Covid-19 has increased online SNAP purchases twentyfold—and Amazon, Walmart have a lock on virtually all those sales

More than 750,000 households had used food stamps benefits online as of late June. That’s up from just 35,000 in March. 

As states went into lockdown in March and April and people began avoiding grocery stores, the United States Department of Agriculture (USDA) finally achieved a long-standing goal: making it easier for people to use federal food assistance dollars online. 

Since 2016, the agency has inched towards allowing online purchases with Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) benefits. In 2017, it selected a group of retailers who would eventually pilot the program in a handful of states. But it wasn’t until April 2019 that internet sales launched in New York, and the second state—Washington—was not up and running until January 2020. 

Though the reasons for the slow rollout are unclear, things have changed quickly in recent months. As the Covid-19 pandemic envelops the U.S., and states rush to support alternatives to grocery shopping in person, the pilot program has expanded rapidly. As of early July, 43 states are approved to accept SNAP benefits online, and 39 have the program up and running. 

Yellow SNAP and EBT Accepted here sign, July 2020

Covid-19 has rapidly increased the demand for online grocery shopping. As of early July, 43 states are approved to accept SNAP benefits online, and 39 have the program up and running.

iStock/jetcityimage

Between March and June of this year, the number of SNAP households that had shopped online increased from about 35,000 to nearly 769,000, a USDA spokesperson told The Counter in an email. That’s more than a twentyfold increase in just a few months. The agency said it did not have data to share on total dollar amounts spent online. 

One thing is certain: At this point, two big retailers stand to benefit from the explosion in online SNAP sales. In 34 of the 39 states, Amazon and Walmart are the only participating grocers. 

The reasons why are likely logistical. Few independent grocers have the web infrastructure to display and update their inventory online, making Amazon and Walmart a kind of duopoly by default. Even fewer have enough staff to assemble complex orders and deliver them to people’s homes. By contrast, Amazon and Walmart have been investing heavily in grocery delivery for years. 

In 34 of the 39 states offering online SNAP sales, Amazon and Walmart are the only participating grocers.

Legislators have taken note of the apparent unevenness of the playing field. Last week, the two U.S. Senators from Illinois, Tammy Duckworth and Dick Durbin, introduced the Expanding SNAP Options Act, a bill that would provide funding for smaller retailers, direct-to-consumer farmers, and farmers’ markets to start accepting online orders. It calls for USDA to develop an easy-to-use app where shoppers can connect with small food businesses, and for the creation of a Technical Assistance Center to help retailers join the app. 

Does the app sound a little like Instacart, the tech platform that allows users to order groceries online from retailers of their choice? The company apparently thinks so. In late April, Politico reported Instacart had hired former Republican Congressman Luke Messer to lobby for its inclusion in the program—a change that would allow customers to place orders from brick-and-mortar retailers on its platform using SNAP. 

On one hand, Instacart makes sense for SNAP sales because of its existing relationship with grocery stores and its easy-to-use interface. On the other hand, Instacart is not a retailer—it’s merely a digitally enabled service where users hire gig economy workers to do their shopping for them. The app’s delivery fees and its tip-based compensation model for drivers may render the service prohibitively expensive for a lot of users (not to mention its potential markups). Importantly, SNAP dollars can only be used for food purchases—not delivery fees. 

SNAP dollars can only be used for food purchases—not delivery fees.

Other retailers may find ways to make home grocery delivery more affordable—and less restricted by the rules that govern SNAP. Amazon currently offers Prime subscriptions, which typically include unlimited free delivery, to SNAP recipients for $6 a month. Walmart is launching an Amazon Prime competitor, Walmart+, in July, and it’s not yet clear whether the $98 annual fee will be discounted for SNAP users. 

Though USDA does not release retailer-specific SNAP sales figures (and probably never will, since the Supreme Court ruled in its favor last year), analysts estimate Walmart derives about 4 percent of its U.S. sales from SNAP dollars. If that number is accurate, it means a hefty proportion of SNAP dollars are already spent at the corporation. In other words, federally subsidized food spending was already a big deal for the country’s largest retailers—and the pandemic pushed more and more sales online, Walmart and Amazon were already waiting in the wings.