Tuesday, August 30, 2016

Can Online Sales Help Food Co-ops Thrive?

When I heard that Food Front Co-op in Portland was offering online ordering and delivery to most of the Portland area, I knew it was a big story. Food co-ops have traditionally depended on their immediate neighbors for most of their sales and, particularly, for their membership subscriptions. With the grocery scene in Portland exploding, co-ops were struggling to compete. So I pitched the story to the prestigious online food-issues website, Civil Eats, and it published today.

Can Online Sales Bring Food Co-ops into the Modern Age?

New technology is allowing once-fringe natural food co-ops to reach a new audience.

If the mention of a cooperative grocery store conjures images of barefoot hippies pawing through bins of nuts and grains like squirrels, then we have news for you. Many of today’s co-ops have modernized their business plans to reach a wider audience. This fact is especially evident in the way many co-op groceries, like national supermarket chains, are on their way to offering online ordering, with delivery in one to two hours.

The reason that many brick-and mortar grocery stores are jumping on the online grocery bandwagon is simple—for many people, shopping online is more convenient.

Due to the emergence of delivery services like Instacart and Amazon Fresh, the technology which has made it possible for the chains to get online has also made it easy for co-ops, many of which have only one or two stores. Customers simply go to the store’s website, log into the online ordering section and start shopping.

Instacart currently has 100 retailers nationwide, including several co-ops such as Rainbow Grocery in the Bay Area, Good Grocer in Minneapolis, Central Co-op and Puget Consumers Co-op (PCC) in Seattle, and Harvest Coop in Boston. Andrew Nodes, head of retail accounts at Instacart, says that co-ops particularly benefit from online ordering and delivery services because it allows them to expand beyond their neighborhood membership base by giving them access to new customers.

“[Co-ops] also sell hyper-local and perishable items that don’t have the exposure that national brands backed by multibillion dollar corporations do,” he says. “Instacart is a way for them to increase customer exposure to those items.”

According to Brie Hilliard, marketing director of Food Front Cooperative Grocery in Portland, Oregon, the co-op decided to go forward with an online system two years ago, but put it on the back burner until it had a point-of-sale (POS) system in place. This year, they’ve begun offering sales through Instacart and so far around 130 customers have taken advantage of the service.

The timing was fortuitous, as it coincided with the opening of a popular 17-store grocery chain, New Seasons Market, just a few blocks from the co-op’s flagship location. With online ordering, Hilliard said, Food Front is now able to fill orders from its two locations for most of Portland’s neighborhoods in one to two hours.

Read the rest of the article.

1 comment:

Jeff Barry said...

Hi Kathleen. I just tried to post the following comment on the Civil Eats website, but it only allows for 750 characters....

I question how much of a value/mission alignment there is when Food Coops outsource grocery deliveries to independent contractors and embedded pickers. At best, the embedded pickers work part-time and are covered through workers compensation if they are injured on the job. The delivery drivers, on the other hand, have no such benefits and are responsible for auto insurance, wear and tear on their vehicles. They do not receive paid time off, health insurance or other benefits many employees receive. It is unclear about what happens if an independent contractor driver gets into an accident, injures someone, or causes damage to a customer’s property.

My company, Boston Organics has been providing home and office delivery of local and organic groceries since 2002. We are also a Certified B Corporation. B Corporations are trying to use business to solve social, environmental and economic issues. When we make business decisions, we consider the impact the decision will have on all of the stakeholders. In addition to the bottom line/profitability, we also ask ourselves “What will the impact of this decision be to the environment, the communities we operate in, and our employees.” At Boston Organics, we are trying to build a truly healthy and sustainable food system. This includes looking at how our food is grown. We also consider how the food is produced and transported from the farms to our customers’ doors.

It is very tempting to partner with one of these independent contractor/”gig economy” companies. Maybe the co-ops feel they have no other choice, and maybe we will too eventually. Instead of paying what is considered an hourly living wage, subsidized health insurance, paid time off, matching 401K, and various insurances (auto, business, general liability, etc), we could pay by the delivery. Such a partnership would allow us to push many of the risks, liability and costs on to the independent contractor (and customer).

Outsourcing order picking and deliveries to independent contractors might be a good way to keep our costs down, but we don’t think there is a strong enough alignment with our mission. We believe a truly healthy and sustainable food system includes paying all of those involved in the supply chain, including the order picker and delivery person, a competitive wage and benefits.