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New grocery delivery service Shipt rolls into Richmond area

RICHMOND, Va. -- A new online grocery shopping marketplace has launched in Richmond, becoming the latest home grocery delivery service in the city.  Shipt, which is based in Alabama and California, began delivering to customers in Richmond Thursday morning.

Companies like Instacart, partnered with both Wegmans and Publix, already entered the Richmond market.  Two local Kroger stores have also been testing home delivery services.

Online based grocery delivery is only a small part of the market currently, according to industry experts, but massive growth is expected in the coming years. The Food Marketing Institute (FMI) predicts home delivery will account for 20 percent of grocery sales by the year 2025.

Richmond native Kenny Quade is working part-time as a Shipt shopper.  Quade receives a notification on his app that a customer has placed an order.  He then picks up those items at a local Kroger, and delivers them the customer's home or business during a specific time period. Shipt plans to expand their grocery store partnerships soon.

Although he has not used online grocery deliver for his own family, Quade said he thinks app based grocery delivery will be considered normal just like a pizza guy at your door is currently.

"I actually had a customer the other day that was talking to me about how they remember when barcodes came into play and how foreign they were," Quade said.  "With grocery delivery, 10, 15, 30 years from now, it'll be the norm."

Robert Kelley at the VCU School of Business studies the local grocery marketplace.  Kelley estimates online delivery accounts for only two to three percent of current grocery sales.  Kelley said the FMI 20% estimate is not far off, but he added that number is likely the current ceiling.

Kelley noted that self checkout kiosks are on average only used by 25-30% of supermarket customers.  The biggest challenge facing home delivery companies is that some shoppers cannot stomach someone else picking up their groceries for them, especially fresh foods.

"We like to smell the melon, hold the melon, and look at that certain cut of New York strip," Kelley said.  "There's such an emotional connection to buying fresh food for your family versus Kellog's Cornflakes. "

Grocery stores of all sizes must consider how they will handle the delivery business going forward, Kelley said.  Still, not all grocers can easily handle a transition toward online based home delivery.  National chain stores and regional grocers are better suited to implement the new technology because of their size while local markets may have to opt out, he said.

"If you have 500 stores and you have to create an online platform, you can spread that out over 500 stores versus if you're a one or two store operator it's a lot more expensive," Kelley said.

CBS 6 donated the groceries Shipt delivered to the station in the above video story to Feedmore.