Membership-based delivery services are beginning to disrupt the $600 billion-a-year grocery industry

Bii amazon prime vs costcoBI Intelligence16 million Americans buy their groceries at either Costco or Sam’s Club. Now Amazon is using Prime to disrupt groceries as well.

The cost and complexity of delivering groceries is what ultimately led to the downfall of Webvan and other startups that have tried to disrupt the $US600 billion-a-year grocery industry.

But a new wave of promising delivery startups are relying on a tried-and-true model to disrupt groceries: membership.

Membership grocery services help secure consumers as repeat customers and allow companies to lower individual shipping fees on every order. Shipping fees are typically a big barrier to grocery delivery because orders must be delivered fast to guarantee freshness.

The grocery delivery model is attractive because it guarantees that customers are getting fresh food straight from their local supermarket, without having to waste time in the store. The typical American family of four visits the grocery store twice a week, according to the USDA.

In a new report from BI Intelligence, we define what an e-commerce membership program is and how retailers are taking the Costco model and updating it for online grocery shopping. We also assess the advantages and disadvantages of e-commerce membership programs for the retailer, as well as what consumers might look for in these programs and what incentives are needed to get people to sign up.

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Here is a small sample of the e-commerce membership programs that we examine in the report:

In full, the report:

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Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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