Dive Brief:

• Target’s Shipt has taken the top spot in Consumer Reports’ first-ever ranking of best online grocery delivery services, according to a news release. The ranking evaluated six of the most popular online grocery services​ and was based on a 2018 consumer survey of more than 3,000 people.
• Shipt scored well for its delivery hours, timeliness, communication about delivery status, text-based customer service and packaging. Amazon Prime Now ranked second with consumers, also scoring well for delivery hours, timeliness and communication on delivery status. Both services, along with Instacart, were ranked well for freshness and quality of groceries.
• Price was a notable differentiator in the rankings, with Instacart, AmazonFresh and FreshDirect all scoring low because of subscription and grocery costs. Shipt, Amazon Prime Now and Peapod fared better in the pricing category. 

Dive Insight:

Rounding out the Consumer Report rankings are Peapod in third place, followed by FreshDirect, Instacart and AmazonFresh, which received the lowest score among consumers. Consumer Reports noted that Walmart was excluded from the survey because of its limited availability of grocery delivery at the time.

The ratings lumped together pure play e-grocers with bolt-on services Instacart and Shipt, further underscoring the movement of brick-and-mortar grocers into e-commerce. Shipt's top ranking bodes well for the service's expansion under Target, which seems poised to expand through grocery as well as non-grocery retailers, having recently signed on with Petco. Instacart, meanwhile recently linked up with office supplier Staples in Canada.

However, Shipt's price advantage against Instacart may be short-lived. The latter slashed its membership and delivery fees late last year, matching Shipt's $99 annual fee. Since Consumer Reports' survey went out last year, the new pricing likely hadn't had a chance to catch on with shoppers.   

In addition to pricing, shoppers are taking notice of service quality. Consumer Reports' survey highlights that e-commerce shoppers are paying close attention when it comes to timing and delivery speed, availability, communication and grocery quality. 

Online grocery shopping has been slow to grow, especially compared with other retail categories. Customers complain of less product selection and strange substitutions, a desire to see fresh items up close, slow or inaccurate delivery times and challenging e-commerce tools. For grocery companies, delivery is a costly endeavor in an already low-margin business.

There are bright spots that indicate progress in grocery e-commerce. As the survey indicates, Instacart, Prime Now and Shipt are getting positive feedback from shoppers on the quality and freshness of their food, which is a major hurdle for e-commerce adoption among consumers.

Communication is also becoming more sophisticated, with companies including Shipt, Peapod, Instacart and FreshDirect offerings product substitutions and delivery status via text. FreshDirect is also rolling out a feature in Manhattan called "Ask David" that will let customers email CEO David McInerney directly. Albertsons recently implemented live tracking so customers can get real-time updates on their grocery order while it’s out for delivery.

Amazon Prime Now's high ranking suggests that Amazon's investment in Whole Foods may be paying off for shoppers. While reports have said that Prime members are not visiting Whole Foods in significant numbers, Amazon Prime Now grocery could prove to be the more effective way to get existing Prime members buying groceries through the company.