Dive Brief:
- Hy-Vee announced it will significantly reduce the minimum order for its free grocery pickup service from $100 to $30, according to The Gazette. Prior to this, online orders less than $100 were charged a $2.95 fee for pickup.
- The retailer is also rolling out free delivery for members of its Aisles Online program for orders of $30 or more, previously requiring a $100 order minimum to avoid a $4.95 fee. Non-members will be charged a $9.95 delivery fee.
- Aisles Online is a $99-per-year program that Hy-Vee launched in 2015 and is offered at all of its more than 240 locations in eight Midwestern states.
Dive Insight:
This latest move helps Hy-Vee stay competitive as other companies, including Instacart, reduce their delivery fees. The grocer's updated policy removes excess fees and may entice customers to join its Aisles Online program.
Prior to the announcement, Hy-Vee's $2.95 fee for pickup and $4.95 for delivery of orders under $100 was higher than some Midwest competitors but lower than others. Kroger charges up to $5 for pickup orders, which many shoppers consider too high, especially considering Walmart offers free pickup and Whole Foods' is free for Prime members with orders over $35. Just a few months ago, Meijer also added pickup to its home delivery membership service, which also costs $99 a year. Meijer's, however, charges members a $7 delivery fee on orders over $35 — making Hy-Vee’s fees seem more reasonable.
Hy-Vee's delivery fee reduction for its Aisles Online members should make the program more attractive for consumers, who prefer same-day delivery to in-store pickup by a 4:1 margin, according to Commonsense Robotics. Its $99 fee also remains competitive with Instacart's annual $99 fee and less than Amazon Prime's annual $119 membership.
In addition, the retailer recently expanded its Aisles Online click-and-collect lockers to non-store locations, which hold online orders for next-day pickup. With these off-site pickup locations, Hy-Vee can reach customers who may not be able to trek to a Hy-Vee store but still want to shop with the grocer.
In the past few months, Hy-Vee has doubled down on its e-commerce efforts after a period of focus on other business initiatives. The company is experimenting with new programs, including its discount surplus food app, health initiatives, pharmacy acquisition and partnership with Orangetheory at HealthMarket stores. It has also made a big push into the restaurant business in recent months with Wahlburger.
