Price perception could be at risk
The industry has used considerable tech firepower and spent billions of dollars… to make it easier for people to avoid going to buy groceries.
Some interesting new research from fintech firm Self Financial suggests we might be coming to a point where that supreme convenience is too expensive for the average American household.
Any way you slice it, the cost of having groceries delivered is substantial, adding up to a significant fraction of the entire tab. Self compared 29 common grocery products purchased directly from Target with the same products ordered through Uber Eats, which has been offering grocery delivery since July 2020.
The results? The delivered basket cost $153.28, compared with $120.58 for the in-store purchase, including estimated gasoline expenses. That’s a $32.70 difference, or a 21.3% premium.
If a household repeats that transaction every week, the additional expense hits $1,707 annually. For a household watching its grocery budget – and research suggests 90% of us are to some degree – that’s serious money.
And for an industry deep into a $326-billion online grocery boom, it ought to give a moment of pause…
Convenience Has Its Limits
I can’t argue with a straight face that grocery delivery provides no value – it clearly does, and at my house we use delivery for at least half of our monthly grocery “get.” It saves time, eliminates a trip out, and offers genuine benefits to my family and who-knows-how-many other working families. It benefits old folks and people with mobility limitations.
That’s value.
And of course it’s perfectly reasonable to charge for that service – it incurs a cost, after all. Somebody’s got to pick the groceries, get the order together and transport it. Someone needs to tackle the inevitable customer service complications. But I think there’s a difference between paying for convenience and paying a double-digit premium on practically everything in the basket.
That brings me back to Self’s two grocery orders.
Self Financial found that 27 of the 29 products examined were cheaper when purchased directly at Target. Cooking oil cost $2.50 more through Uber Eats, chicken breasts $2.03 more, frozen pizza $1.40 more and instant oatmeal $1.33 more. These aren’t luxurious indulgences; they’re kitchen and mealtime necessities, and many of them are staples in households where price is an outsized consideration.
Critically, these differences seem to be more than just “delivery charges.” Individual products averaged 14.1% higher prices through Uber Eats, before the additional checkout costs were considered. Delivery, service fees and taxes added another $14.31 to the bill.
A customer might reasonably expect to pay $6 or $8 or $10 to have groceries brought to their door… but discovering that the groceries themselves cost considerably more is another thing altogether.
It’s a safe bet that many consumers have already figured this out.
Just Whose Price Reputation Is at Risk?
Now we come to the proverbial dangerous ground for food retailers themselves – retailers who’ve spent decades carefully building and vigorously defending their price reputations.
They advertise weekly specials, work out promotional allowances, develop private-label assortments and invest heavily in loyalty programs. Entire merchandising strategies revolve around convincing shoppers that “there’s great prices and great value here.”
Then a customer opens a third-party delivery app, selects that retailer and runs headlong into prices that may be substantially higher than they’d get inside the store.
Who gets blamed?
My hunch is that most shoppers aren’t particularly interested in the contractual arrangements between a supermarket and its delivery partner; they see the retailer’s name, the merchandise and the final tab. If the bill looks excessive, that’s the experience they’ll remember.
In other words, there’s a danger that retailers can lose at least some control over their price image at the precise moment they’re trying to build and strengthen relationships with digital customers.
That’s not to suggest every supermarket delivery arrangement works exactly like the Target-Uber Eats comparison. It’s worth noting that pricing models can vary considerably – as do membership benefits, promotional offers and fulfillment costs.
The Self Financial study also has limitations I should mention. It examined one geographic market using July 2026 prices, excluded discounts and promotions, and calculated annual costs by extrapolating a weekly purchase. In other words, it’s not actually hard evidence that the typical American household actually spends an additional $1,707 on delivery.
Nevertheless, I think the underlying issue deserves a deeper look, beyond this particular comparison.
Digital Growth Doesn’t Automatically Mean Customer Loyalty
We’ve become accustomed to treating online grocery growth as an unqualified success. After all, the numbers are staggering, on track to hit $500 billion before the end of this decade. More digital orders, greater delivery penetration, increased engagement – these are often presented as evidence that retailers are meeting changing consumer expectations. To a great extent, they are; the industry has done a dynamite job rising to the challenge and opening this “new frontier.”
But it looks like order volume and growth tell only part of the story.
How frequently do customers reorder after seeing the final delivered price? How much of their regular grocery spending do they shift online? Are they using delivery for full weekly baskets or just those occasional purchases when convenience outweighs cost? Most importantly, does the customer believe the service represents reasonable value?
A shopper who orders groceries twice, recoils at the total and returns to shopping in person isn’t exactly evidence of a successful digital relationship. Nor should retailers assume that consumers who can afford delivery today will remain indifferent to its cost tomorrow.
It’s no secret that shoppers have become exceptionally attentive to prices. As we’ve seen time and again since the pandemic, they’re comparing, switching brands, trading down and up, and adjusting to manage household expenses and extract maximum value. It’s tough to reconcile that behavior with the assumption that those same customers will routinely accept a 20% premium simply to avoid a trip to the supermarket.
The Opportunity for Supermarkets
There’s another way to look at this – one more encouraging for traditional grocers.
The physical supermarket retains an enormous competitive advantage: customers can walk through the doors, choose their merchandise and take it home without paying somebody else to do the work. That real advantage can be overshadowed by the industry’s (justifiable) enthusiasm for delivery.
I’m not saying the answer isn’t to retreat from digital grocery; that would be, frankly, stupid. But it would be worth the effort to develop a more intelligent balance between convenience, transparency and affordability.
Curbside pickup deserves particular attention here. It eliminates the last-mile delivery expense while offering plenty of the time savings customers want. Retailers who can execute pickup efficiently might find an important competitive differentiator there.
Transparent pricing is critical; customers should understand – before checkout – that certain merchandise costs more through a delivery platform. Retailers should also take a hard look at whether their loyalty programs and promotional strategies are being faithfully represented across digital channels.
And perhaps most importantly, operators should understand the full economics of their delivery relationships, including what customers actually pay rather than simply what the retailer receives.
There’s no virtue in generating digital sales if the experience gradually persuades customers that shopping with your company is expensive.
The Price of Progress
Like I said, delivery is an important, valuable service; it has earned a permanent place in the industry’s operating model. But “permanent” isn’t the same thing as “unlimited growth.”
Consumers are perfectly capable of recognizing the value of convenience and deciding it costs too much. And retailers shouldn’t confuse a customer’s willingness to pay the occasional premium with a willingness to fork it over every week.
Digital grocery, with its huge promise, needs to be economically sustainable without making it economically unattractive. That’s a more complicated proposition than simply adding delivery capacity, expanding geographic coverage or signing another third-party partnership.