In a smartphone era where every purchase can be made by consumers using nothing more than their thumb and an Internet connection, Silicon Valley is betting big that the grocery industry is the next sector ripe for disruption. The online food-delivery market is not just trendy but also becoming very crowded as a result—and backed by deep-pocketed technology companies and billions in venture capital investments.
Read More A 3-D promise to improve women's lives
The bricks-and-mortar supermarket chain old guard isn't sitting still.
Wal-Mart Stores—which generates half of its business from food—has been testing the online grocery concept, in markets such as San Jose, California; Bentonville, Arkansas; Phoenix; Denver, Colorado; and Huntsville, Alabama. The Peapod service, owned by supermarket holding company Ahold USA (Stop & Shop, Giant Food Stores)—and which has an even longer history than FreshDirect—is delivering to all five New York City boroughs and opening a new warehouse last summer to double its service capacity. It also delivers across many Eastern and Midwest states.
Tech giants from Amazon to Google are vying for a piece of the online food-delivery business. Food-delivery start-ups, including Instacart and Blue Apron, have been valued in the billions.
And in maybe the biggest shift, "We're starting to see this on-demand economy where players you might not even consider in the space can be in the space. They've become carriers, and food gets more complicated," said Robert Peck, a tech-sector analyst for SunTrust Robinson Humphrey, who has focused on Internet companies for more than a decade.
The prime example of how far the online grocery trend is extending is on-demand car start-up Uber, the most richly valued start-up in the U.S., which announced in April that it was introducing a food service in New York and Chicago, pledging to deliver meals to customers in 10 minutes or less.