Michael Hopcroft, a SNAP recipient who lives in the Portland, Oregon, area wishes his local grocer Fred Meyer let people pay with their Electronic Benefits Transfer (EBT) cards online, with delivery as an option. Right now, Hopcroft's retailer choices are slim: Amazon and Walmart are the only ones offering SNAP online purchasing in Oregon.

Hopcroft has turned to Amazon, but would like to see more major grocery stores offer the capability to address safety concerns during the pandemic and mobility issues among SNAP recipients, in particular.

"There needs to be competition for the benefit of the customer," Hopcroft said.

That competition is waiting in line for a chance to draw away customers. While Amazon and Walmart are the primary players in the U.S. Department of Agriculture's (USDA) SNAP Online Purchasing Pilot, hundreds of grocers are slated to join by the end of the year.

As 2021 gears up to be the year SNAP recipients have significantly more online shopping options, companies are trying to tackle the technology hurdles that get in the way of greater adoption of SNAP online, from creating easier user experiences that open up accessibility to resolving the issue of what to do with e-commerce fees. 

Grocers that don't offer EBT online payments could miss out on increasing government spending on SNAP. The federal government spent $85.6 billion on SNAP, which is the largest food security program in the U.S., in fiscal year 2020 — roughly 35% more than the $63.5 billion that went to the program in fiscal 2019. 

Sources told Grocery Dive they expect online shopping for SNAP-eligible items to increase as more grocers start to offer it. 

"If it works out, it could revolutionize grocery for good," Hopcroft said.

Inclusive design could yield higher dollars

A "vast majority" of SNAP recipients are impoverished, while a "majority" of households receiving SNAP benefits include a child, a senior or a person with a disability, according to a post analyzing USDA data from fiscal year 2018 by the Peter G. Peterson Foundation, which focuses on fiscal barriers in the U.S. 

To optimize the experience for recipients, Joel Berg, CEO of Hunger Free America, recommends retailers hold focus groups to get input from potential customers and advocacy groups that combat hunger. A poor user experience creates missed opportunities that in the end could cost a grocer additional revenue. 

Sylvain Perrier, president and CEO of e-commerce provider Mercatus, said having an easy and secure user interface is important. He advised taking a "less is more" approach by using larger fonts and numbers to make it easier for older consumers and people with visual difficulties.  

Berg wrote in the blog post that websites and apps also need to display clear links to where to order.

Once they're ready to put items in their cart, having a mobile-friendly e-commerce platform for ordering and payment is key, Perrier said. "Smartphone penetration rates in the United States are above 95%, regardless of the demographic profile. So that's No. 1."

Perrier said Mercatus is also working with a company focused on digital accessibility to audit the company's SNAP online purchasing technology to certify that it's compliant with the Americans with Disabilities Act.

People whose primary language isn't English is another core — and often overlooked — group to target when setting up SNAP online, Berg said.

"[Grocers] are not Mother Teresa. Their job is first and foremost to make money for their stockholders, but they will make more money if they do better outreach to these communities," he said. In his blog post, Berg specifically pointed out retailers should particularly consider building sites that offer a Spanish and Chinese translation. 

Charlie Hoffs and Isabelle Foster, co-founders of the youth-led organization unBox that works to combat hunger in the U.S., said they want to see diversity embraced more. "We have definitely seen the need for multilingual materials," Hoffs said. 

Foster said SNAP recipients that unBox has spoken to have said they like shopping at their local bodega or ethnic food store to get certain items. "Culturally relevant food options is something that will be a consistent value and purchasing decision that individuals, even regardless of SNAP, I think, but people in general will want to continue to be able to access," Foster said. 

Ultimately, grocers and tech vendors may need to address specific challenges for vulnerable communities that receive SNAP benefits, while also ensuring they provide a similar shopping experience for SNAP and non-SNAP customers. 

GrocerKey, a white-label e-commerce technology provider, considered having a separate EBT shopping experience, but decided against it, said co-founder and CEO Jeremy Neren. "We opted out of that because we knew we wanted EBT customers, ultimately, to have an identical experience," he said.

To help minimize confusion, grocers and e-commerce platforms have directions posted on their websites to help SNAP participants navigate the online shopping experience. For example, Instacart has an extensive EBT SNAP online guide that covers everything from how to manage the EBT card via the user's Instacart account to shopping for SNAP-eligible items. Meanwhile, unBox offers broader resources with its state-by-state guides and flyers for SNAP online purchasing.

Maximizing SNAP dollars

It's important for recipients to be able to see how much of their benefits they have left so they can maximize the use of their SNAP dollars, said Vishwa Chandra, partner at management consulting firm McKinsey & Company. "The last thing you want is a surprise as you're checking out if you expect something to be able to be paid for with your benefits versus your other form of payment," he said. 

Heads of technology companies echoed the need to keep shoppers informed about how much of their EBT cards are going toward their purchase and provide additional features to help them stretch their benefits.

For example, according to a demo of Stor.ai's EBT online payments, which is still under development, customers can see what their EBT balance is, how much of their order is eligible for EBT and decide how much of their benefits they want to use. Stor.ai, which offers grocery e-commerce software, breaks EBT spending out into EBT SNAP, which covers eligible food, and EBT Cash, which covers eligible household items. 

Grocers will need to decide how transparent they want to be about pricing differences between in-store and online items. In the announcement about expanding SNAP online purchasing, H-E-B said prices may vary from online and in-store, but that online prices are the same for all customers. 

Integrating apps that help shoppers maximize their SNAP benefits could be beneficial, said Joel LaFrance, vice president of product at Basketful, a grocery e-commerce platform. It could help consumers consider questions like, "What is the most efficient use from a calorie standpoint of $50?"

LaFrance also recommends tech companies integrate shoppable lists that allow shoppers to compare prices. Basketful has a grocery list app where shoppers "can basically flip retailers and compare prices against that product," although it doesn't factor in SNAP eligibility. LaFrance said, however, that "that's an opportunity down the road for sure."

For e-commerce platforms like Instacart that have a number of retailers, LaFrance said it's possible to offer the price comparisons in a "retailer agnostic" way. "Potentially, they could create a tool that says, 'Hey, you know, it's more efficient to get this bag of rice versus this box of Hamburger Helper because it feeds more,'" LaFrance said.

What's SNAP-eligible?

Sources said it's vital that e-commerce platforms have tags clearly distinguishing between which items are and aren’t SNAP-eligible to make the shopping experience convenient and quick. 

Spencer Price, co-founder and CEO of taste intelligence company Halla, also sees tags as an opportunity to offer filters that help shoppers discover other options, like products that are keto-friendly or healthier. "Maybe you want to avoid foods with a ton of sodium or sugar or saturated fat" or are shopping for a specific diet, he said. "All of those filters should be working in tandem and not mutually exclusive."

Eli Yeheskel, director of U.S. operations of e-commerce platform Stor.ai, echoed a similar desire for health-focused tags and filters, saying that shoppers should have the option to look for both EBT-eligible items and ones that meet certain dietary needs, like organic or gluten-free. 

Neren of GrocerKey says one retailer he talked to wants to reward EBT-eligible customers for buying produce and healthy products, adding that he expects to see more marketing initiatives in the grocery industry for healthy food items with coupons, discounts and rewards points. 

Substitutions, a pain point for grocery e-commerce in general, are another area where sources say clear labeling is key because grocers will want to ensure any suggested replacements of unavailable SNAP-eligible items are also SNAP-eligible. 

Getting substitutions right matters because multiple orders mean e-commerce fees start to add up, Chandra said. Grocers need to be "managing substitutions so that you still stay in compliance and you're fulfilling as much of the basket as possible," he said. 

"Obviously, in the event of someone paying with SNAP, in an ideal world, you could have those substitutes only be EBT-eligible, but that's tricky because we don't necessarily know upfront that that customer is paying with SNAP [benefits]," Neren said. 

Neren said GrocerKey is trying to take a proactive approach to substitutions. "We've even gone to the level of curating recommended substitutes for just about every common center aisle grocery item," he said, adding that customers can select preferred substitutions while ordering. 

The fee dilemma

Payment of delivery and pickup fees may be one of the biggest challenges to resolve. SNAP benefits can only be used to pay for eligible items, which means shoppers have to use another payment method, such as a credit, debit or gift card, to cover those costs.  

Currently, split payments — having customers use their EBT card coupled with another payment method to cover non-SNAP items and fees — are the solution, albeit an undesired one because of the potential financial burden to shoppers, technology vendors told Grocery Dive. 

Grocers will want to make sure EBT customers can buy SNAP- and non-SNAP-eligible items easily in one online order with the split payments because "almost all SNAP recipients make some purchases with SNAP and some purchases with cash," said Craig Gundersen, a University of Illinois professor who focuses on SNAP.

Some grocers have waived all or some of the fees. For example, Instacart is currently waiving delivery fees for a limited time for up to three EBT SNAP orders per customer. H-E-B, which expanded online EBT payments chainwide in late 2020, charges all customers $5 for delivery, but removes the $4.95 curbside pickup fee if orders are placed more than two days in advance. 

SNAP recipients get free delivery with Amazon Prime memberships, which are discounted to $5.99 per month. However, they do not have to get an Amazon Prime membership to shop Amazon Fresh — their EBT card grants them access.

Most of GrocerKey's clients either don't have pickup fees or are shifting to offering free pickup for orders over a certain basket size, Neren said. 

One solution Neren sees to the fee dilemma for grocers is waiving pickup and delivery fees with order minimums, which he said are "fairly easy to achieve." A low order minimum, like $10, or low delivery fees could work if grocers can't afford to eliminate it entirely, Berg wrote in his blog post.

But Brian Moyer, CEO of e-commerce provider Freshop, said that cutting or eliminating fees might not be financially feasible for grocers, especially smaller ones. "I don't think that that's really equitable that you can't charge [those] as part of the SNAP benefits," he said. 

Moyer said he would like to see SNAP benefits expanded to include limited coverage of e-commerce fees, which cover the costs of picking and preparing the order. He shared this example: On an order of more than $50, grocers can charge a $5 fee that SNAP benefits would be eligible to cover. "Then, a customer who wants delivery that is more expensive would need to pay for the rest of it with their credit card," he said. 

Price of Halla disagrees with the idea of using taxpayers’ money to cover e-commerce fees, arguing instead that grocers should waive delivery fees, especially while the competition is still light for SNAP online dollars. By doing so, Price said grocers can improve customer acquisition and benefit shoppers. 

"If you're the only [retailer] or one or two or three in your state that can provide SNAP-eligible products in an online ordering environment, then you are almost guaranteed to get those shoppers to return to your site or your online store, provided you give them exactly what they need," Price said. 

LaFrance said expanding SNAP benefits to cover fees "is probably not in the spirit of the program."

"We want all those [SNAP] dollars to be used for food as much as possible and used actually to put food in people's mouths," LaFrance said. 

LaFrance proposes brands offer coupons or subsidize delivery fees, either with or without order minimums. He said it would create a "big" opportunity to connect brands with EBT customers, leading to repeat purchases and increased loyalty for both the companies and the grocers. 

While CPG and national brands would be more likely to adopt this idea because they operate with a larger margin cushion, LaFrance said he could see private label opportunities with fee subsidization. 

Offering more payment options

Customers can also face the issue of not having a credit or debit card.

To address that, some retailers accept additional payment methods. H-E-B takes H-E-B gift cards, while Amazon accepts gift cards and cash that customers can add to their Amazon Balance at certain Amazon locations. 

Berg of Hunger Free America said he would like to see something similar to Amazon's cash option rolled out at more grocery stores, where SNAP participants will have more options to use non-SNAP funds to pay for non-SNAP items. 

"Most low-income people, they don't have credit cards. ... People with disabilities or people with limited mobility, having heavy stuff delivered to your home would be great and much of the heaviest stuff, with the exception of beverages, the heaviest things supermarkets sell generally are non-food items: pet food, kitty litter, detergent," Berg said. 

Perrier said that Mercatus' SNAP online purchasing layered in EBT Cash, which covers household items — an option only some retailers offer. Walmart's website, for example, says it accepts EBT Cash online, while Amazon's says it does not. 

Alleviating the 'digital divide'

Moyer of Freshop advises grocers to be wary of the perception that SNAP users are novices at online shopping. "This isn't an audience that doesn't want to do e-commerce and is new to it. They're just regular people that don't have full access to this, but they're already using Amazon Prime, and these people are ready to use these services."

Still, Hopcroft said that SNAP recipients can face a "digital divide" where they don't have access to equipment, like printers to scan their EBT and identification cards; adequate internet access; or comfortability with using technology.

To help address the technology limitations, the Hunger Solutions Institute at Auburn University in Alabama and Wright's Market, which offers SNAP online purchasing, are planning to offer Healthy Food Hotspots, said Alicia Powers, managing director of the institute. 

College students will bring devices and Wi-Fi hotspots to residential sites for seniors and Head Start centers, which support preschool children from low-income families, to help people order groceries online with their EBT cards, Powers said. Once the orders are placed, Wright's Market will deliver the groceries to a centralized location. 

The Healthy Food Hotspots will hopefully launch in the fall, Powers said, although the timing depends on risk factors with the coronavirus pandemic. The university wants to scale the program by teaming up with other grocers in rural Alabama, Powers said.

"We definitely think it's something that can be scaled because broadband connectivity and comfort level with online shopping and EBT redemption is definitely a challenge that's going to have to be overcome," Powers said. 

As the grocery industry tackles e-commerce accessibility, sources said it's important grocers spread the word offline about SNAP online purchasing. 

Neren recommends grassroots efforts, especially at the store level, to reach the community. Moyer said Freshop is working with local organizations, churches, food banks and government agencies. Stor.ai plans to rely on a combination of offline and online efforts with emails, push notifications, in-store flyers, bag stuffers and information on grocers' home pages once its SNAP online purchasing goes live, Yeheskel said. 

Eyes on Amazon and Instacart

While the USDA says the pilot can currently reach more than 97% of the households receiving SNAP benefits, it's unclear how many SNAP recipients will turn to online shopping. 

As of September 2020, roughly 22.6 million households received SNAP benefits, according to data from the USDA. The number of households that receive SNAP benefits that shopped online for SNAP-eligible items increased from 20,000 in January to 810,000 in June, hitting 1.4 million in December. 

"With anything that we implement, we'll want to understand from our retailers how much is this driving business versus cannibalizing existing business," Neren of GrocerKey said. 

Still, sources said it's worth the gamble. For a traditionally low-margin industry, every dollar counts. Neren said if grocers can have online EBT account for 2% of their overall value, "that's really, really significant."

Now that Instacart has rolled out SNAP online ordering with Aldi and Food Lion, tech companies are waiting to see how quickly the e-commerce service scales the offering. "In unlocking those [SNAP] dollars, I think Instacart is uniquely positioned," LaFrance said. "They have hundreds of retailers that are on their program."

Instacart has already started to onboard more of its retail partners with SNAP online payments, Andrew Nodes, vice president of retail at Instacart, wrote in an email, declining to share more details. 

Meanwhile, Amazon's moves are worth watching, said Anne Mezzenga, co-CEO of retail blog Omni Talk. She expects the expansion of Amazon Fresh stores to "heat up" the company's online SNAP purchasing presence, noting that Fresh's products, especially in the produce department, and low-price points appeal to SNAP consumers. 

Hopcroft said Amazon has several beneficial features, like a quick ordering process and the ability to see past orders. He thought, however, the e-commerce giant could do a better job of distinguishing between SNAP- and non-SNAP-eligible items. 

While the recent dismantling of Amazon Pantry took away some options for SNAP consumers, Mezzenga doesn't think it will be missed. 

"In my experience, the prices were never comparable to say the local Walmart, and in most cases required that customers buy in bulk," Mezzenga said about Pantry. "When customers are required to buy a minimum of 12 boxes of mac and cheese on Amazon in order to meet the $35 Pantry minimum, it doesn't leave much choice or option for a limited SNAP budget."

Price agrees Amazon's focus on its grocery options has shifted the industry forward. As more retailers and tech vendors ramp up their SNAP online purchasing, EBT customers will likely benefit. 

"I think competition is almost always the main — and in many cases the only — thing that causes or creates change," Price said.

The Online SNAP series is brought to you by Mercatus, a recognized leader in grocery eCommerce technology. To learn more about their SNAP EBT Online solution and access resources, visit their website here. Mercatus has no influence over Grocery Dive's coverage within the articles, and content does not reflect the views or opinions of Mercatus or its employees.