This article by Karen Jowers originally appeared on Military Times, the nation's largest independent newsroom dedicated to covering the military and veteran community.
Plans for expanding the commissary doorstep delivery program to every stateside commissary are on hold as officials try to find a way make the program financially viable while keeping customers’ cost as low as possible.
The pilot program continues at eight commissaries in the continental U.S., at least through June, but the delivery fee has more than quadrupled. The new delivery fees, implemented March 1, now depend on the distance of the customer from the commissary and range from $15.99 for a delivery within one to five miles up to $29.99 for a 16- to 20-mile trip.
Previously, it was about $4 per delivery, which was the only cost to customers beyond the actual cost of groceries and the 5% surcharge. Customers also have the option of tipping the delivery driver when they check out online.
The commissary website notes that the pricing is determined by the delivery service provider, not by the Defense Commissary Agency.
With a $4 delivery fee — which was the only money the contractors received — the program wasn’t sustainable, said numerous sources.
The federal minimum wage for federal contract workers is $16.20 per hour. Add on the current mileage rate of 65.5 cents per mile, plus fringe benefits and other costs, and “it’s very difficult to make it work,” said Todd Waldemar, founder and CEO of ChowCall, the contractor providing the delivery service at all eight commissaries in the pilot program, in explaining the delivery fee increase.
Losses of $40 to $70 per delivery were cited in the questions asked by potential bidders in the contract solicitation for the expansion of the deliveries at all stateside commissaries.
“Expansion will be delayed until further notice as DeCA performs additional market research” to find an approach that’s sustainable and cost-effective for commissary customers, he said.
That means they’re trying to find a way to make the program viable for contractors, while keeping the cost for commissary customers as low as possible.
“DeCA has been working hard to make this work,” said Waldemar. “My interpretation is that they’re trying to find that sweet spot of how to make it viable for a contractor while staying true to their mission of improving quality of life for service members, families and other authorized commissary customers.
“It’s close to being viable,” he said.
Caitlin Hamon, deputy director of government relations for the National Military Family Association, said the program is still needed.
“This is a service that families want, that they requested during the pandemic,” she said. “We think it’s important those families who need the delivery have it still as an option and still have access to the low-cost grocery benefit of the commissary.
“We were told by families, and earlier by DeCA, that the delivery services were becoming more popular,” she said. “We would encourage them to explore other avenues of funding for the delivery. Obviously the federal government has restrictions, but there’s something to be said for looking at the civilian counterpart grocery setup.”
Waldemar noted that pricing in the delivery service industry is challenging, not just for the commissary agency but across the entire industry. The increases in delivery fees have affected the number of people using the service, he said, without providing specifics.
“But it’s still a great program, and it’s still going well,” he said.
“We, as a contractor, want to be profitable, but we also want to minimize the fees,” Waldemar said. “Volume is important. The more volume, the better for us.”
The doorstep delivery program is an expansion of the Commissary Click2Go program, where customers at stores worldwide can order online and pick up their groceries curbside at their commissary.
But this test has taken the groceries a step farther — to the customer’s front door. Commissary employees pick the items from the shelves to fill the customer’s online order, then bring them to the delivery driver curbside.
The eight pilot locations have seen an influx of 17,503 new Click2Go customers since the delivery program started, said Robinson, the commissary spokesman. The store with the largest sales volume is Fort Belvoir, Virginia, with 5,013 orders totaling $643,169 from May 18, 2022, through March 31, 2023.
In addition to Fort Belvoir, the doorstep delivery pilot program is available at seven other locations: Scott Air Force Base, Illinois; Fort Bragg South, North Carolina; MacDill Air Force Base, Florida; Naval Station Norfolk, Virginia; Joint Base Lewis-McChord, Washington; and Marine Corps Air Station Miramar and Naval Station San Diego in California.
Rivet, another delivery services company that was part of the pilot program until February, was also successfully providing services, with military spouse employees.
“We were asked by the commissary to continue service without government funding and we shared, based on industry norms and pilot data, it is impossible to have a nationwide program without funding it, especially when federal regulation restricts revenue and adds costs,” said Harold Earls, co-founder of Rivet.
“Rivet was forced to pause services, letting go 41 military spouses” in late February, he said. But he’s optimistic that DeCA is working on a viable solution “and has a strong commitment to creating jobs for military spouses that transfer with them when they PCS,” he said.
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Waldemar said 60% of ChowCall’s employees are military affiliated, including spouses and veterans.
When Rivet left the pilot program, ChowCall took over delivery services at all eight commissaries.
Limited Options for the Commissary Agency
There are constraints DeCA has that other grocers who provide commercial delivery services don’t have. The agency, which relies on taxpayer dollars to pay for operations, to the tune of about $1.4 billion a year, is a benefit, not a business. Others in the delivery service industry have ways to earn revenue besides the customer fees they charge, according to questions and answers in the now-canceled solicitation. That includes marking up prices to pay for deliveries.
“The commissary cannot mark up pricing for groceries to cover or subsidize the cost of delivery,” commissary officials stated in the solicitation Q&A. “DeCA has statutory pricing and savings requirements that commercial grocery outlets do not have.”
DeCA officials has consistently said that all costs will be covered by customers using the delivery service. The agency won’t subsidize the program.
One questioner estimated a net loss of nearly $40 on each delivery, using the commissary at Fort Lewis, Washington, as an example. The estimate was based on a delivery fee of $11.99, which is the top of the range of the industry average.
Delivery from that commissary often takes drivers 45 minutes; plus there’s a 21-minute average wait time at the commissary for commissary employees to bring out the groceries. The local required wage rate noted for drivers is $20.90 per hour, along with the 65.5 cents per mile reimbursement.
Waldemar said the doorstep delivery is important to expand access to the commissary benefit. It’s especially important, he said, for spouses who may need to get their groceries delivered, for various reasons, when the service member is deployed.
ChowCall also partners with other businesses, expanding options for deliveries.
“Ultimately we want the military community to have better options than everybody else,” he said. “We want to tangibly make people’s lives better.”
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