business news in context, analysis with attitude

by Kevin Coupe

Bloomberg reports that Trader Joe’s has decided to stop offering delivery in New York City, a service it has provided for more than a decade, citing “the costs associated with fulfilling e-commerce orders” as well as the fact that it now has stores scattered more conveniently around the city. The change is scheduled for March 1.

““Instead of passing along unsustainable cost increases to our customers, removing delivery will allow us to continue offering outstanding values — quality products for great everyday prices, and to make better use of valuable space in our stores,” Trader Joe's representative Kenya Friend-Daniel told Business Insider. “This was not a decision we made lightly. We value our customers and all that they do to come shop with us.”

When Trader Joe’s started offering delivery, it had just one store in New York City. Now it has almost a dozen, and plans for more.

Bloomberg writes that “the move illustrates how competition for online grocery shoppers is heating up in New York, a city well suited to e-commerce because many people don’t own cars and live in close quarters. FreshDirect has dominated the market for years, but rivals like Walmart’s, Ahold Delhaize’s Peapod and Inc. are closing the gap. Local grocers can also outsource delivery to startup Instacart, which maintains an army of shoppers who roam grocery-store aisles, picking and packing orders.”

And, the story points out, “Delivering fresh groceries to people’s homes in Manhattan is still a costly proposition, though, as it entails refrigerated trucks, expensive drivers and the ever-present threat of parking tickets. New York shoppers also have high standards, which can boost the cost of processing returns and refunds.”

Now … Abandoning delivery at this point in the space-time continuum seems a little counter-intuitive, but then again, Trader Joe’s can be a pretty counter-intuitive company.

Two thoughts…

One, I give Trader Joe’s credit for not outsourcing delivery to the likes of Instacart … Trader Joe’s is nothing if not distinctive and differentiated, and making that kind of move would’ve diluted its value proposition.

Second, I know that MNB’s Kate McMahon has two daughters living in New York City who shop at a Trader Joe’s there, and the standard operating procedure for shopping at TJ’s is to go with a friend, with one person immediately going to wait on the checkout line while the other does the shopping. Otherwise, it takes forever. My point being … it is a lot easier to give up delivery when you’ve got in-store customers willing to make that kind of commitment.

That’s the Eye-Opener.
KC's View: