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Grocers, Startups And Wholesalers Scramble To Meet Demand For Online Groceries

As online grocery orders surge, grocery chains are ramping up their delivery options and startup delivery services are expanding as well, as existing delivery operations find themselves overtaxed.

Regional supermarket company H-E-B has been expanding its online grocery delivery through its delivery company Favor.

Regional chain H-E-B said Thursday it will offer a two-hour contactless delivery of as many as 25 items from a list of groceries and other essentials via Favor, the online delivery service the grocer acquired in 2018. The company has more than 400 stores in Texas and Mexico under the H-E-B and Central Market brands.

The H-E-B service is in addition to the chain's standard delivery and curbside pickup. The faster service will cost nearly $5 per order, along with a $10 tip to the delivery person.

Also on Thursday, Midwestern grocery chain Hy-Vee rolled out a free pickup service at most of its stores, Supermarket News reports. Hy-Vee's Mealtime To Go allows customers to order prepared meals from over 200 locations for curbside pickup in as little as half an hour. The grocer already offers delivery and curbside pickup of grocery items.

Since the early weeks of the pandemic, Amazon-owned Whole Foods market has expanded grocery delivery from about 80 stores to more than 150, and the company said it is adding additional locations. 

Instacart, which specializes in grocery delivery, has hired 300,000 workers in recent weeks to meet demand, and wants to hire another 250,000 over the next two months, CNN reports. At the same time, the company has been limiting grocery delivery times, as has competitor Fresh Direct.

Online grocery shopping, formerly a small but growing segment of the grocery business, has been kicked into overdrive by the pandemic. More than half (51%) of grocery shoppers placed an online order during the four weeks ending on April 7, research firm Acosta reports. Among all online grocery shoppers, 33% made their first-ever online order during that period.

The rapid rise in online orders has caused bottlenecks, with customers sometimes finding it hard to schedule deliveries or obtain all of the items they want, Delish reports

Startup delivery services are trying to take advantage of the situation, Bloomberg reports, citing Brooklyn, New York-based Farm to People, which offers seasonal farm boxes, as an example.

"We’re working around the clock to fill the gap,” Farm to People co-founder Michael Robinov told Bloomberg, explaining that his business has grown 400% since the beginning of March.

Wholesale food companies — many of whom primarily sold to restaurants before the pandemic — have also been inspired to offer online sales to individual grocery buyers, DCist reports.

Not all of the startup delivery services are for profit. In Chicago, just before Illinois' shelter-in-place order in March, volunteers organized the Rogers Park Community Response Team to deliver food and medicine to residents who are unable to pick them up themselves.

Also, not every grocery store is increasing its online sales, or even its curbside delivery. Trader Joe's has stuck with in-store sales despite the pandemic.

"Creating an online shopping system for curbside pickup or the infrastructure for delivery — it's a massive undertaking, something that takes months or years to plan, build and implement," Trader Joe's Vice President of Marketing Matt Sloan said during a company podcast April 20.

"The reality is that over the last couple of decades, we invested those resources in our people, rather than build an infrastructure that eliminates the need for people," Sloan said.