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Kroger to launch digital marketplace this fall

Partnership with e-commerce specialist Mirakl to extend Kroger Ship D-T-C platform beyond groceries

Russell Redman

August 11, 2020

5 Min Read
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The Kroger Ship direct-to-customer platform is being expanded to include a marketplace of third-party vendors.The Kroger Co.

The Kroger Co. is getting into the online marketplace business.

This fall, Kroger plans to go live with a digital marketplace of third-party sellers through a partnership with e-commerce provider Mirakl, which specializes in B2C and B2B e-marketplaces.

Kroger said Tuesday that, under the move, its Kroger Ship direct-to-customer platform will extend its ship-to-home assortment beyond groceries to a range of other categories, including natural and organic products, international food, specialty items, housewares and toys. Initially, more than 50,000 items will be available to customers, the Cincinnati-based retailer said. Eligible Kroger.com orders also will be able to earn loyalty rewards, such as fuel points.

“Our customers are increasingly turning to our e-commerce solutions provided at Kroger.com for their grocery and household essential needs. To better serve our customers, we’re continuing to invest in technology that enables us to expand our digital services to deliver anything, anytime, anywhere,” Jody Kalmbach, group vice president of product experience at Kroger, said in a statement. “Leveraging Mirakl’s best-in-class marketplace solution, we are broadening Kroger’s ship-to-home capabilities by offering more relevant products for our customers through exciting new partnerships with reputable third-party sellers.”

Related:Kroger unveils its own online grocery delivery service

Launched in August 2018, Kroger Ship currently enables consumers to order from a selection of center-store groceries, pantry items and household essentials — including Kroger own-brand products — at ship.kroger.com and have them delivered to their door. Delivery is free for orders over $35 and $4.99 for smaller orders. Products offered via Kroger Ship are curated using data and insights from Kroger’s 84.51° digital intelligence arm.

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The Kroger Ship marketplace assortment will span a range of categories, including natural and organic products, international food, specialty items, housewares and toys.

An extension of the Ship service into a broader e-commerce marketplace would turn up the competitive heat on big retailers like Amazon, Walmart, Target and Costco Wholesale, given Kroger’s data, analytics and media muscle and its national scale. One of the world’s largest retailers, Kroger has nearly 2,800 stores in 35 states under two dozen banners and generates annual sales of more than $121 billion.

Kroger’s aim to stretch its online retail wings is evidenced by its efforts to build its own e-commerce infrastructure. In May 2018, Kroger unveiled a partnership with UK-based online grocer Ocado to build 20 automated customer fulfillment centers (CFCs) in the United States over three years. Running at around 350,000 square feet, the Ocado CFCs use automation and artificial intelligence to fill online orders. The companies said they plan to replicate the CFC model as they build the facilities across the U.S., extending Kroger’s online retail reach — possibly into new markets where it doesn’t have brick-and-mortar stores.

Related:Kroger plans three more Ocado automated warehouses

So far, Kroger has announced plans for nine CFCs (including two smaller facilities of 200,000 and 150,000 square feet), with the first slated to open in Monroe, Ohio, in early 2021. CFC locations include the Midwest, Mid-Atlantic, Southeast, Southwest and Pacific Northwest.

“The expansion of our Kroger Ship platform will continue to bring together our industry-leading customer insights and merchandising data to offer our customers a digital shopping experience that includes staples available in our physical stores as well as products that are exclusive to Kroger.com,” said Stuart Aitken, senior vice president and incoming chief merchant and marketing officer. “As part of our continuing transformation, we look forward to accelerating the development of our e-commerce platform and providing our customers with even more choices.”

In announcing the partnership with Boston-based Mirakl, Kroger said its e-commerce technology and channel investments under the Restock Kroger strategic plan are better enabling the company to respond to rising consumer demand for delivery, pickup and ship-to-home orders, especially during the COVID-19 pandemic. In the fiscal 2020 first quarter, Kroger’s digital sales jumped 92%.

According to Adrien Nussenbaum, co-founder and CEO of Mirakl, a digital marketplace is a natural next step for a retailer the size of Kroger.

“Kroger has long been a retail giant, and by integrating an online marketplace into its leading e-commerce experience, Kroger is continuing to lead from the front,” Nussenbaum stated. “It’s clearer than ever that digital marketplaces are the foundation of the next generation of commerce, and we look forward to supporting Kroger as it takes advantage of this opportunity.”

According to Jefferies analyst Christopher Mandeville, the third-party online marketplace should help drive greater throughput and capacity utilization over time for Kroger's upcoming Ocado CFCs. Still, he questioned how big Kroger must go for its "endless aisles" strategy to work.

"We view today's announcement as a positive step forward in Kroger's efforts to build out its ecom business, as well as capitalize on COVID-driven ecom momentum, as additional assortment from a 3P platform should help relevance (to some extent) and improve ecom margins," Mandeville wrote in a research note on Tuesday. "However, we wonder how big this platform will ultimately need to be to succeed. With Amazon offering 10 million-plus items for one-day shipping and Walmart also making strides in building out a 3P marketplace, Kroger might find it difficult to capture mind share."

Albertsons Cos., the second-largest U.S. supermarket operator, behind Kroger, launched a Mirakl-powered online marketplace for third-party vendors in October 2018. Called the Albertsons Digital Marketplace, the virtual store offers thousands of specialty food and nonfood products, with a focus on natural, organic, ethnic and alternative products. The website currently says a “new and improved Marketplace experience” is coming “in the near future.”

*Editor's Note: Article updated with analyst comment.

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About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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