Executive Briefings

Online Grocery Delivery Is Hard Business to Make a Buck In

The online grocery delivery business seems to get more crowded - and more competitive - by the minute. Tech giants Google and Amazon.com are offering it in some major cities, and so are upstarts such as Instacart, Postmates and FreshDirect. These newcomers are battling with more established businesses such as Peapod, which has been delivering groceries for more than 20 years, and services from companies such as Wal-Mart that allow customers to place orders online and pick them up at a nearby store.

It's a business that everyone seems to want in on, even though new data show it's awfully hard to do profitably.

In some ways, the enthusiasm makes makes sense: According to a report from IBIS World, a market research firm, online grocery sales grew at an annual rate of 14.1 percent over the last five years and they are expected to grow at a rate of 9.6 percent between 2014 and 2018.

But look more closely at the report, and you see the major challenges these companies will face as they try to make these fledgling businesses viable.

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It's a business that everyone seems to want in on, even though new data show it's awfully hard to do profitably.

In some ways, the enthusiasm makes makes sense: According to a report from IBIS World, a market research firm, online grocery sales grew at an annual rate of 14.1 percent over the last five years and they are expected to grow at a rate of 9.6 percent between 2014 and 2018.

But look more closely at the report, and you see the major challenges these companies will face as they try to make these fledgling businesses viable.

Read Full Article