How Much Does Grocery Delivery Cost?
Utilizing the convenience of grocery delivery is one of those things where you wonder how you got along without it. So how much does grocery delivery cost? The time saved by not having to suffer traffic and crowded grocery stores can be recouped into something more meaningful. While data scientists are working out the most efficient means of shoppers and delivery drivers, you can focus on relaxing. But what is the real cost of grocery delivery and how do companies like Instacart and Shipt build their empires while also funding the shopper and delivery contractor fees?
The first thing that companies like Instacart and Shipt do are markup your groceries to pay picking or shopping fees. Of course, you already know this because when you sign up for the services, they tell you that on the websites. Sometimes it can be as much as a 25% markup. I have provided shopper and delivery services through Instacart over the last few months. I took 26 sample items, in and around the Atlanta region, that were typically in a customer’s order and then priced the same thing as an Instacart or Shipt Marietta Georgia customer. What I found were two very different markups. Instacart’s average increase was 12.64% while Shipt was 17.62%.
In fact, I’ve spoken to several Shipt contractors, and they all report higher earnings but now that we can see the respective markups on groceries that would seemingly explain higher earnings from Shipt.
Let’s say you were shopping online via either grocery delivery service application and searched for “Barilla Spaghetti” to eventually arrive at the “add to cart” screen. You see that the box of pasta costs $1.65 from Publix on the Instacart interface. You add this item to your cart and later purchase it with the rest of your groceries. You are buying through Instacart, so that they can, in turn, interface directly with Publix inventory in a store somewhere in your geographical region, and procure it directly from Publix. They then use their shopping algorithms and either send the order to an in-store shopper to be picked up by a delivery person or they send the entire order to one person who will provide both shopping and delivery.
The latter is a function I have been providing. I avoid stores with in-store shoppers because the delivery only service is lonely and doesn’t pay enough for my car expenses. So let’s say I got your order for that box of pasta from Instacart and they want me to purchase it from a designated Publix. I use the Instacart debit card and buy your box of pasta for today’s price of $1.47. It’s only .18 cents markup and I get .40 to pick it. In the big scheme of things, if you procure $35.00 with Instacart, you would spend that in gas if you go to Publix yourself. Conversely, if I was a Shipt shopper and you wanted that box of pasta from a Marietta Georgia Kroger you would pay $1.79 via Shipt and I’d buy it for Shipt in a Kroger for $1.49 and deliver to you. So that’s $.30, and again you would probably spend that on gasoline. Or would you?
The Sample Shopping List
I used some April grocery orders to pull a sample list together and checked in-store pricing against what you would via the online interface. With Instacart you would pay a typical delivery fee of $5.99 ($9.99 for busy times) or have joined via an annual subscription for $149. Shipt only works via month-to-month for $14 or annual subscription for $99. There are no hidden fees because you already know your groceries are marked up to cover picking costs. The problem with this is that you will never really know the true markup unless any grocery delivery company will show that transparency on each item versus having you electronically agree to pay marked up prices (which is what you do). Check out the list below:
|Date Purchased||Item||Publix Store Price||Instacart Publix Item Price||Instacart Publix Item Markup %||Shipt Publix Item Price||Kroger Store Price||Shipt Kroger Item Price||Shipt Publix Markup %||WalMart Item Price|
|4/11/2018||Kellogg Froot Loops||$3.50||$3.89||11%||$4.29||$2.99||$3.59||20%||$2.58|
|4/11/2018||Entemans Lil Bites Choco Chip Muffins||$4.69||$5.19||11%||$5.59||$4.69||$5.59||19%||$2.98|
|4/11/2018||Tomato on the vine||$1.69||$1.89||12%||No match||$1.49||No match||No match||$1.78|
|4/11/2018||Bananas||$0.65||$0.69||6%||$0.69||$0.55||No match||No match||$0.56|
|4/11/2018||French Bread (Bakery)||$2.49||$2.75||10%||$2.99||$1.99||$2.39||20%||$1.00|
|4/11/2018||Arnold Health Nut Bread||$3.99||$4.75||19%||$5.09||$3.19||$3.69||16%||$2.98|
|4/11/2018||Granny Smith Apples||$1.99||$2.69||35%||$2.19||$1.99||No match||No match||$1.77|
|4/11/2018||Catfood Tin Fancy Feast||$0.59||$0.65||10%||$0.69||$0.60||$0.79||32%||$0.54|
|4/11/2018||Oscar Meyer Center Cut Bacon||$7.26||$8.19||13%||$9.99||$6.49||$7.69||18%||$5.48|
|4/11/2018||Egglands Best doz eggs||$2.75||$3.05||11%||$3.29||$2.79||$2.99||7%||$2.67|
|4/11/2018||Store Brand Milk Fat Free gal||$2.99||$3.35||12%||$4.09||$2.79||$2.59||-7%||$2.68|
|4/11/2018||All 2X Free & Clear||$12.99||$14.39||11%||$11.79||$13.59||$15.69||15%||$12.87|
|4/12/2018||Marie C Chicken Pot Pie||$2.36||$2.65||12%||$2.89||$2.39||$2.59||8%||$2.08|
|4/12/2018||Goya canned coco milk||$2.19||$2.45||12%||$2.19||$1.99||$2.39||20%||$1.78|
|4/12/2018||Tidy Cats Litter 35 lbs||$13.45||$14.99||11%||$19.49||$13.59||$16.09||18%||$13.74|
|4/12/2018||Starbucks Kcup PER POD||$0.97||$1.10||13%||$1.18||$0.90||$1.07||19%||$0.75|
|4/12/2018||Goya Red Kidney Beans||$1.39||$1.55||12%||No match||$1.19||$1.49||25%||$0.84|
|4/12/2018||Green Giant Riced Veggies||$2.99||$3.35||12%||No match||$3.29||$3.89||18%||$2.48|
|4/12/2018||Sunbeam Giant Bread||$3.15||$3.49||11%||$2.99||$3.19||No match||No match||$2.98|
|4/12/2018||Prego Traditional Sauce||$2.17||$2.39||10%||$2.79||$2.19||$2.59||18%||$1.96|
|4/12/2018||Little Debbie Zebra Cakes||$1.99||$2.19||10%||$2.39||$1.99||$2.39||20%||$1.68|
|26 Items picked||Publix Grocery Bill $87.89||Instacart Grocery Bill $98.67||Instacart Average Markup 12.64%||Kroger Bill $83.72||Shipt Average Markup 17.62%||Total Walmart Grocery Bill $76.15|
With Instacart in some instances, upon checkout, the customer has a service charge automatically added to the final total. On April 24, 2018, that changed slightly. Grocery delivery cost includes items that we discuss in this post but can change at any time. You can see this, and should always check when you are done picking groceries and attempt to check out. In weeks past, the service fee could be waived if you clicked the hyperlinked “Change” and reject it. Today, it appears Instacart has been listening to the complaints by customers and changed the waivable fee to a flat fee and then finally added a reminder about the tip. Check out how it looked previous and also how it looks today:
So while Instacart may not mark up groceries as much as Shipt, they do now add a $5.00 flat service fee. Again, having your groceries delivered when needed is worth it. I have to give kudos to Instacart for adding a driver tip reminder. I’ll take this as a sign that eventually all groceries will be picked by a store associate and only delivered by a driver versus the full shopping service that is prevalent in my region.
Maximizing Your Grocery Delivery Cost
In another blog post, I detail how you can save over $700 per year by either shopping in-store at Publix or utilizing Kroger or Walmart grocery pickup. However, I realize that the convenience of grocery delivery will make it second nature and while Walmart and Amazon continue to build their strategies, Instacart and Shipt will continue to markup your groceries and provide a modicum of income for shoppers and delivery contractors everywhere. So how do you maximize savings with grocery delivery? There are a couple of basic rules:
- Only use grocery delivery on an as-needed basis. If you use it too much, marked up groceries will end up costing us all.
- Don’t order the minimum, order what you or your family will need for a two-week period and plan your meals.
- Don’t order a 2nd item just because it’s “Buy One Get One Free.” It’s a gimmick. Order only what you need, you’ll get it at 50% if you get one.
- Use the online coupons and sales just like you would in the store but stay away from marketing schemes urging you to buy things you didn’t explicitly plan to get.
- If you receive a full shopping service, ask the contractor not to deliver electronically until you have checked your produce. Then get a refund at the doorstep.
- Plan your deliveries on a schedule; you might get a discounted rate if you choose a set list and a set day of the week instead of within the hour or during busy times.
- If you get a notification that the shopper has started and you need 1 or 2 more items, just send a message to check if the shopper can add a particular item. That will save a trip to the store.
- In items that you know may be in short supply, add a message NOT to substitute. This saves time and an old box of whatever the shopper chose. Also, remember you can get a refund at the doorstep.
- Add “No substitutions” to all produce. There is no point in substituting raspberries for strawberries in most instances, let the shopper know you don’t want any or maybe you do.
Ultimately, the stores you prefer end up deciding which shopping and delivery service you choose. Is grocery delivery cost worth it? If you can stomach the 12-17% markup then grocery delivery is definitely for you. The markup with Instacart as of this writing is generally less than Shipt. The ultimate savings will come from Walmart prices and a curbside pickup, but if you still want to use a grocery delivery service I highly recommend Instacart.