Help the Planet and Save Money: Have Your Supermarket Deliver

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Shopping cart car traveling to buy food
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Why do students ride to school on buses? Why do parents commute to work in carpools? Why, for that matter, does the U.S. Postal Service bring our mail to us in trucks, rather than have each of us trek individually to the post office to pick up our junk mail?

In each case, the answer's as obvious as you think: Using a single vehicle to move multiple people (or objects) to a single destination (or to bring those objects to multiple people) is simply more efficient. It saves time, gas, and helps preserve the environment.

This is the upshot of a recent study published in the Journal of the Transportation Research Forum.

On the off chance you're not already a subscriber, here's a quick summary of the findings: JTRF crunched the numbers on multiple U.S. and international test cases, in which trucks were used to deliver groceries to homeowners. What they discovered was that centralized distribution of groceries cut carbon emissions by anywhere from 17 percent to 90 percent in comparison to having grocery shoppers travel individually to the store to buy their orange juice and Oreos.

Weighing Convenience, Cost and Carbon

On the surface, this seems obvious. It is, after all, the reason the aforementioned pupils, parents, and postmen all ride their daily rounds according to a centrally planned system.

But there are a few observations contained in JTRF's study worth highlighting.

For example, companies such as Peapod, the online-ordering, truck-delivering home grocery service owned by Koninklijke Ahold, started out delivering groceries in dense urban environments. That's because, as JTRF confirms, corporate profits are greatest when groceries can be delivered within a city environment.

But today, these services are able to serve suburban and rural markets too. And from a consumer's perspective, the biggest gains in efficiency -- in greenhouse gases not emitted, and in gasoline not burned (or bought) -- are found when grocers deliver goods to multiple households out in the country.

Think about it. When your nearest suburban Kroger (KR) is just a few miles away, a grocery store can make a killing by lining up multiple customers to deliver to, all within, say, a 10-mile radius. Those customers, however, only save a few dimes' worth of gasoline each per shopping trip by having a grocer deliver to them rather than having to drive to the grocer.

Where It Really Pays Off

The scale tips in favor of the consumer out in the sticks, though, where the nearest supermarket (or increasingly, the nearest Target (TGT) or Walmart (WMT)) may be 25 miles distant, a grocer may not see as much profit in driving a far-flung rural route. But customers save a bundle -- as much as a two-gallon gas bill per delivery -- or easily $7 at today's gas prices.

If that sounds like a good deal to you, it's because it is.

Peapod, for example, charges $6.95 to deliver groceries to its customers. (Rates may vary based on the size of an order, and in different locations.) At this rate, rural customers to whom Peapod delivers pay essentially no extra cost for their deliveries. To the contrary, they save money on the delivery service (in the form of the cost of wear and tear on their cars), in addition to saving time.

Should Washington Step Into the Stockroom?

JTRF worries that the benefits of grocery delivery services aren't piling up fast enough. It thinks governments should "incentivize" the establishment of grocery delivery services -- perhaps through tax breaks for businesses that set them up.

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This may not even be necessary. Peapod's business has gained traction in many areas even without incentives, after all. And other grocers may move even faster to take advantage of the big savings associated with centralized delivery.

Amazon.com (AMZN) has already stuck its toe in the water of nonperishable grocery delivery. As national legislation to require online retailers to collect sales tax gains support, Amazon should become more willing to build warehouses in states where it formerly feared to do so (lest it create a taxable "nexus" within a state). It's possible that Amazon will then move further into the grocery delivery business -- perhaps even rolling the service into its $79-per-year Amazon Prime free delivery service.

For shoppers who've failed to take advantage of the savings in gas, in time, and in the toll taken on the environment made possible by grocery delivery services, a free grocery delivery service from Amazon -- or if they're smart, from Peapod or one of the other existing players -- may be the final straw. Remove that last lingering concern that grocery delivery requires payment of a fee, and we could finally see more shoppers move to board the grocery delivery train.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com.
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