In the wake of the global digital revolution, fresh e-commerce has profoundly reshaped urban lifestyles with its convenience and efficiency. A few taps on a mobile app can now deliver fresh groceries to doorsteps within half an hour—a commonplace expectation for many. Yet behind this seamless experience, operational models in fresh e-commerce are undergoing quiet but significant shifts. Recently, U.S. retail giant Ahold Delhaize USA announced plans to shutter centralized e-commerce fulfillment centers for its subsidiaries Giant Food and The Giant Company by Q1 2026. This move has sent shockwaves through the industry, signaling an intensifying battle over the "last mile" of delivery.
Chapter 1: The Promise and Reality of Centralized Fulfillment
1.1 The Rise and Advantages of Centralized Fulfillment
In the early days of fresh e-commerce, centralized fulfillment centers were hailed as efficient, scalable solutions. This model aggregates inventory in large warehouses, streamlining picking, packing, and delivery processes. Key advantages include:
- Economies of scale: Bulk purchasing and storage reduce per-unit costs.
- Standardized operations: Uniform processes enhance efficiency and accuracy.
- Scalability: Easily accommodates growing order volumes.
- Quality control: Specialized cold chain equipment ensures product safety.
When The Giant Company invested $22 million in a Lancaster fulfillment center in 2018, these benefits were central to its strategy for expanding e-commerce capacity.
1.2 Challenges and Limitations
As consumer expectations evolved—demanding faster delivery, broader selection, and greater flexibility—the model's drawbacks emerged:
- Speed barriers: Multi-step processing struggles to meet "instant" expectations, particularly for perishables where freshness deteriorates rapidly.
- Limited SKUs: Centers stock fewer items than physical stores, restricting variety.
- High costs: Facility maintenance, labor, and multi-center networks drive expenses.
- Inflexibility: Struggles with demand spikes during holidays or inclement weather.
- Geographic constraints: Remote locations delay urban deliveries.
1.3 Niche Applications
The model remains viable for standardized goods, low-volume items requiring consolidated storage, or long-distance deliveries leveraging hub-and-spoke logistics.
Chapter 2: Strategic Pivot to Store-as-Warehouse Model
2.1 Benefits of Store-Based Fulfillment
Ahold Delhaize cited customer demand for "rapid delivery, expanded variety, and availability" as driving its shift to fulfilling orders directly from stores. This approach offers:
- Faster service: Proximity enables minute-range deliveries.
- Broader inventory: Stores carry exponentially more SKUs than warehouses.
- Cost efficiency: Leverages existing retail infrastructure.
- Local adaptability: Merchandising can respond to neighborhood preferences.
2.2 Implementation Hurdles
Transition challenges include:
- Retrofitting stores with picking systems
- Precision inventory management
- Optimizing in-store picking routes
- Scaling delivery fleets
- Upskilling staff for dual retail/e-commerce roles
Chapter 3: Technology as the Great Enabler
Key innovations supporting this transition:
- Demand forecasting: AI predicts local purchasing patterns to optimize stock.
- Smart picking: Augmented reality and voice-guided systems accelerate order assembly.
- Route optimization: Algorithms balance delivery speed and fuel efficiency.
- Contactless interfaces: Mobile checkouts and biometric payments streamline operations.
Industry Implications
This strategic shift reflects broader trends:
- Abandoning capital-intensive dedicated fulfillment for asset-light models
- Deepening partnerships with third-party logistics providers like Instacart and DoorDash
- Prioritizing immediacy over inventory centralization
The closure will impact approximately 218 employees collectively, with Ahold Delhaize offering internal transfers. Financially, the company anticipates $50 million in non-cash impairment charges—a short-term cost for long-term agility.
The Future of Instant Retail
Projected to grow at 9.7% CAGR through 2028 (Statista), the $958B U.S. online grocery market (Brick Meets Click) is betting on immediacy. Success requires:
- Expanding beyond groceries into general merchandise
- Developing micro-fulfillment technologies
- Building resilient last-mile networks
Ahold Delhaize's move underscores that in fresh e-commerce's next chapter, victory will belong to those who master hyperlocal execution while balancing speed, selection, and sustainability.