Dive Brief:

• Kroger and Instacart have launched a virtual convenience store that offers delivery of fresh food, meal solutions, snacks and other products in as little as 30 minutes, the grocery chain and e-commerce provider announced in a joint press release Tuesday morning.
• The service, known as "Kroger Delivery Now," carries a selection of 25,000 items and is available to as many as 50 million households through Kroger's more than 2,700 grocery stores.
• Kroger's entry into the ultrafast delivery segment puts it in competition with speed-focused e-commerce services like Gopuff that have attracted billions of dollars from investors.

Dive Insight:

With the launch of Kroger Delivery Now, the nation’s largest supermarket operator is assertively moving into the instant needs delivery space that Gopuff, DashMart and numerous convenience-store operators have targeted in recent years.

Kroger’s e-commerce business surged to $10 billion in sales last year on the back of its pickup and planned delivery business. The company is also investing heavily in large, automated warehouses built by British e-grocer Ocado that cater to next-day orders. But a growing number of consumers are looking to fill small, mostly impulse-driven orders online for groceries and consumables.

Kroger may turn to its assortment as a differentiator for shoppers as it looks to compete head-on with Gopuff and other players, including instant-delivery companies that have recently invaded the U.S. While Kroger is touting its selection of 25,000 items and has a large network of full-size supermarkets, many quick-delivery firms rely on small stores and warehouses with assortments of a few thousand items to fulfill orders.

Kroger has been sizing up speedy delivery service for some time. The company piloted a 30-minute "Rush" delivery program in Cincinnati back in 2019. It was difficult to scale the service with Kroger employees, however, CEO Rodney McMullen told The Wall Street Journal, and will be easier to do with Instacart’s nationwide gig-labor force.

Kroger Delivery Now will require a $10 order minimum and carry a $2.99 delivery fee, The Journal reported. This compares to the company’s standard $35 order minimum and $3.99 fee.

In May, Instacart launched its own 30-minute delivery service that grocers can tap. On Tuesday, the company announced it’s launching its own convenience service on its digital marketplace. The new "Convenience Hub" serves "nearly every major U.S. city," according to the announcement, which didn’t offer details on its fee structure, only noting it offers free delivery in as little as 30 minutes to Instacart Express members.

Other companies are also forging partnerships to enter the convenience delivery space. This includes c-store operators like 7-Eleven, which now offers nationwide delivery through companies like Instacart, Uber and DoorDash, as well as its own 7Now 30-minute service. 

Earlier this year, Uber Eats launched an "everyday essentials" storefront, which utilizes Gopuff’s warehouses, assortment and drivers.