Virtual grocery stores won customers over in Philadelphia and Seoul, but the newest Chicago iteration has yet to catch on with commuters.
Online grocer Peapod is test-driving a program in Chicago, allowing subway commuters to shop at a virtual store with their smartphones. The walls have pictures representing items like bananas and milk, and users can download an app to scan the items they want, which Peapod delivers to their homes shortly afterwards.
Peapod unveiled a similar store on multiple train platforms in Philadelphia, and reported a bump in mobile orders.
A similar bump in mobile orders may not happen in Chicago. The virtual store, in the northeast tunnel at the city’s State and Lake red line station, is in an inconvenient spot outside of the area where people wait for trains. Commuters eager to catch a ride cannot use the virtual store without risking missing the train, because it is not within the ticketed area.
Over a four-hour period a few days after it launched, no one walking through the subway tunnel used the program, or even considered using the program. Most people ignored the store or looked at it with mild interest before continuing on their way.
Keith Brown, 41, noticed it only after it was pointed out, and said his mother often used Peapod. “She is way too old to come to the subway, though, so she wouldn’t use this,” he noted.
“I like the idea, and I’m comfortable with mobile payments in general, but I don’t feel like I need this,” Chicagoan commuter Amie Kesler, 27, explained.
Dan Thorpe, 24, echoed Kesler’s sentiments, saying “I have a grocery store around the corner, and I’m going to stick with that,” but he was enthusiastic about this project’s potential.
Why did virtual shopping find more success in the subway stations of Seoul and Philadelphia? It’s simple: location and exposure.
In Seoul, Tesco’s Home Plus tested virtual stores inside the waiting area for trains, meaning commuters could browse while waiting for an incoming train. Home Plus is the second-most popular grocery store in Korea, so everyone was familiar with the store’s products, and Home Plus rolled out virtual stores throughout Seoul, including locations at bus stops.
While South Korea’s virtual store has a some differences with Chicago’s version, Peapod’s based its virtual stores in Philadelphia on similar concepts, just a different city. Peapod reported a boost in online sales in Philadelphia, but the reception in Chicago is chilly thus far, even though the Windy City has more product options.
One main difference between the two locations is Philadelphia’s virtual stores are in the area where commuters wait for a train, whereas Chicago’s store is in a tunnel leading into and out of the subway station. Because commuters are still rushing to their destination, they are not as likely to take a moment and look at the virtual store, let alone order groceries from it.
The experiment in Chicago underscores potential difficulties for mobile-based shopping. It is not enough to compete on the novelty and convenience of purchasing goods and services via smartphone: businesses hoping to boost sales through mobile payment methods must still think strategically about audiences, placement, marketing and differentiation. In other words, services like Peapod’s must meet consumers where they already are, rather than hope to change their lifestyle and daily routines.
If Peapod wants a successful Chicago test run, it should consider changing its virtual store’s location to make it more convenient for shoppers. Even though people are growing comfortable with the concept of mobile payments and smartphone shopping, companies looking to expand in this area will not see significant growth unless they make the experience preferable to the other alternatives.