Joe Ganley
Writing code since 1979
I have been a professional software engineer for over 10 years. I have written many kinds of software, but my particular strengths are interactive graphics applications, compilers and interpreters, and algorithms.

I also enjoy writing, woodworking, and home improvement. Also this.

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Thursday, May 13, 2004

The economics of Peapod

I received a huge delivery today from Peapod, a grocery-delivery service run by Giant. Peapod has been a topic of some discussion in our neighborhood, and people ask us lots of questions about it, but few seem to use it. I don't know if the reason is economic or something else, but I'm convinced that from a strictly economic standpoint, Peapod makes sense to use. Peapod makes their delivery overhead by charging a delivery charge, but moreso, by not reducing the prices of sale items nearly as much, nor having as many sale items, as the actual Giant store does. I'm pretty savvy about how much groceries cost, and I estimate I pay a premium of roughly 5% for getting groceries from Peapod. So, for a load the size of today's, that's about $25. This saves me a 2+-hour trip to the store, and a trip that long would have to be made with no children along. The value of kid-free time is clearly at least $8/hour, because that is what we pay babysitters when we go out. So, including transit time, Peapod is roughly a break-even in economic terms. On the other hand, people don't function in strictly rational economic terms. Hiring a lawn service probably also makes sense economically, but I won't do it because I enjoy mowing the lawn, or at least my dislike for it is low enough that the amount I would pay to eliminate that chore is smaller than I'll pay to eliminate grocery shopping. Peapod has some other advantages, though: They bring the groceries to your kitchen, so they're doing the gathering, loading, and unloading for you. The produce is much fresher than what you find in the store, because it comes straight from the warehouse without the day-or-two delay of shipping it to the store, stocking it, and having it sit in the produce section until you pick it up. We're much less likely to forget something, since we have days to make up a list at our leisure, often with a cookbook in front of us (and note, if I forget something critical and have to go back, that's another hour wasted -- the nearest store is ~20 minutes away). The way it usually ends up is, I actually make small trips to the store a few times a month, with the kids. We go to Costco about once a month. And five or six times a year, we get a really huge load from Peapod. If you live in a Peapod delivery area, try it out. And if you say I referred you, we both get a credit; just tell them the referrer's email address is "peapodd@ganley.org," but with only one "d". (The email you would get if I sent you a referral looks like
this.)

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