By 2024, 70% of U.S. consumers will be shopping for groceries online, according to a recent study from Nielsen and the Food Marketing Institute. Supermarkets are scrambling to set up customer-facing ordering and delivery solutions to handle this growing wave. H-E-B has made a rare acquisition, purchasing Favor Delivery for an undisclosed sum.
Favor, founded in 2013, now serves 50 cities in Texas after doubling its footprint in 2017. The Austin, Texas-based company deploys 50,000 contract delivery people, called Runners, to bring groceries and restaurant orders to consumers.
The Favor acquisition gives H-E-B more strength in the highly competitive grocery delivery arena. Amazon-Whole Foods announced earlier this month that it would begin deliveries via its Prime Now service in four markets (including Favor’s home town of Austin). Instacart recently received $200 million in new funding, bringing its valuation to approximately $4.2 billion. Even Costco, which had long resisted moving into e-Commerce, debuted an online grocery shopping and delivery service in October 2017.
H-E-B already offers home delivery via its HEBtoYou program, along with curbside pickup at more than 100 stores and online deliveries of grocery, drugstore and general merchandise products to 48 states and military bases worldwide. The retailer has been working with Favor for two years and also partners with Shipt, which Target acquired in December 2017.
The Favor acquisition gives H-E-B access to “best-in-class consumer-facing technology and the on-demand company’s advanced delivery system,” according to a company statement. “H-E-B will also leverage Favor’s data-driven approach to capture valuable insights to deliver the best customer experience possible.”
Favor CEO and President Jag Bath will remain in his role and the company will maintain its headquarters and 140 employees. “We’re not looking for Favor to become an H-E-B delivery service,” said H-E-B COO Martin Otto in a report on MySanAntonio.com.