Mohamaad Nikoofal, from Toronto Metropolitan University will present his research. 

The hidden cost of Grocery Delivery Platforms

Our study explores the impact of third-party food delivery platforms on grocery retailers' sales and profitability. We consider two prevalent online delivery models: (1) a membership-based model, employed by Shipt, where shoppers pay an annual fee for unlimited free deliveries, and (2) a per-order model, used by Instacart, where customers pay a delivery fee per transaction. Using a stylized theoretical framework, we characterize the value of these partnerships and derive key predictions on how they affects retailer performance. We then empirically validate our findings using data from approximately 436 grocery stores across seven U.S. states that have partnered with either Instacart or Shipt. Our empirical analysis shows how the benefits of these partnerships vary with product price, consumption rate, inventory holding costs, and competitive intensity. Our findings also offer actionable insights for retailers deciding whether-and how-to integrate third-party delivery services into their operations.