Walmart, Amazon, and ShopRite have started to offer their services to food tamp recipients as well after getting the green light from USDA.
Online shopping is extremely convenient, especially when we all have super busy lives and don't really find the time to go out and buy stuff, even groceries for that matter. Online grocery shopping might cost a little more than going to the supermarket but it is totally worth it. Recently, the U.S. Department of Agriculture (USDA) gave the green light to Amazon, ShopRite, and Walmart to step into a new lucrative market: food stamp recipients can now shop for their groceries online as well. Earlier, we couldn't use food stamps online and were forced to go to the supermarket on the one day in the week where we thought we could get some rest. The agency made an announcement on Thursday that recipients of the Supplemental Nutrition Assistance Program, or SNAP, could use their benefits to buy groceries online and get them delivered. The retailers are kicking off a two-year pilot in New York that will enable some of the state's 2.7 million SNAP recipients to grocery shop online.
Amazon and ShopRite will be providing their services in the New York City area while Walmart is said to cover all the upstate locations. According to the USDA, other grocery delivery service providers like FreshDirect, Safeway, Hy-Vee, and Dash's Market will join the New York pilot. The test is said to eventually spread across other parts of New York as well as Alabama, Iowa, Nebraska, Maryland, New Jersey, Oregon, and Washington. Whether or not other food chains will be joining in when the test expands has not been made clear as of yet.
As reported by CNN, the USDA says it eventually wants the more than 38 million Americans on food stamps nationwide to be able to make online purchases. The agency believes that this new introduction will reduce the burden on working moms, as well as on the elderly and the disabled. The move has also opened new doors to online retailers. "People who receive SNAP benefits should have the opportunity to shop for food the same way more and more Americans shop for food — by ordering and paying for groceries online," said Agriculture Secretary Sonny Perdue. "As technology advances, it is important for SNAP to advance too."
Although online grocery shopping is not very popular and has a small section of consumers, officials believe that the market is likely to grow. The popularity of online grocery shopping. especially for meat, is seen to be growing consistently among both, high and low-income consumers. Tapping into the $63 billion food stamp market could give retailers a big boost in that arena. Nearly $52 billion, or 82% of all food stamp dollars, were spent at these retailers in 2017, according to the most recent USDA data.
"It was only a matter of time before we saw SNAP benefits start to impact the online grocery world," said Tory Gundelach, an analyst at Kantar. Food stamp recipients are already an important section of customers at Walmart and other grocery stores. Around 4% of Walmart's sales. "There is a lot of money that is pumped into the food store system via SNAP, so retailers are going to try and maximize that," said Elizabeth Racine, professor of public health at the University of North Carolina Charlotte, who studies food assistance policies.
Walmart and Amazon will now compete on an entirely new battleground as low-income shoppers get access to spend food stamps online https://t.co/nWIUdMp2HD— Business Insider (@businessinsider) April 18, 2019
However, Walmart and big box retailers have lost out on the food stamp market share in the past few years. This is mainly because of convenience stores, pharmacies and dollar stores that are opening up in new locations and are expanding their grocery selection. These stores are not just expanding in terms of area covered but are doing it at a very fast pace which has an impact on the big grocery chains. Walmart, Amazon, and others hope that offering food stamp recipients the opportunity to buy online will help them beat the convenience stores since these smaller stores do not deliver the products.
The USDA is using the pilot announced Thursday to further test technical and security issues before it rolls out the program nationwide. There are far more security issues when it comes to using food stamps online. A higher level of security is required in order to prevent and detect misuse. Food stamp participants can use their benefits to buy eligible items online, but not for delivery or services charges. Walmart and Amazon have been getting ready for this move to be made ever since the idea was first announced in the Farm Bill in 2014. In fact, Walmart has been testing a separate pilot that is in a way similar to this one. Customers are allowed to purchase their groceries online using their food stamps but are required to pick it up from the store. Delivery was not a part of Walmart's pilot. This is something new that they will be testing out. Amazon is waiving its Prime membership fee for food stamp customers who want to shop for groceries and household staples through AmazonFresh and Prime Pantry.
Buying groceries online could appeal to food stamp recipients who live in food deserts in urban and rural areas, said Racine, the University of North Carolina professor. This initiative could also work very well for all those customers who do not have access to reliable transportation to get to the stores. However, there are a number of obstacles that the retailers will be faced with. Amazon and Walmart will face delivery hurdles shipping fresh produce to low-income areas, according to analysts. "The online grocery industry already struggles with delivery of perishable goods, so that won't go away with the acceptance of SNAP," said Kantar's Gundelach. Surely, the retailers will find a way around these hurdles soon, especially when the demand starts to grow.
This is potentially a good thing. Many of those who receive food stamps are in no shape for shopping, to begin with.— Joe Kushner (@JoeGKushner) April 18, 2019