following week. This was a convenience for the customers and saved them time and the need to travel to the store having to do it themselves.

Home delivery of groceries is alive and well in 2013 and it is growing more popular by the day. The difference today lies within the technology that is rapidly advancing the program to the next level in grocery shopping.

Byron Bellows, produce merchandiser for Coleman’s supermarket chain in Corner Brook, Newfoundland, Canada said, “Coleman’s has been doing home delivery for years dating back to the original days of Arthur James Coleman delivering groceries to his customers with a horse and buggy. Today is much different, but in some ways has not changed much. Our customers call, fax or go online and place orders. They build a grocery list that remains in their personal file for reordering.  Groceries are selected at each store location and delivered directly to the homes. Many long-standing customers have come to enjoy this service, which has been a successful part of the Coleman business since 1934. You might say we are the pioneers of home shopping.”

Some early ventures into online grocery shopping were not very successful. One of the earlier start-up companies, Webvan, soon learned that unbearable costs in product storage and delivery were too much to handle.

Heidi Chapnick, e-commerce expert and chief executive officer of Channalysis LLC in White Plains, NY, who is also an associate of FreshXperts LLC, headquartered in Kansas City, MO, said, “Current online grocery shopping endures many challenges and because of the razor-thin profit margin in delivery of grocery/fresh, companies often suffer huge losses on an annual basis. Delivery has been a main downfall for many online grocers. When I helped start Peapod on the East Coast, there were two competitors. We became the leader because we nailed down the operational issues with delivery costs. We built slowly, zip by zip, to keep costs down. Building density carefully will lower delivery costs unless the grocer has begun to opt for a UPS-type situation of outsourcing their deliveries.”

Amazon has been testing online food deliveries in the Seattle area since 2007 and is now expanding into Los Angeles. Other locations, such as San Francisco, are in the planning stages.

Walmart is also cautiously testing online groceries/general merchandise in the San Francisco area. It may have an advantage in logistics because it can ship orders directly from the chain’s many store locations. However, testing is the guideline and determining factor for a successful program.

Derrell Kelso, owner and president of Onions Etc. in Stockton, CA,  discussed the threats supermarket brick-and-mortar operations could face from online grocers.

“In my opinion, the threat is not to recognize the fight for stomach space and not to compete for it,” he said. “The biggest threat in the 1980s was fast food. Now, it looks like online grocery shopping could be entering the picture, though the biggest challenge will be in the shipping costs.”

Maintaining the integrity of fresh items is a huge challenge in the online shopping business. Some companies use refrigerated trucks, while others use dry ice and chill packs to control product temperature.

“Proper packing is intrinsic to maintaining the integrity of food, and training is imperative as well, not only in picking produce properly but packing,” said Chapnick. “Some produce needs to be refrigerated, while other produce can’t be.”

Customers demand convenience and convenience dictates choice. Choice dictates that there are different channels of sales, hence the ability to go to the store one day and to order online or with a mobile device the next day — or consumers will go somewhere else where they can do what is easiest on any given day.

Brick-and-mortar supermarkets have had a difficult time trying to meet the online grocery shopping challenges. It’s a changing trend in consumer shopping.

“Even if you are at break even, you have to offer online shopping in this day and age,” said Chapnick. “Erosion is occurring at a very rapid rate with respect to brick-and-mortar grocers who do not offer online shopping. In one large company, they are eroding at a half a percent each year due to online competition. Online shopping is the cost of doing business today. Brick-and-mortar will continue to erode as enterprises that offer online shopping and delivery encroach on their territories rapidly.”

The reawakening of home delivery grocery shopping is generating new interest these days. This could be another battle in the works for that “fight for stomach space,” Kelso added.

Let the competition begin.

Ron Pelger is the president and CEO of RonProCon, a consulting firm for the produce industry, and the chairperson of FreshXperts LLC, a consortium of produce professionals. He can be reached by phone at 775/853-7056 or by email at [email protected], or check his details on freshxperts.com for more information.