Peapod\’s New PUP: Doggone Poor Thinking

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\"RRPeapod has a new PUP. Unfortunately, it may be a biter.

Peapod is the big grocery delivery service with major operations in the Northeast and the Midwest. It has never been hugely successful, so it sometimes casts around in different directions to invigorate the business. The latest idea is to launch pick-up points, referred to in the industry as PUPs. Peapod now has three dedicated pick-up points in the suburban Chicago area in addition to one attached to a Stop & Shop supermarket outside Boston. (Peapod and Stop & Shop are commonly owned by Ahold.)

The click-and-collect model goes like this: Customers go online and order groceries on Peapod\’s website. But instead of waiting for delivery, customers agree to go to a pickup place at a certain time to retrieve their order. This scheme may offer some consumers a vague advantage in that it eliminates waiting at home for delivery and it can reduce or eliminate fees charged for delivery.

Peapod isn\’t alone with its PUPs. A number of conventional supermarket retailers have tried PUPs too, not all with success.

The difference is that for conventional retailers, PUPs make a modest amount of sense. It gives established retailers a way to cater to customers who really want to transact business online, but don\’t want home delivery. It is also a low-risk proposition for an established retailer. The store itself can be the pickup point and existing personnel can probably be used to pick and package customers\’ online orders. So retailers\’ PUPs do little harm and if they fail, little is lost. Supermarket giant Publix in the Southeast is among the retailers that tried PUPs, and discontinued them for lack of consumer interest.

That exposes the real problem with PUPS: Many customers just don\’t find there to be much convenience associated with ordering online, then picking up. Why not just shop a store and be done with it?

That a company like Peapod is trying PUPs is an especially odd development. Peapod\’s core business is the offer of home delivery. If the delivery model is so flawed that it feels obliged to offer customers an alternative, doesn\’t that mean that a major part of the business is a failing at some level?

Beyond that, Peapod is operating dedicated pick-up points in the Chicago market, so the cost of failure– if that happens — will be far from negligible. Failure may move closer if Peapod goes through with its plan to charge for pick-ups. The plan is to charge $2.95 for picking up against $6.95 for home delivery. Really? Another reason to use the pick-up service all but vanishes.

It\’s time for Peapod to put the PUP on a very short leash.



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