Kroger Co. (NYSE: KR) is launching a home delivery service today called “Kroger Ship”. It will be available in four cities, Houston, Cincinnati, Nashville and Louisville, for now and may expand to other cities in the next few months.
This new service will hopefully allow Kroger to compete with giants such as Walmart, Target and Amazon, which all have their own delivery services. Walmart acquired Jet.com, a grocery delivery service, in 2016 and is currently expanding into the New York City market. Target purchased Shipt Inc., another grocery service and is now expanding their delivery areas. Amazon’s acquisition of Whole Foods is arguably the most well known and rakes in the most revenue. This quarter, they sold approximately USD 650 Million packaged food items which is a 40% increase from last year.
Previously, Kroger offered delivery via Instacart at 1,200 of its stores and curbside pickup at 1,250 stores. The new Kroger Ship offers over 50,000 options among grocery, household and beauty items. They hope to expand to include produce, meat and other products in the future but they are currently focusing on promoting sales of their store brand collection items since they are more profitable for Kroger. They are using Vitacost.com, an e-commerce site they obtained in 2014, to develop the delivery service and they are working with FedEx and the United States Postal Service to ship their orders. Kroger currently has two fulfillment centers with another opening later this year.
The delivery service is priced at USD 4.99 for orders below USD 35 and free for orders over USD 35. Kroger is offering a discount of 15% with a promo code for their introduction phase.