This upcoming summer, the U.S. Department of Agriculture will test a pilot program that will allow online grocery stores to accept food stamps. These stores, seven in total, include retail web giant Amazon. The program will run for two years, during which online ordering and payment will be tested in order to insure against fraudulent use.
The program has the capacity to turn the $800 billion grocery industry on its head. Approximately 43 million people in America rely on the Supplemental Nutrition Assistance Program, commonly known as food stamps. This program brings in $66.6 billion in annual grocery profits.
Amazon’s involvement in the program reflects its recent steps into the grocery business with Amazon Fresh and Amazon Pantry. The company also has plans for stores with no check-out process, as well as more online delivery services. In a statement sent to CBS MoneyWatch, Amazon said “We are committed to making food accessible through online shopping, offering all customers the lowest prices possible. Amazon’s selections and competitive pricing can improve the grocery shopping experience for SNAP participants while helping extend their benefits further.”
Walmart is also in the process of revamping its grocery services, offering curbside grocery pick-up. Groceries brings in 56 percent of the companies revenue’s in the U.S. While not taking part in the program, Walmart said in a statement that “We look forward to working with FNS as they continue to explore this opportunity.”
According to advisory firm Gordon Brothers, online grocery shopping is “nearing an inflection point”, with four out of 10 consumers buying groceries online. Extending food stamp application to online grocery stores isn’t just convenient, however; it could also eliminate food deserts. Food deserts are neighborhoods without access to fresh, healthy food.
FreshDirect, an online grocery service based in New York, worked on a previous pilot-testing program with the USDA. This program, taking place mostly in the South Bronx, found that the government’s restrictions on payment was an impediment to efficiency. Payment had to be in-person, and the delivery person was required to carry a card machine in order to authorize the purchase.
Larry Scott Blackmon, vice president of public affairs at FreshDirect, found this restriction to be unnecessary, “If you look at a traditional model where a customer goes online to order, we can leave the delivery with a doorman or leave at the customer’s house.” He added, “It’s not just that there’s an opportunity; it’s more than an opportunity, it’s an obligation. We feel that this payment option should be afforded to everyone.”
The new USDA program will be testing online ordering as well as payment. Along with Amazon and FreshDirect, retailers include ShopRite and Safeway. Safeway will roll out the program in Maryland, Oregon and Washington while ShopRite will test in New Jersey and Pennsylvania.