Dive Brief:

• The U.S. Department of Agriculture has announced the launch of a two-year pilot program that will enable Supplemental Nutrition Assistance Program (SNAP) recipients to purchase their groceries online. The program, which covers the cost of the food but not service or delivery fees, will begin today in New York state.
• Amazon and Walmart are part of the launch, and ShopRite will join the program next week. Walmart will serve SNAP recipients in upstate New York, while ShopRite and Amazon will serve the New York City metro area. Additional retailers will be added to the program in the coming months.
• Retailers will only be able to deliver online grocery orders to SNAP customers in the pilot areas. If the launch is deemed successful, the USDA plans to introduce the program in Alabama, Iowa, Maryland, Nebraska, New Jersey, Oregon and Washington.

Dive Insight:

Originally mandated under the 2014 Farm Bill, the U.S. Department of Agriculture's online grocery pilot has slowly expanded, starting with a click-and-collect pilot two years ago with Walmart. The SNAP program remains one of the most important sources of food for low-income families, with around 42 million Americans receiving SNAP benefits. In fiscal year 2017, the program reached an estimated 2.9 million people in New York state.

Online shopping has become part of many shoppers’ lives, regardless of income level, so applying it to food stamps is a logical next step that could also significantly increase access, particularly for SNAP participants who are located in food deserts and areas that have limited grocery options. The progress is also notable because SNAP is overseen by one of the largest government agencies in the U.S., which can be slow to modernize.

In a statement, USDA said SNAP recipients should be able to shop for food online the same way other Americans do.

"We look forward to monitoring how these pilots increase food access and customer service to those we serve, specifically those who may experience challenges in visiting brick and mortar stores," U.S. Secretary of Agriculture Sonny Perdue said in a statement.

While their participation may seem driven by altruism, Amazon and Walmart also stand to gain from it. Each retailer could potentially see a boost in sales and online traffic because of the pilot project, which is especially valuable in the competitive New York market. In addition to Amazon and Walmart, FreshDirect, Peapod and a number of other online grocery startups are vying for customer dollars in the state.

Amazon posted on its blog today that shoppers in New York will be able to buy products from the grocery and household sections of AmazonFresh and Prime Pantry without a membership fee. The retailer also posted a new landing page where SNAP recipients can verify whether or not they’re eligible for Amazon delivery with their benefits.

Meanwhile, Walmart recently announced a $64 million investment in New York, with plans to remodel 10 stores in the central and upstate regions and add delivery to 12 stores in the state. Grocery pickup will be added to 25 Walmart locations in New York, giving shoppers with SNAP multiple options for retrieving their online grocery orders.