Simple Reasons Trader Joe’s Won’t Ship

New York
CNN Business

Online ordering is a big deal these days, if you haven’t heard of it, and almost every supermarket chain in the US offers delivery and curbside pickup.

Except Trader Joe’s.

The private company, founded in 1967 to appeal to counterculture shoppers ignored by mainstream stores, refuses to deliver because its brand identity is wrapped in its distinctive food brands and nautical-themed stores. A company motto: “The store is our brand”.

E-commerce is a costly undertaking for companies, and Trader Joe’s business model isn’t ideal for delivery, according to retail experts. But Trader Joe’s boycott makes it easy to lose shoppers who have grown accustomed to the convenience of online ordering, especially during the pandemic.

“Trader Joe’s is skeptical of change. They have something that works well,” said Benjamin Lorr, author of “The Secret Life of Groceries.” “The chain has been very slow to adapt from its core model and core capabilities.”

Store delivery fees are high. Many supermarkets have outsourced logistics to third-party platforms such as Instacart, rather than hiring their own staff to process orders. These platforms use a network of contract workers to pick customers’ orders from store shelves and ship them to their homes.

But Trader Joe’s store is already full. Trader Joe’s squeezes a limited number of items into small stores, many of which are located on city street corners. Extra people in the store or cars in the parking lot can make Trader Joe unbearable. For these reasons, roadside pickups will also be difficult to implement.

While Trader Joe’s could choose to build warehouses to fulfill grocery orders, it would be a huge investment for the company, which could force it to raise prices or take pay cuts.

“Creating an online shopping system for curbside pickup or delivery infrastructure — it’s a huge undertaking,” Matt Sloan, vice president of marketing at Trader Joe’s, said on the company’s 2020 podcast. It takes months or years to plan, build and implement and it takes enormous resources.”

Trader Joe’s also launches and discontinues products more frequently than many of its competitors. This tactic helps provide a treasure hunt-like browsing experience in the store and stimulates customers to make impulse purchases. But it’s hard to recreate this environment on a website.

Trader Joe’s has offered delivery in New York City for years, but ended the program in 2019 due to high costs and limited space.

“Rather than passing on unsustainable cost increases to our customers, canceling deliveries will allow us to continue to deliver exceptional value … and make better use of valuable space in our stores,” a spokesperson said at the time. .

The company was caught off guard during the online shopping boom in 2020 and 2021, when many customers restricted their in-store visits to prevent Covid-19, and instead ordered to their homes.

At the height of the pandemic, 20% to 30% of grocery business moved online. Online grocery shopping accounted for 9% to 12% of the overall market by the end of 2020, triple the pre-pandemic level, according to McKinsey.

McKinsey predicts that e-commerce will continue to grow and reach 14% to 18% or more of all grocery sales over the next three to five years.

Trader Joe’s lack of an online presence means it will miss out on that sizable market share and lag behind rivals like Amazon’s (AMZN)-owned Kroger (KR) and Whole Foods, which have invested dozens of dollars in their online ordering systems One hundred million U.S. dollars. .

In fact, even drugstores and convenience stores like 7-Eleven have delivery options these days. Costco, Aldi and other discount grocers that have resisted online movement for years have embraced it.

“It really does seem like a missed opportunity on the sales side,” said Steve Bishop, co-founder of retail consultancy Brick Meets Click. “It’s a growing and increasingly important part of the business.”

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