Point Pickup Acquires GrocerKey for $42M - Same-Day Delivery Expansion
Point Pickup Acquires GrocerKey in $42 Million Deal
Point Pickup Technologies, a provider of last-mile delivery solutions, has completed the acquisition of GrocerKey, a white-label e-commerce platform, for a reported $42 million. This strategic move empowers retailers to offer same-day delivery services directly under their own branding, circumventing the need to rely on third-party platforms such as Instacart.
Instacart's Pandemic Growth and Data Control
During the height of the coronavirus pandemic, Instacart experienced substantial growth by facilitating grocery and goods deliveries for numerous retailers. The company generated $1.5 billion in revenue in 2020, and facilitated $35 billion in total sales.
Instacart currently boasts approximately 9.6 million active users and a network of over 500,000 independent contractors responsible for picking up and delivering orders.
Expanding Same-Day Delivery Market
The same-day delivery sector is witnessing an influx of new companies, a trend that mirrors the anticipated expansion of the industry. Allied Market Research projects the market to reach $20.36 billion in value by 2027.
However, companies like Amazon and Instacart, which both provide delivery services and operate delivery marketplaces, gain access to valuable customer data in addition to sales revenue.
Retailer Data Ownership
Tom Fiorita, founder and CEO of Point Pickup, emphasizes the importance of retailers retaining ownership of their customer data. The acquisition of GrocerKey, including its consumer-facing sales engine and predictive analytics capabilities, is intended to restore data control and brand recognition to retailers.
“Customers of Instacart provide them with subscription fees, and in return, Instacart possesses their purchasing patterns, credit card information, and other personal data,” Fiorita explained to TechCrunch. “Instacart became prominent during COVID-19 due to the lack of delivery options. Retailers have now realized the need to avoid relying on marketplace models that sell their goods without providing them with customer insights, payment details, or data.”
Emerging Competitors and Walmart's Initiative
Tyltgo, a Canadian startup, represents another recent entrant into the same-day delivery space, operating under a similar model to Point Pickup through the utilization of GrocerKey’s technology.
In both instances, customers interact directly with the merchant’s platform during the ordering process, creating a seamless brand experience. Furthermore, Walmart recently unveiled a new white-label delivery service, enabling other merchants to leverage its delivery network.
Point Pickup's Mission and Customer Base
Tom Fiorita established Point Pickup in 2015 with the goal of supporting local businesses in the face of Amazon’s growing dominance.
The company’s primary clients include major grocery retailers such as Walmart and Kroger, as well as other national chains like Albertsons and Giant Eagle.
Fiorita believes that the service offered by his company will be particularly beneficial to mid-sized and small- to medium-sized businesses.
The Importance of Data for Small Businesses
“Our aim is not merely to compete with Amazon or Instacart, but to provide a vital service for small businesses,” Fiorita stated. “These businesses cannot afford to continue allowing other companies to sell their products and control their customer relationships, including data, advertising, and consumer packaged goods revenue.”
Point Pickup's Delivery Network
Point Pickup facilitates deliveries of a wide range of products, including groceries, general merchandise, pharmacy items, and oversized goods. The company maintains a network of 350,000 gig economy drivers operating across 25,000 ZIP codes in all 50 states.
Driver Fleet and Environmental Considerations
As Point Pickup’s delivery network relies on independent contractors using their own vehicles, the company lacks precise data on the proportion of electric or hybrid vehicles within its fleet.
Fiorita estimates that the percentage is likely comparable to national averages, and potentially even higher. A recent Pew Research report indicated that 7% of Americans currently own an EV or hybrid vehicle.
The company considers driver vehicle type during the recruitment process and is exploring incentives to encourage the adoption of less-polluting vehicles. Point Pickup is also a vehicle-agnostic platform, actively piloting alternative delivery methods such as drones and autonomous robots.
Future Strategy and Carbon Emissions
To effectively compete with industry leaders like Amazon and Walmart, both of which are investing in electric delivery vans, Point Pickup must prioritize and enhance its sustainability strategy and reduce carbon emissions.
