“A billion here, a billion there, pretty soon you’re talking about real money”
Kroeger and Instacart just announced a virtual convenience store initiative. The current crop of articles outline the agreement and hopes for Kroeger and Instacart. We at Ekalore did some rough number crunching to understand the deal for the eCommerce grocery market. EkaLore has been working with folks to understand the post-Covid economy and rippling changes that are becoming permanent in the landscape.
Kroeger delivered $10B in eCommerce groceries over the past year. That’s against $132.5B in revenue across 2742 stores. That’s a lot of beans (<g>.) Kroger’s CEO set a target to double e-commerce revenue by FY20231
InstaCart is expanding existing Kroeger services to 30-minute delivery performance. So, what does this mean? Let’s break this down annually, by average store, and finally by average store per day.
This amounts to 1.5% of a store’s average annual sales of $48,000,000. 7.65% e-commerce revenue per store isn’t a big number against costs for online presence, stocking, picking, and delivery. Any orders filled “from the warehouse” imply additional physical infrastructure, Warehouse Management, and delivery management.
Analysis sees little profit for this initiative and difficulties sustaining a business relationship that may depend on having InstaCart investors subsidize some costs for Kroger. The implicit “but we’ll make it up on gained knowledge and volume” is just wishful.
If you’d like to learn more about our analysis and a deeper dive into the numbers let’s talk.
1. Kroeger.com – Press Release – 9/14/2021
2. Business Insider – 9/7/2021 – Meet the typical Kroeger Shopper – Average shopping trip est.
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