Why Vitacost.com is Vital to Kroger’s Omnichannel Strategy

Jul 09, 2014 7:23 AM  By

The Kroger Co. will purchase all outstanding shares of Vitacost.com for $8 per share in cash, or approximately $280 million, according the a definitive merger agreement announced on July 2.

On the surface, the deal may seem like a head-scratcher. But Vitacost.com’s ecommerce platform will enable Kroger to serve customers through ship-to-home orders in all 50 states, including 16 states that are currently not served by Kroger supermarkets. That will expand the grocer’s reach into new US markets, as well as internationally.

“Vitacost.com’s core focus on healthy living products is complementary to our fast-growing natural foods business, and we intend to grow Vitacost.com’s strong position in the online nutrition market,” said Kroger CEO Rodney McMullen in a press release. “At the same time, we will build on Vitacost.com’s eCommerce platform by integrating it with our existing digital offerings to create exciting new levels of personalization and convenience for our customers.”

Building on Vitacost.com’s technology and fulfillment platform and linking it to Kroger’s existing digital capabilities will accelerate Kroger’s omnichannel strategy. With Vitacost.com, Kroger will offer customers the convenience to order online and ship to their door with an expanded assortment online.

Vitacost.com’s website and mobile app offer robust product information, rich content including recipes, videos and customer reviews, and “Set & Save” subscriptions for thousands of items. Kroger offers an order online, deliver-to-home service in its King Soopers division in Denver, and continues to learn from Harris Teeter’s successful Express Lane model, which offers customers the ability to order online and pick up at their local store in 154 locations.

Following closing, Vitacost.com will operate as a subsidiary of The Kroger Co. and continue to operate its facilities in Boca Raton, FL, Lexington, NC and Las Vegas.

Vitacost.com reported annual revenue of $382.7 million in fiscal 2013. Vitacost.com reported approximately 2.3 million total active customers as of the end of its first quarter of fiscal 2014, which ended March 31, and reported shipping 1.5 million orders.