Grocery E-Commerce Affordability: Why Retailers Need to Own the Path to Price Parity

Introduction

Affordability has become the defining challenge in grocery e-commerce. Even the largest players have recently called it the industry’s biggest hurdle. And they’re right — the cost of fulfilling online grocery orders has been one of the toughest barriers to long-term growth.

The pressure is felt across every model, but it’s sharpest in on-demand grocery, where customers expect immediacy and in-store pricing parity at the same time. That combination has exposed just how costly and fragile many fulfillment approaches really are.

For many grocers, third-party partnerships have helped bridge the gap. But they also come with tradeoffs: commissions, platform fees, margin pressure, and added complexity on the store floor. These costs make it difficult to offer true in-store pricing parity online — and even harder to build a sustainable e-commerce channel.

True affordability in grocery e-commerce comes from putting fulfillment back in the retailer’s hands. With the right systems, grocers can keep revenue in-house, protect margins, and run operations that minimize in-store disruption while maximizing fulfillment speed. That’s the foundation for online grocery that grows profitably, not just incrementally.

Why Online Grocery Costs So Much

The gap between what consumers expect and what retailers can deliver sustainably is wide. Online grocery fulfillment is expensive because:

• Labor costs are high. Picking and packing adds significant overhead compared to traditional in-store shopping, with McKinsey estimating that last-mile and picking operations alone account for more than 50% of total e-grocery fulfillment costs.
• Substitutions and errors pile up. Wrong items and unavailable products erode customer trust — and margin.
• Store congestion creates friction. Gig shoppers and under-equipped staff slow down aisles and frustrate in-store customers.
• Systems don’t talk to each other. POS, ERP, and e-commerce platforms often sit in silos, leaving teams without real-time inventory visibility.
• Third-party fees eat into margins. Commissions and service charges force many grocers to inflate online prices just to cover backend costs — making affordability harder to deliver to customers.

The result? Cost-to-serve is inflated, while customer experience takes a hit — especially in time-sensitive, on-demand orders.

The Third-Party Tradeoff

For many grocers, outsourcing fulfillment to third-party platforms has felt like the only way forward. But while these models can patch short-term capacity gaps, they often introduce long-term obstacles to affordability and control.

High commissions and hidden fees chip away at profitability, while customer relationships shift as the platform becomes the face of the shopping experience and retailers lose the opportunity to build loyalty directly.

Valuable shopping data and insights often stay with the third party, and brand identity becomes diluted as grocers compete under someone else’s banner — where the shopping journey is optimized for convenience, not differentiation.

Fulfillment becomes inconsistent, driven by gig labor and variable service standards with rigid, standalone systems that make it difficult to adapt and scale as demand grows. For on-demand grocery especially, this lack of reliability makes affordability nearly impossible.

For retailers ready to move away from third-party dependency, the next step is rethinking the systems that power e-commerce — and building internal operations that can deliver affordability by design.

Building a Cost-Efficient E-Commerce Model

Grocers looking to make e-commerce more affordable aren’t short on ambition — they’re short on infrastructure that makes it viable.

Cost-effective grocery fulfillment starts with gaining operational control. That means using store-based systems that fulfill faster, stock smarter, and eliminate margin drain across the board.

It begins with real-time visibility. When teams know exactly what’s in stock across channels, they reduce substitutions, avoid wasted labor, and fulfill with greater accuracy. Streamlined workflows help staff pick and pack efficiently, without extensive training or costly errors. And smarter replenishment strategies keep shelves stocked with less spoilage and fewer stockouts.

Just as important, those systems need to be flexible. As demand shifts, new channels emerge, or compliance rules change, tech that evolves alongside operations ensures affordability doesn’t come at the cost of agility.

And the real unlock? Owning the experience end to end. When retailers control their brand, customer data, and margins, they gain the strategic advantage needed to personalize offerings, build loyalty, and operate profitably — a principle echoed by Forrester in their analysis of loyalty programs and direct data collection strategies.

Final Thoughts

The conversation around affordability in online grocery is gaining momentum—and for good reason. Customers want fair prices, but retailers can’t subsidize inefficient models forever.

The path forward is clear: fulfillment systems that drive efficiency, protect margins, and build trust with every order. Retailers who take control today will be best positioned to deliver in-store pricing parity online without compromising profitability.

At OrderGrid, we help make that possible. Our unified platform powers fast, accurate grocery fulfillment enabling teams to pick and pack 30-item orders in under five minutes with over 99% accuracy—boosting productivity, reducing training time, and eliminating substitutions to build trust with every perfect order.

No commissions. No third-party markup. Just efficient, brand-owned operations that scale.

Ready to cut fulfillment costs, own your margins, and scale profitably? Let’s talk.