ALBUQUERQUE, N.M. — At 2:30 p.m. on a recent Wednesday, a mint green Skarsgard Farms vehicle — license plate: VEG VAN — stopped on a quiet Los Ranchos street. Edward Whitney hopped out, grabbed a red cooler filled with eggs, potatoes, grapes and more from the back, and dropped it off on a nearby front porch.
The homeowner had ordered the groceries online just a few hours earlier and now had the fresh bounty on the doorstep in time for dinner, thus joining the roughly 10 percent of Skarsgard Farms’ customers already taking advantage of the company’s newest offering: same-day delivery.
In the increasingly competitive grocery space, Albuquerque-based Skarsgard Farms was looking for yet another way to distinguish itself.
“Our competitive advantage is local products and brought to you in a way that no other store is willing to do. For now anyway,” owner Monte Skarsgard said. “We will see the delivery model change big time in (Albuquerque) over the next five years, and we want to be on the cutting edge of that movement.”
Skarsgard sells produce from its own South Valley farm as well as food from partnering growers and producers (dairies, bakeries, ranches) from Albuquerque and the larger region. Skarsgard’s 8,000-square-foot warehouse stocks everything from beans and peanut butter to bell peppers and beef.
When Skarsgard Farms launched in 2003, its organic array helped set it apart. Now, though, consumers see the “organic” label almost everywhere, with grocery giants like Costco and Smith’s devoting more space to those items.
Skarsgard sees same-day delivery as a new differentiator for his company, which previously only delivered around Albuquerque on Tuesdays and Fridays and required those customers to order a day in advance.
About 8 percent of Americans bought fresh food online in 2015, but 26 percent expected to do that this year, according to Morgan Stanley Research. It is considered a huge growth opportunity given how much consumers spend on groceries.
A 2015 report by Nielsen showed younger shoppers are driving the trend of ordering online for home delivery, with 30 percent of millennials already doing it worldwide and another 57 percent expressing a willingness to use such a service.
E-commerce behemoth Amazon offers grocery delivery in select metro areas through its AmazonFresh program, but Albuquerque is not among them. Skarsgard anticipates Amazon will eventually expand the service to Albuquerque but figures that’s still several years away.
In the meantime, he realized he already had the resources to do something similar himself, including a vehicle fleet, employees and a network of nearby partners to help fulfill orders on a short turnaround. Albuquerque’s relatively mild traffic also gave him the confidence that orders placed before noon would arrive by dinner time.
Skarsgard launched the service — free for orders $75 or more, or $5 otherwise — to Albuquerque customers east of the river in late July. Between 8 and 10 percent of Skarsgard’s 1,300 members used it within the first month.
Skarsgard said the idea came to him when he, as one of his own customers, missed one of the company’s old ordering deadlines and realized he’d have to wait several more days before he could snag another delivery. Other customers had surely been through the same thing.
“What we found is a lot of (customers who missed a deadline) would just go to the grocery store,” he said. Now, he added, “people … get used to buying food online and they can keep doing that and just have a better service from our side of it.”