Peapod.com reaches 18% of US population
This is our 6th and final article on online grocery retailer reach in the US. Others are available here. We started this research because we needed it as input to our own business plans, and published it because it might help with yours.
While many competitors on rapidly expanding their online grocery footprint Peapod has focused on slow, deliberate growth. Today Peapod is concentrated on the east coast and Chicago-land, but that wasn’t always the case. Peapod once had presence in Ohio (Kroger), Texas (Randall’s), and California (Safeway) but pulled out of those markets when acquired by Ahold in 2001.
Peapod has been in online grocery for over 20 years. Also in 1989: the fall of the Berlin Wall and the year George H.W. Bush banned import of semi-automatic rifles in an attempt to address mass shootings. In the early 90s we had 28.8k modems, and the average lifetime of a website was less than 100 days. In the US there may be no more experienced online grocery retailer.
Deliberate, Measured Growth
Peapod was up against Webvan, and many favored WebVan to win. WebVan famously and catastrophically imploded by expanding too quickly and building their own complex infrastructure and warehousing. Peapod used existing store infrastructure and resisted Webvan attempts to undercut them on price. Co-Founder Thomas Parkinson and CMO Carrie Bienkowski did a 2017 interview with Jim Dallke of ChicagoInno. Parkinson on WebVan: “The numbers didn’t add up… we decided not to go down the rabbit hole with them. We stuck to our guns, serving our customers really well but sticking to two hour windows and a delivery fee of $6.” He argues the same dynamic is happening with competitors like Instacart. Bienkowski said Peapod will continue to win because of: decades of food delivery experience, “cracking the suburbs”, and a superior understanding of market factors.
Retailers by Reach of US Population with Online Grocery Services
Can Regional Online Grocery Retailers continue to win?
We think they can in exceptional cases like Peapod, mainly through superior customer experiences and convenience. Competitors may be underestimating the specific needs of demographically varied populations. Peapod claims it has “cracked the suburbs”. Our maps show the macro view: Amazon Fresh and Peapod are tied at 18%, Amazon Fresh is more dispersed. Zooming into the data we confirm what Bienkowski points out — Peapod covers over 600 more US zip codes than Amazon Fresh, many of them in suburban areas where Amazon Fresh is absent. Bienkowski says business “is pretty evenly split between suburban and urban zip codes.”
In the next 3 years Peapod will experience intense competition on convenience, price and quality. Don’t underestimate 20 years of online grocery wisdom and innovation.