Is Online Grocery Shopping More Expensive?
"It's 2022 and we are still in a pandemic. Online grocery shopping isn't the future, it's the present." - Mitch (Doorway Drop Co-Owner)
If you're like the average Canadian you likely have bought something online in the last month; electronics, books, clothes, or groceries. Who wouldn't want to shop for groceries from your couch while you binge watch the latest true-crime documentary in your pajamas?! However, when it comes to "convenience" many consumers typically see this as a code word for "more expensive".
Which begs the question: is online grocery shopping more expensive?
It sure would be nice if we could simply tell you ‘No, all online groceries are cheaper across the board', but in many cases that is simply not true. Let’s take a look!
Physical goods such as clothing, groceries, books and electronics constituted the most frequent type of goods bought online in both 2018 and 2020. Just over three in four Canadians (76%) bought physical goods in 2020, up from 63% in 2018. Meanwhile, their spending on these goods doubled from an average of $1,165 in 2018 to $2,336 in 2020.
The Traditional Grocery Store
When you think of a traditional grocery store you most likely conjure up an image of a massive building packed with aisles and aisles of products, the deli counter, that signature grocery-store bakery scent and the generic easy listening music blasting over the speakers that's occasionally interrupted by a teller looking for a price check. As you push your cart through the store, you're constantly looking at products, checking out the prices, making split-second decisions and going through your mental grocery list because, naturally, you forgot your list on the counter at home.
Let me ask you though, how often do you think of the cost of the products you are putting into your cart? Not the shelf price, but the reason it's priced the way it is.
If you haven't read our post 'Why Are Groceries Expensive' it's a good place to start. The CliffsNotes version is that the traditional supply chain is complex. This complexity involves many entities that form the supply chain, each that need to make a buck.
The average grocery store item goes through a supply chain that consists of the Food Producer, Distributor and Retailer. At each stage, the product gets a little more expensive, so the respective party can make money. Ultimately, it is the Retailer that dictates the shelf price and usually, has the largest overhead to account for (those shelves take a lot of people to fill). Now imagine that you're strapped for time because you got to get your kids to soccer, and for sake of ease and time, you order your groceries from the store – you need them delivered by the time you get home. Guess what? You've just added another touchpoint, which means, yes, your groceries are getting more expensive.
Grocery Store Delivery vs. Online Grocery Stores
Dedicated online grocery stores are the same as traditional brick and mortar grocery stores. They both operate in the same supply chain (food producer, distributor, retailer) except instead of a storefront, they have a warehouse packed with products and a team that pack and deliver your items to your door. This may lead to slightly lower shelf prices. Yay! However, many online grocery stores are basing their pricing off the market. If customers are used to, let’s say, buying a pound of butter at the grocery store for $5.99, many online retailers are happy to charge $5.99 even if their business model would allow them to sell it for cheaper.
As online grocery ordering became more and more popular, especially with the COVID-19 pandemic, traditional retailers had to quickly pivot to provide home delivery. Many had to invest in developing online platforms, buying delivery fleets, and adding staff to pick, pack and deliver orders. It is a convenience, but the stores must charge more to cover these new costs. This is usually why you get hit with service or picking fees on top of delivery fees. Again, this has meant that online grocery ordering, through your favourite grocery store, is often more expensive than going in person.
Let's Talk Fees
The biggest reason online grocery shopping is more expensive are the fees associated with the "convenience" of online ordering. When you order take out for delivery, you usually pay a premium and it's no different with online grocery stores.
Some of the fees we have seen:
- Picking Fees
- Packing Fees (sometimes referred to as assembly fees)
- Delivery Fees (certain days/times even cost more)
- Dry Ice Fees
- and more
Many stores also have minimum order or delivery thresholds of over $50.
At Doorway we don't believe in hidden fees. We've factored our costs into our pricing and have tiered delivery fees to make it easy for everyone.
How Much Is Shipping with Doorway Drop? Shipping is FREE for orders that are $75 or more for deliveries in Greater Victoria and Sooke. Shipping is FREE for orders that are $100 or more in Nanaimo and Metro Vancouver. Order under these thresholds? No worries, flat rate shipping is available; $6.95 for Greater Victoria/Sooke & $8.95 for Nanaimo & Vancouver. Better yet, our order minimum is only $35!
Doorway Drop vs. Online Grocery Shopping
All is not lost though. At Doorway Drop, we saw an opportunity to reinvent the grocery industry. Our team has decades of grocery experience under its belt and are no stranger to the traditional way of thinking. The years of pounding our heads against the wall asking ourselves "there's got to be a better way" has paid off. We've cracked the code! At Doorway, we have found a way that allows our food producers (or vendors as we like to call them) to sell their products directly to you while skipping out on the distributor fees. By eliminating one of the common touchpoints in the supply chain and choosing to allow the vendors to set their shelf price, there is some significant savings when you shop with Doorway Drop!
Secondly, we've created some incredible strategic partnerships which has allowed us to have very little overhead. This means that we don't have an expensive building to manage or staff. We work with our vendors so that they retain control of their products, and we only make money if their product sells. This structure allows us to be hyper-competitive in our pricing. Additionally, because we built our company to be an online business from the start, we have tailored our delivery operations to be the most cost-effective possible.
Yes, that means when you shop online with Doorway Drop, you save, on average, 10-15%!
That's a Wrap
Now you know! The next time you are ordering online or heading to the grocery store you'll have a better understanding of why items are priced the way they are. At Doorway, we are continually improving our processes. Our mission is making food accessible to all because we believe that food is a right, not a privilege and, on top of that, everyone deserves the convenience of online grocery delivery!