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The Financial Times has a story suggesting that Walmart’s decision to get into online grocery sales is an indicator that the e-grocery business is reaching a certain level of maturity, a decade after “a raft of venture-backed start-ups collapsed under the weight of overly ambitious expansion plans.”

According to the piece, Walmart is following in the practiced footsteps of companies such as Peapod and FreshDirect, though there remains doubt in some quarters as to whether online ordering and delivery of groceries will have the legs to establish a national presence. in part, this is because to this point, e-grocery still represents just 1-2 percent of the total US grocery market.

“Obviously there was a bit of a false start 10 years ago, when people thought the traditional grocery store was going to go away,” Peter Larkin, CEO of the National Grocers Association (NGA), tells FT. “I think as technology has improved and access to broadband has improved, the future of online grocery is actually quite bright.”
KC's View:
Not sure I agree with the basic premise of this story. I think we have a long way to go before e-grocery is a “mature” business, because I believe that 1-2 percent is just the tip of the iceberg. This will change with the next generation of shoppers, which has been raised to think that everything is available on Amazon, and which has less allegiance to traditional shopping experiences than their elders.

Speaking of Amazon, it is amazing to me that FT did not mention Amazon’s efforts in the online food business ... nor did FT mention the many retailers out there that are using online grocery to considerable success. To be sure, the pick-up model is more profitable than the delivery model, but this also gets little attention.

Expansion this time around will be more measured, but it also will be considerably more sustainable. A mature business? I think not. The future upside is too great.