Dive Brief:

• Ahold Delhaize plans to consolidate its e-commerce platforms in the U.S. under its Peapod online delivery service. CFO Jeff Carr told The Wall Street Journal the company will integrate the unified platform with its stores — including Stop & Shop and Giant Food — and its loyalty cards. 
• To update its system, which currently includes disjointed platforms from prior to the company’s 2016 merger, Ahold Delhaize is considering acquisitions and partnerships “related to technologies and ecommerce.” 
• This move comes on the heels of Ahold Delhaize’s earnings report, in which the company noted that sales volumes were “challenged” at most of its U.S. retail banners. U.S. online sales grew just 7.7% during the quarter. 

Dive Insight:

Ahold Delhaize’s quarterly report continued to outline the company’s lagging U.S. online sales. Industrywide, online grocery sales are increasing by about 25% annually. 

With the launch of its digital lab initiative, consolidation and an openness to technology acquisitions, Ahold Delhaize could rectify some its e-commerce issues. But the channel is rapidly evolving and competition is tight, so there is a lot of catching up to do. In the first quarter, by comparison, Kroger’s online sales grew by 66%. 

Ahold Delhaize is wise to streamline its e-commerce presence behind its e-grocery brand Peapod. Although Peapod has struggled a little as of late, it already has years of experience in the space, as well as the infrastructure and technology resources in place to serve as a launching pad for the company’s unified platform. 

Still, it won’t be easy or cheap. Berenberg analysts estimate the company will need to invest about $1.9 billion to catch up to its peers. Ahold Delhaize itself has noted during past earnings calls that it will need to increase spending on ecommerce by 50%. 

Also, as some retailers have proved, spreading ecommerce capabilities across different banners can be a challenge. This is why some chains have outsourced to companies like Instacart and Shipt to do the job. Ahold Delhaize, however, has the resources and infrastructure via Peapod to own its online services and that could provide a big advantage when it comes to customer experience and branding and operational consistencies. The company can not only leverage its Peapod infrastructure to scale more quickly, it can also glean some insights from its innovative European business. In Europe, for example, Ahold Delhaize invested in artificial intelligence research and is on the cutting edge of technology development. 

In the U.S. it’s a different story. Right now, online only accounts for 2% of the company's U.S. operations. Ahold Delhaize will have to scale quickly to make a dent in the competitive category alongside e-commerce heavyweight Amazon and tech-savvy Kroger and Walmart. It will also need more promotional support behind its Peapod business — which the company admitted has been a miss — in order for this consolidation to be successful. 

There have been glimpses of progress in Ahold Delhaize’s streamlining efforts post-merger. Last year, Ahold USA reported a 20% increase in web traffic to go along with a 70% increase in monthly users of its store apps.

Having a dedicated focus on a consistent e-commerce platform could expedite similar success. One thing is clear: Ahold Delhaize will need an answer from somewhere. Online grocery sales will increase at 10 times the rate of in-store sales over the next five years, which doesn’t give the company much time to play catch up.