When Shipt launched its grocery delivery service in the Tampa Bay area more than two months ago, the response from Publix shoppers was explosive.
"Tampa is definitely our fastest growing market," said Shipt CEO, Bill Smith. "Our biggest challenge was trying to meet the demand."
Thousands of people signed up for the company's mobile app, which allows users to virtually browse the aisles of a Publix grocery store and place orders to be delivered to their homes. Customers order groceries and pay via the Shipt app or on the company's website. Most Publix items are available for delivery, right down to the exact cut of meat from the deli to the specific preferred brand of frozen organic cherries.
Shipt, which is based in Birmingham, Ala., is expanding aggressively in Florida. Within two months, they've begun offering Publix delivery services in Tampa Bay, Orlando and Miami. Later this month, Jacksonville and Sarasota shoppers can sign up for Shipt.
The mobile app company has entered a heated and deeply contested race to be the next big innovator for the grocery industry. Amazon is delivering groceries in select markets across the U.S. Walmart begins offering an online grocery ordering and curbside pick up program in Tampa this month. WeGoShop.com offers local grocery delivery in Tampa Bay. Other supermarkets work with a company called InstaCart for delivery.
Even Publix experimented with online ordering over the years but never found a platform that worked. The grocer ended a short-lived online ordering and curbside pickup service at a Citrus Park location in 2012 because there wasn't enough business to justify the service after 18 months.
The Tampa Bay Times caught up with Shipt CEO Bill Smith to learn more about Shipt's expansion in Florida.
Why did Shipt decide to expand so quickly in Florida?
We are expanding rapidly in Florida and so far have been well received in all the cities where we've launched. Tampa has been a great area for us, and since then we've had a lot of demand from people in the Sarasota-Bradenton market. So far Florida has been one of the best states for us. We're seeing really great numbers here, and I think it's because of the variety in demographics. It's not just one type of population. There's retirees and young families. And in South Florida, it's such a densely concentrated population in what's generally a pretty small area, so it's been easy for us to serve.
What are some of the biggest challenges Shipt has faced since entering Florida?
The initial challenge we saw when we launched in Tampa was trying to keep up with the demand. Since then we've learned a lot about how to forecast the demand and to make sure we have the right amount of shoppers in the right part of the city to avoid that problem. That's no longer a problem in Tampa. We have about 400 people (employed) there. Another issue in Florida is the diversity of the Publix stores. We shop only at Publix, which has been in Florida for a long time. Some of the smaller stores don't always carry the same items, which can be a challenge for our shoppers and customers.
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How often is the app changed or updated?
We have a fantastic team at our headquarters that are constantly tweaking the app to make it easier to use for our customers. We recently added a tipping option on the app because so many were giving us feedback, saying they wanted to tip their shoppers but didn't always have cash to do it. We probably add new, small features every week or two, based on what people are asking us for. Like recently we added a new feature for customers to tell us how to handle an item on their grocery list that is out of stock. They can choose to just omit it from their list or substitute for something else.
There's been some backlash on social media from shoppers who say their pay rates aren't great once promotional fees drop after launching in a new market. What do you have to say to those employees?
Shipt isn't for everyone. We do offer a higher incentive during our new city launches, where we increase the pay on each order to make sure there's enough shoppers to handle the volume. Once we have enough shoppers, which is usually about six weeks after we launch in a new market, we start to phase out the incentive prices. If you can't work during the peak shopping times, which is usually on Sundays and in the evenings, then maybe Shipt isn't right for you. You decide your own schedule in this job. Our top performing shopper is actually based in the Tampa market. I'd say the majority of the people who work as shoppers are very happy. And we have a lot of people who want to work for us. There are thousands of applicants that are backlogged in the Tampa market. Obviously there's only so much demand so we can't hire everyone.
What's Shipt's relationship like with Publix?
We are separate businesses, but Publix has reached out to us. We continue to do our own thing but value the open line of communication with them. Their store associates are always friendly with our shoppers and are fantastic to work with. Also we don't only work with Publix. In Florida, Publix is the company we use but we just launched in Phoenix, which is a market Publix isn't in, so we're open to other chains.
What made you want to get into the grocery business?
When I originally started working on Shipt, it was focused on same-day delivery from other retailers, like Target and Best Buy. Customers loved it, but we kept getting requests to provide grocery delivery. Most people said they only needed merchandise delivered from Best Buy maybe a few times a year. We never intended to deliver groceries though — it was the one thing I said I wasn't going to do because it's very tough. It's challenging because of the logistics and it's hard to make a profit and keep it consistent. But the customer demand was there. It wasn't until I tried shopping with my own two young children that I saw the niche for it.
There are a lot of players going into the grocery delivery right now or like Walmart, with curbside pick up. The trend really is driving convenience and more people will continue to get into this space. But not everyone will be successful. The logistics are so tough. So who knows.
Contact Justine Griffin at firstname.lastname@example.org or (727) 893-8467. Follow @SunBizGriffin.