Dive Brief:

• Grocery Outlet is working with Uber to test on-demand and scheduled grocery delivery at select stores on the West Coast, the companies announced in a joint press release Thursday.
• The pilot involves 72 Grocery Outlet locations in California, Oregon and Washington. Customers will not be charged a delivery fee on their first order of at least $30 through June 19, and Uber One members will get free delivery on all orders of $15 or more.
• Grocery Outlet has recently been expanding its digital operations after long saying it preferred to direct shoppers to its brick-and-mortar locations and did not see a need to offer e-commerce.

Dive Insight:

The announcement detailing Grocery Outlet’s partnership with Uber follows comments during the retailer’s first-quarter earnings call last week by CEO Eric Lindberg indicating that it was developing a relationship with the e-commerce provider.

Lindberg also said during the call that Grocery Outlet intends to work with DoorDash, but the supermarket operator has so far not said anything further about that partnership.

Uber and Grocery Outlet did not say how long they expect their pilot to last, but noted it involves stores in cities including Seattle; San Francisco; Portland, Oregon; and San Jose, Sacramento, Palo Alto, and Sunnyvale, California. Shoppers will be able to place orders through the Uber and Uber Eats platforms, according to the press release.

Grocery Outlet’s deal with Uber follows the discount food retailer’s expansion of its relationship with Instacart, which began offering delivery service from most of the chain’s locations in April.

Like Grocery Outlet’s newly announced partnership with Uber, the company’s arrangement with Instacart began with a pilot involving a limited number of stores. Grocery Outlet opted to bring Instacart-provided delivery service to nearly 400 of its approximately 410 locations in seven states after a test at 68 locations that kicked off in October and was set to last six months. 

Until it revealed it was working with Instacart last fall, Grocery Outlet had avoided e-commerce, which it described as a poor match for its business model. The company, whose stores are owned and operated by individual owners, focuses on attracting customers with a shifting assortment of heavily discounted goods that it has said resonates best with people who shop in person.

“It’s really hard to replicate the treasure hunt experience online. And then on top of that, just the close connection customers have with the operator and the overall in-store ... shopping experience” works better when people visit physical stores, Grocery Outlet President R.J. Sheedy said during an earnings call in November 2020.

The press release about Grocery Outlet’s pilot with Uber makes clear that the grocer chain has firmly changed its thinking as e-commerce has expanded across the grocery industry.

“We think it’s important to make our great-value products available across another platform and to a greater audience, introducing Grocery Outlet to customers who may not have shopped with us before,” Sheedy said in Thursday's announcement.