Saturday, April 21, 2018
Business

Can grocery delivery services like Shipt survive now that Amazon Prime Now is in Tampa Bay?

In Amazon's never ending quest to be in the business of everything, the online retail giant rolled out a new one-to-two hour delivery service in Tampa Bay this week.

But it isn't the first time Tampa Bay residents could get anything from soap to butter in an hour via an app or online service.

Shipt launched as a grocery delivery service in Tampa Bay last summer and the response was overwhelming. The Birmingham-based tech company quickly expanded across Florida, delivering goods specifically from Publix Super Markets. But now Shipt will go head-to-head with Amazon to deliver some perishable goods and household essentials.

"We get this question all the time actually," said Shipt CEO Bill Smith, who added that Shipt has gone up against Amazon Prime Now in other cities before, like Atlanta, Dallas, Nashville and Miami.

"Prime Now can best be described as having the selection of a convenience store. When you look at the breadth of items sold at a Publix store compared to Amazon Prime Now, it's just not the same," Smith said.

There is some overlap though. Prime Now will deliver ice cream and frozen pizza, but by brands you'd see in a Whole Foods Market instead of a 7-Eleven. You can get cereal, a gallon of milk and a carton of free-range organic brown eggs.

"There's no real impact on our business because the need is different," Smith said. "But the on-demand economy is really expanding. I think we'll see some consolidation at some point, but consumers want this kind of service."

Others see Amazon as a threat to any retailer or delivery service.

"Amazon is clearly trying to take a bigger bite," said Steve Kirn executive director with the David F. Miller Retailing Education and Research Center at the University of Florida. "This is yet another extension of their online business. I'd definitely say it's a threat to anyone else offering a similar service. I'd even be worried if I was Publix."

Previous coverage: Amazon launches Prime Now free two-hour delivery service in Tampa Bay

Shipt employs around 500 "shoppers" or delivery personnel in Hillsborough and Pinellas counties who shop exclusively at Publix stores when orders are placed and then deliver them. Smith said Tampa isn't their largest market, but it is among the biggest of their 24 markets in the Southeast, Arizona and Ohio.

"Tampa is a growing city. We've done well so far and expect to continue to do well there," he said.

To use Shipt, customers sign up for an annual membership for $99 or a monthly fee of $14 on Shipt.com. Orders can be placed online or through the Shipt smartphone app. Users can schedule a time when they want orders to be delivered. Since Shipt launched last August, the company has added a shopper tipping function and plans to unveil alcohol delivery by the end of the year.

Previous coverage: Shipt grocery delivery app expanding fast in Florida

Smith said Shipt will partner with a liquor retailer for this new service, not Publix, which isn't an official partner with the company anyway. That means Shipt will also compete with Drizly, another smartphone app-based company that launched in Tampa Bay recently and delivers booze from ABC Fine Wine & Spirits stores to your door.

Amazon doesn't sell alcohol on Prime Now. The service is offered exclusively to Amazon Prime members, which requires a $99 yearly membership fee. Orders are placed at primenow.com or on the Prime Now app, and can be shipped from 8 a.m. to 10 p.m., seven days a week. Orders will arrive within two hours at no added cost or customers can get items delivered in an hour for an extra $7.99.

While Smith isn't concerned that Prime Now will affect Shipt, he said the way people shop is changing.

"I think we're still in the very early days of this industry," Smith said. "There's this huge shift happening where people just don't have to the time to go out shopping and they're looking for better ways to leverage their time."

Brick and mortar business is suffering because of how online shopping has changed how quickly orders can be delivered these days, said Faith Hope Consolo, chairman of the Retail Group for Douglas Elliman Real Estate in New York City.

"People are turned off when they go to the store and can't find what they're looking for or have to fight the lines at Whole Foods," she said. "This is just the way the world is going."

Contact Justine Griffin at [email protected] or (727) 893-8467. Follow @SunBizGriffin.

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