The grocery delivery industry is one of the fastest-growing segments of the e-commerce sector. In 2023, online grocery sales in the United States are expected to reach $170.1 billion, accounting for 17.1% of all e-commerce sales and 12.4% of all grocery sales. New York is one of the largest and most lucrative markets for online grocery delivery, due to its high population density, urban lifestyle, busy schedules, and diverse preferences.
The Market Size and Growth Potential of the Grocery Delivery Industry in NY and the US
According to a report by eMarketer, online grocery sales in the US grew by 54% in 2020, reaching $95.82 billion. This accounted for 12% of all e-commerce sales and 7.4% of all grocery sales in the US. The report also projected that online grocery sales will reach $147.1 billion in 2023, accounting for 15.3% of all e-commerce sales and 10.7% of all grocery sales in the US.
| Year | Online grocery sales in the US (in billion USD) | Share of online sales in the US (%) | Share of grocery sales in the US (%) |
|---|---|---|---|
| 2020 | 95.82 | 12 | 7.4 |
| 2021 | 112.9 | 13.1 | 8.5 |
| 2022 | 130.0 | 14.2 | 9.6 |
| 2023 | 170.1 | 17.1 | 12.4 |
According to a study by Second Measure, NY accounted for 19% of all online grocery sales in the US in 2020, followed by California with 15%, and Texas with 9%. The study also found that online grocery spending in NY increased by 153% year-over-year in 2020, compared to 86% nationally.
These numbers indicate that there is a huge demand and potential for online grocery delivery services in NY and the US and that this trend is likely to continue in the future. Therefore, launching a grocery delivery app in this market can be a profitable and scalable venture for entrepreneurs and investors.
The Competitive Landscape and the Unique Selling Points of Each App
The online grocery delivery market in NY is highly competitive and fragmented, with several players vying for a share of the pie. Some of the top apps in this market are:
Instacart
| Market Share | 21.8% (as of June 2023) |
| Retailer Partners | 500 |
| Stores Covered | 40,000 |
| Delivery Options | Same-day delivery or pickup |
| Subscription Service | Instacart Plus |
| Benefits | Free delivery on orders over $35 |
| Subscription Cost | $99 per year or $9.99 per month |
| Unique Selling Point | Network of personal shoppers who handpick and deliver groceries according to customer’s preferences |
Instacart is the leading online grocery delivery platform in the US, with a market share of 21.8% as of June 2023. Instacart partners with over 500 retailers and delivers from over 40,000 stores across the US and Canada. Instacart offers same-day delivery or pickup options, as well as a subscription service called Instacart Plus that provides free delivery on orders over $35 for $99 per year or $9.99 per month. Instacart’s unique selling point is its network of personal shoppers who handpick and deliver groceries according to the customer’s preferences.
FreshDirect:
| Market Share | 9% (as of December 2022) |
| Services | Online grocery delivery |
| Delivery Options | Next-day delivery or pickup |
| Subscription Service | DeliveryPass |
| DeliveryPass Cost | $129 per year or $79 for six months |
| Unique Selling Point | Focus on freshness, quality, and variety of food products |
FreshDirect is one of the oldest and most established online grocery delivery services in NY, with a market share of 9% as of December 2022. FreshDirect specializes in delivering fresh and high-quality food products from local farms and suppliers directly to customers’ doors. FreshDirect offers next-day delivery or pickup options, as well as a subscription service called DeliveryPass that provides unlimited free deliveries for $129 per year or $79 for six months. FreshDirect’s unique selling point is its focus on freshness, quality, and variety of food products.
Amazon Fresh
| Market Share | 32% (as of December 2022) |
| Service | Amazon Fresh |
| Owner | Amazon |
| Availability | Select cities across the US, including NY |
| Delivery options | Same-day or next-day delivery or pickup |
| Subscription service | Amazon Prime: free delivery on orders over $35 for $119 per year or $12.99 per month |
| Unique selling point | Integration with Amazon’s ecosystem of products and services, such as Alexa, Prime Video, Prime Music, Prime Reading, etc. |
Amazon Fresh is Amazon’s online grocery delivery service that operates in select cities across the US, including NY. Amazon Fresh’s usage share is 32% among online grocery delivery users in the US as of December 2022. It offers same-day or next-day delivery or pickup options, as well as a subscription service called Amazon Prime that provides free delivery on orders over $35 for $119 per year or $12.99 per month. Amazon Fresh’s unique selling point is its integration with Amazon’s ecosystem of products and services, such as Alexa, Prime Video, Prime Music, Prime Reading, etc.
Shipt
| Market Share | 6% (as of May 2022) |
| Operating Cities | Over 260 cities across the US, including NY |
| Retailer Partners | Over 120 retailers |
| Stores Covered | Over 20,000 stores across the US |
| Delivery Options | Same-day delivery or pickup |
| Subscription Service | Shipt Pass |
| Shipt Pass Cost | $99 per year or $14 per month |
| Unique Selling Point | Flexibility and convenience for customers, choice of delivery time window, and communication with personal shoppers via text messages. |
Shipt is another online grocery delivery platform that operates in over 260 cities across the US, including NY. Shipt’s market share was 6% in the online grocery delivery segment as of May 2022. Shipt partners with over 120 retailers and delivers from over 20,000 stores across the US. Shipt offers same-day delivery or pickup options, as well as a subscription service called Shipt Pass that provides unlimited free deliveries on orders over $35 for $99 per year or $14 per month. Shipt’s unique selling point is its flexibility and convenience for customers who can choose their preferred delivery time window and communicate with their personal shoppers via text messages.
Peapod
| Market Share | 5% (as of December 2022) |
| Founded | 1989 |
| Operating Regions | Northeast and Midwest regions of the US, including NY |
| Delivery Options | Next-day or later delivery or pickup |
| Subscription Service | PodPass |
| PodPass Cost | $119 per year or $9.95 per month |
| Unique Selling Point | Low prices and discounts on various products and categories |
Peapod is one of the pioneers of online grocery delivery services in the US, founded in 1989. Peapod’s usage share is 5% among online grocery delivery users in the US as of December 2022. Peapod operates in several states across the Northeast and Midwest regions of the US, including NY. Peapod offers next-day or later delivery or pickup options, as well as a subscription service called PodPass that provides unlimited free deliveries on orders over $100 for $119 per year or $9.95 per month. Peapod’s unique selling point is its low prices and discounts on various products and categories.
Strengths and Weaknesses of the Top Players
| App | Pros | Cons |
|---|---|---|
| Instacart | – Large network of retailers and stores
– Personalized service and communication – Flexible delivery and pickup options | – High service and delivery fees
– Variable pricing and availability – Dependence on third-party shoppers |
| FreshDirect | – Fresh and high-quality food products
– Direct sourcing from local farms and suppliers – Wide variety and selection of products | – Limited delivery areas and time slots
– High minimum order amount – No same-day delivery option |
| Amazon Fresh | – Integration with Amazon’s ecosystem – Free delivery for Prime members – Access to Amazon’s deals and discounts | – Limited availability and selection of products – High membership fee for Prime – No personal shopper service |
| Shipt | – Flexible and convenient delivery time window – Text message communication with shoppers – Access to exclusive deals and offers | – High membership fee for Shipt Pass – Limited network of retailers and stores – No pickup option |
| Peapod | – Low prices and discounts on products – Long delivery time window – Customizable orders and substitutions | – Limited delivery areas and availability – High minimum order amount – No same-day delivery option |
Each of the top players in the online grocery delivery market has its own strengths and weaknesses. Amazon Fresh is the largest player in the market, but it has been criticized for its high prices. Instacart is a popular choice for customers who want to have their groceries delivered from a variety of stores, but it has been criticized for its high fees.
FreshDirect is known for its high-quality produce and meat, but it has been criticized for its limited delivery area. Peapod is a veteran in the online grocery delivery market, but it has been criticized for its lack of innovation. Walmart Grocery Pickup is a convenient option for customers who want to pick up their groceries without having to wait in line, but it has been criticized for its limited selection of products.
Revenue Model
| App | Revenue Model |
|---|---|
| Instacart | Commissions from grocery stores, delivery fees, and service fees |
| FreshDirect | Subscription fees, delivery fees, and service fees |
| Amazon Fresh | Subscription fees, delivery fees, and service fees |
| Shipt | Delivery fees, service fees, and tips |
| Peapod | Subscription fees, delivery fees, and service fees |
The top players in the online grocery delivery market use a variety of revenue models. Amazon Fresh and Walmart Grocery Pickup charge a subscription fee, while Instacart and FreshDirect charge a delivery fee. Some players also charge a service fee, which is a percentage of the order total.
Best Practices and Tips for Launching or Scaling Your Own App
As you can see, the online grocery delivery industry in NY and the US is a huge and growing market with a lot of opportunities and challenges. If you want to launch your own grocery delivery app in this market, you need to consider the following factors:
Identify your target market and customer segments: You need to understand the needs, preferences, and behaviours of your potential customers and how they differ from other markets or regions. You also need to analyze the existing competitors and their offerings and find your niche or gap in the market.
Choose your business model and revenue streams: You need to decide how you will source, store, and deliver your products and how you will charge your customers and partners. You also need to consider the costs and margins involved in each step of the process and how you will optimize them.
Develop your app features and functionalities: You need to design and develop your app with a user-friendly interface and a seamless user experience. You also need to include features that will differentiate your app from others and add value to your customers, such as personalization, loyalty programs, referrals, etc.
Market and promote your app: You need to create a strong brand identity and a compelling value proposition for your app. You also need to use various marketing channels and strategies to reach out to your target audience and generate awareness, interest, and conversions for your app.
Launching a successful grocery delivery app in NY is not an easy task, but it is not impossible either. With the right planning, research, development, and marketing, you can create a unique and competitive app that can stand out in the crowded and dynamic market.
However, if you need professional help with any of these steps, you can always contact us at Appscrip. We are a leading app development company that specializes in creating customized and scalable apps for various industries, including grocery delivery. We have a team of experienced and skilled developers, designers, marketers, and consultants who can help you turn your idea into reality.
Thank you for reading this blog and stay tuned for more updates from us!
Digital marketing consultant, helps clients generate leads, drive site traffic, and build their brands through useful, well-designed marketing strategies.
