The Hidden Cost of Outsourcing Grocery Delivery
Third party platforms offer speed and convienience, but the tradeoffs add up.
This is part 2 of 3 in our series on grocery delivery infrastructure. Read the first post here.
On the surface, grocery growth looks stable. In May 2025, total grocery sales grew just 3% year-over-year. But look closer and a different story emerges: delivery surged by 70%, hitting $3.9 billion and making up nearly half of all eGrocery sales.
The consumer is sending clear signals: delivery has become the main way customers shop—and a key driver of loyalty.
The biggest players are acting accordingly. Walmart now delivers to 93–95% of U.S. households, often within three hours, thanks to geospatial planning and hybrid fulfillment networks. Amazon has committed $4 billion to expand same-day delivery into 4,000 rural towns. These companies are using delivery as their differentiator and growth lever.
Regional grocers, by contrast, are often still treating delivery as an operational patch. Many rely on third-party platforms to check the box: fast to launch, low complexity, minimal internal lift. But that simplicity comes at a long-term cost.
This post breaks down the tradeoffs of partnering with third party platforms, the data behind them, and why owning your delivery infrastructure is the only path to long-term growth.
Third parties offer speed. But the tradeoffs add up.
Outsourced delivery helps grocers move fast. The infrastructure is already built. The customer base is active. There’s no need to hire drivers or build internal systems. On the surface, it looks like a win.
But the tradeoffs stack up quickly, and quietly undermine the very systems that drive growth via delivery.
Here’s what grocers give up when they fully outsource delivery:
- The customer experience moves outside the brand
- Shopper data stays locked in another system
- Fulfillment decisions follow outside logic
- Retail media revenue flows elsewhere
- Platform fees that eat into already thin margins
In June 2025, delivery sales grew 29% year-over-year. But not everyone benefited. One in four households that placed a supermarket order also placed one with Walmart that same month—up 400 basis points from last year. Supermarkets lost over two points in primary grocery share, while Walmart and hard discounters gained ground.
That’s what delivery leakage looks like in real time: shoppers drifting to ecosystems that offer better perks, tighter feedback loops, and more control.
Outsourcing may check a short-term box. But it caps what grocers can influence:
- Margins shrink under platform fees
- Customer retention suffers when experience slips
- Shopper data flows out of the business
- Retail media opportunities disappear
- Brand loyalty becomes harder to earn—and easier to lose
Many regional grocers fall into what we describe as Stage 2 or Stage 3 on the delivery maturity curve: dependent on third-party platforms or using basic orchestration without visibility or control. These models work for a time, but they’re not built for long-term growth. Over time, the lack of ownership creates drag on margin, loyalty, and strategic flexibility.
View the Delivery Maturity Curve →
Delivery data drives growth (when grocers own it)
Every delivery contains more than groceries. It carries signals about who your customer is, what matters to them, and how your operation performs.
First-party delivery data enables:
This is the infrastructure that platforms are already using to win. Marketplace players are doing more than delivering groceries; they’re building multi-billion dollar ecosystems fueled by shopper data. Without access to that data, grocers can’t compete on targeting, loyalty, or media.
And that disadvantage compounds. When fulfillment data lives outside your ownership, there is no visibility into what’s working or what’s going wrong. Grocers are stuck reacting to problems instead of preventing them. There is no opportunity to segment churned customers, run A/B tests on delivery promotions, forecast shifts in delivery volume, etc.
Owning delivery data puts those levers back in reach. It turns delivery from a cost center into a strategic advantage.
The loyalty gap is widening
Grocers who rely on third parties also struggle to build digital loyalty that sticks. If the delivery experience happens on a third party platform, it’s almost impossible to reward repeat purchases, push exclusive perks, or recover lapsed shoppers. There’s no feedback loop, because the data, interface, and messaging all belong to a different organization.
Meanwhile, national players are setting the bar. Their closed ecosystems offer speed, perks, and personalization that keep shoppers coming back. Walmart+ provides fast delivery, exclusive discounts, and seamless reordering. Amazon Prime does the same, locking in loyalty with convenience and benefits.
It’s working. In May 2025, one in four supermarket eGrocery customers also placed a Walmart order that month. That overlap is growing.
Regional grocers should look to build their own ecosystems—ones that deepen customer relationships, reward repeat behavior, and make the next order easier than the last.
Let’s look at what this can mean in practice.
A tale of two grocers
In Store A’s case, Mia became a recurring customer—but the store never knew. They couldn’t reward her, recover her if she churned, or tailor the experience. All of that value went to the third party platform.
Store B captured Mia’s behavior, rewarded her loyalty, and kept her coming back.
The cost of lost loyalty
Let’s say you have 20,000 monthly eGrocery customers, and 30% of them order through a third-party platform.
That’s 6,000 customers whose behavior you can’t track, whose loyalty you can’t influence, and whose repeat business is at risk.
Now assume:
- Just 20% of those customers start regularly ordering from a competitor with a better digital loyalty experience (like Walmart+)
- Each one spends $50/month online
- That’s 1,200 customers x $50 x 12 months = $720,000/year in shifted spend
If your average gross margin is 25%, that’s $180,000/year in lost profit—just from one segment.
These are shoppers who already like your brand enough to order once. Without owned delivery, grocers don’t get the chance to optimize this customer relationship.
The case for orchestration
Owning the delivery engine gives grocers control over growth. And grocers that take control can reverse the math:
- Reduce cost per order to ~$6 (vs. $10–$12 on outsourced platforms)
- Cut out-of-stocks by up to 7% with better data alignment
- Improve service consistency by setting fleet and routing logic
Orchestration puts grocers in control of delivery—pricing, routing, timing, and performance.
Grocers that invest in their own delivery infrastructure can build systems that protect margin, strengthen loyalty, and scale with the business.
Thanks for reading the second part of our grocery series!
- Read part one on Why Delivery Isn’t Optional in Grocery Anymore.
- In part three, we’ll show what it takes to build delivery infrastructure that scales, no matter what stage you’re in.
Heading to Groceryshop? Attend our Innovation Session on Monday, September 29.
Hear from Mike Brennan (Former COO, Peapod), Jordan Berke (CEO, Tomorrow), Faraz Hashmi (Head of Grocery, Uber Direct) and more on how grocers are cutting delivery costs 40-50% while owning their customer experience.
Register now →