2017 has been a bad year for traditional retail. Established firms like The Limited and hhgregg disappeared. Many of these jobs moved out of stores and into e-commerce warehouses. But clothing and gadgets aren’t the only products people are now more likely to buy online. The rise of grocery delivery services is having a big impact on shopping and logistics, too.
A Brief History Of…Thyme?
Most of us remember the dot-com boom. In those carefree days, venture capital flowed like wine. Anyone who knew how to register a domain and build an e-commerce site could make big profits…at least for a while.
Grocery delivery company Webvan was one of the biggest busts in dot-com history. In 2000 it had $178.5 million in sales. It also placed a $1 billion order for warehouses and a fleet of delivery trucks.
But by 2001, the roller coaster ride was over. Webvan filed for bankruptcy.
A push to grow too big too quickly doomed Webvan in just a few years. But today the grocery delivery industry is exploding. In 2015 sales were about $7 billion just in the United States. Companies like Instacart, Peapod, and FreshDirect have all gotten in on the action.
And there is a postscript to Webvan’s sad story. After it went bankrupt in 2001, it was bought by another distribution company: Amazon.
Grocery Delivery Changing The Distribution Landscape
The increasing popularity of these services means more warehouses and bigger fleets of delivery trucks.
AmazonFresh, the company’s online grocery service, currently delivers to about 20 cities. But its reach is growing. Amazon operates a network of at least 21 cold-storage distribution centers that exclusively serves Amazon Prime Pantry and AmazonFresh. And its grocery business is expanding internationally, with service starting in Tokyo and Berlin.
Amazon’s impending purchase of Whole Foods is another step toward the e-commerce giant’s domination of the grocery delivery business. Not only will Amazon own Whole Foods’ 460 brick-and-mortar stores, but also its network of distribution centers.
Meal Kit Revolution
Meal kits are also helping to lead the shift of American jobs away from brick-and-mortar retail and into logistics.
There are about 150 meal kit companies worldwide. Together, they’ve expanded to $5 billion in sales in 2017. Some of the big players are Blue Apron, Purple Carrot, and HomeChef.
Just like traditional retailers, meal kit services need distribution centers. They also need warehouse laborers to sort, package, and pack produce and other ingredients. Blue Apron alone serves a staggering eight million meals per month out of its distribution centers in California, Texas, and New Jersey.
Amazon, always on the cutting edge, is also jumping into this business. In July of 2017 the company began testing its own meal kit service in the Seattle market.
Currently, analysts predict that the meal delivery market could grow to as much as $36 billion in sales by 2026.
Webvan didn’t survive the dot-com bust and so never got to see the industry charge ahead. But companies like Amazon that have invested more wisely are poised to reap huge rewards in the years ahead.
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