Peapod Inc.

Innovative technology and new products have helped Peapod stay on top in the e-commerce market. 

By Kat Zeman

When it comes to online food and beverage sales, very few companies can bring it to the table like Peapod. An early innovator of smart shopping technology, Peapod has managed to stay at the top of its game by driving new investments, products and services.

“Being a pioneer in this space came with a lot of lessons learned, but we continuously innovate,” says Ken Fanaro, Peapod’s senior director of transportation planning and development. “All those experiences have helped to refine quality of our home delivery product.” 

As the world’s first e-commerce grocery delivery business, the Skokie, Ill.-based retailer has invested millions in new technology in the past year. That includes roughly $1.5 million in alternative fuels technology. Dozens of its trucks now run on liquid propane (compressed natural gas) and the company is testing hybrid trucks as well.

“We’re committed to sustainability,” Fanaro says. “Our alternative fuel fleet is producing strong results and we plan on investing more into hybrid technology.”

In addition, Peapod started installing safety cameras in its trucks to encourage safe and efficient driving habits within its fleet. It hopes to have all of its trucks equipped with cameras by the end of 2017.

Aside from fuel efficiency, Peapod has invested about $1 million into mobile field technology, partnering with Omnitracs LLC fleet management software and systems in Dallas, Texas, and Raleigh, N.C.-based Integrated Communications. Delivery tracking, driver navigation and product scanning verification were the key components to this mobile technology deployment.

“The driver helps collect critical last mile execution data,” Fanaro says. “This information is reused during the planning phase to optimize route efficiency and ensure we continue to execute with on-time rates over 95 percent.”

Filtered Shopping 

Responding to growing consumer demand for nutritional knowledge, Peapod added new filtering capabilities to its website and mobile app this year. They include four new nutrition filters: non-GMO, sugar free, vegan and vegetarian. It aims to enable shoppers to curate their own personalized digital aisle specific to eating habits.

Traditional in-store grocery shopping can be overwhelming for health-conscious eaters. It takes time to find products and read nutrition labels. Using Peapod’s smart filters, shoppers can customize their searches with 16 features specific to nutrition preferences. For example, they can rank products according to their sugar, sodium and fat content, as well as price.

To stay further ahead of the curve, Peapod is expanding its meal kits. It first launched the meal kits in collaboration with Barilla Pasta in 2014. Today, close to 20 meal kits are offered and their sales have increased by 250 percent in the past year.

“We are coming up with more recipes and continue to grow this,” Fanaro says. “We are merging it into our supply chain.”

All Peapod meal kits include easy recipes to cook at home and feature pre-measured, pre-cut and pre-washed ingredients. Many cost less than $5 per serving. The size of the meals are intended for families with the average meal being between four to six servings.

Peapod refreshes the kit selection throughout the year to reflect seasonal eating habits and incorporates fresh produce. Currently, the meals are offered only in the Midwest but customer demand may soon change that.

Reaching A Milestone

For Peapod, business is booming. “The new generation has really become accustomed to shopping for everything online,” Fanaro says. The country’s leading internet grocer serves 24 markets throughout Connecticut, Illinois, Indiana, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, Washington, D.C., and Wisconsin.

Founded 28 years ago as a smart shopping option for busy households, Peapod has reached a milestone this year: It delivered its 40th million order. “Our experience and knowledge with those 40 million orders came with a lot of bumps in the road,” Fanaro says. “But we’ve learned from that. We know what works and what doesn’t work.”

Roughly 90 percent of Peapod’s business comes from home delivery and about 10 percent is pickup. On a typical day, a driver will make 20 deliveries on the route. Pickup locations, introduced in 2014, are available primarily on the East Coast. Customers save about 50 percent off their total bill by picking up the groceries themselves. Peapod has more than 200 pickup locations throughout its market area, most of them attached to Ahold USA-owned brick and mortar stores like Stop & Shop.

How It Works 

For those not familiar with Peapod, its customers can order at Peapod.com or on a free mobile app at any time of day or night. They browse online “aisles” and fill their carts with anything from produce and meats to pantry staples and local specialties. When done shopping, the consumer chooses a time for delivery that can be anywhere from the next day to two weeks out.

“Our business model is set up around next-day delivery,” Fanaro says. “Same day delivery is intriguing but also logistically challenging, carrying a high cost.”

Peapod also offers special features on its mobile app and desktop platform that are designed to help the customer shop faster, save money and select products based on their personal taste.

Aside from the “sort and filter features” that allow consumers to shop based on dietary needs and price, an “express shop” feature locates and selects ingredients for a specific recipe or meal plan. Its “order genius” tracks what customers purchased in the past and auto-fills carts with the most frequently bought items. This filter feature is an option for consumers who want only certain products, like dairy-free items or peanut-free snacks.

When it comes to staying competitive, Peapod works to offer a variety of sales and specials. Including all of its food and drink categories, Peapod offers thousands of weekly specials and doubles manufacturer coupons up to 99 cents. Customers can also shop by price by using the company’s tools to sort from lowest to highest prices.

Peapod offers 60 days of free delivery to new customers plus $20 off on their next order and all customers receive discounts on delivery if they order during a weekday. In addition, customers can purchase a “PodPass,” a one-time low annual fee that guarantees them unlimited deliveries.

Merging Business 

Staying on top takes work. But Peapod keeps trucking forward. Over the past three decades, the company has made much progress.

Founded in 1989 by brothers Andrew and Thomas Parkinson, Peapod launched as the world’s first e-commerce business out of Evanston, Ill. In the 1990s, it expanded into Massachusetts and New York and delivered its first millionth order.

Peapod was associated with Jewel until 1999 when it opened a facility in Niles, Ill. In 2000, Peapod became a wholly-owned subsidiary of Royal Ahold, an international food provider based in The Netherlands, and pursued exclusive relationships with Ahold USA grocers, Stop & Shop and Giant Foods.

In 2012, Peapod opened its first grocery pickup location. In 2016, just as Peapod delivered its 40 millionth order, Royal Ahold merged with Belgian-based retailer Delhaize, creating Ahold Delhaize, one of the world’s biggest food retail groups.