Online SNAP at Markets: On the Horizon, not out of reach

By: Katie Myhre, Farm Direct Technology Manager       Posted On: February 24, 2021

Online SNAP: On the horizon, not out of reach. 

In March 2020, the world went online. Restaurants, retailers, and farmers alike were suddenly asked to sell their products via pre-order, curbside pickup, “contactless” delivery, or any variation of the new household terms COVID-19 brought us. In the first three months of the U.S. outbreak alone, nearly 80% of Americans reported shopping online for groceries; suddenly, it made sense for thousands of families to skip their Sunday errands and instead order their toilet paper online for home delivery. With the rapid increase in online shopping, the immediate effort from the USDA to expand their online SNAP pilot to additional states and retailers was a logical next step; Food and Nutrition Service (FNS) aims to offer shoppers using Supplemental Nutrition Assistance Program (SNAP) equitable opportunities to shop through the same options as those using credit and debit. By March 2020, roughly 35,000 households purchased groceries with SNAP benefits online. By late June 2020, that number had increased twenty-fold to 750,000. In the month of September 2020 alone, over 1 million households using SNAP shopped online. While these increases were nearly immediate and dramatic, the total still only amounts to less than 3% of shoppers using SNAP utilizing online transactions among a few retailers. And, this is during a global pandemic — will shoppers using SNAP continue to utilize online shopping services when things return to “normal”? Will the number grow, and continue to exceed pre-COVID predictions for the next 5 years?

CAGR: Compound Annual Growth Rate

What does it mean for us?

For the farmers market community these are particularly important questions. Just because consumer and FNS shifts are underway, gaining the ability to offer online SNAP-EBT at your market won’t necessarily solve the challenges that face the farmers market community around funding the technology and operations, or managing the physical liability of product, logistics, and staffing that that an online system requires. We don’t yet have clarity on the future of a legal model for processing online SNAP at markets, or even the technology that will emerge beyond basic pre-order systems. What market operators can do at this time is return to the details about your model and your market’s benefits to your community as we explore the current barriers — knowing your market’s community value can’t be subsumed by any large retailer’s slick SNAP-EBT ordering systems. 

Barriers to Entry

There are still plenty of barriers we face as a market community to consider before we implement online SNAP. The most notable barrier is that at present, there is no technology available to allow for online SNAP processing by farmers markets or farmers. And even if we did have technology, there are only a dozen grocery retailers that are approved as part of the USDA pilot and allowed to process SNAP online legally — Walmart, Amazon, and a few others. This FNS approval isn’t as simple as having the technology and filling out a form; we have not yet seen any indication that FNS will enable farmers markets to serve as the online SNAP processors on behalf of farmers due to the way the law is written. From a legal perspective, USDA and FNS require online SNAP-EBT approved retailers to own inventory of products, meaning they have to purchase and physically possess products (like a grocery store does) before reselling to a customer. The legislative criteria of owning inventory immediately excludes most farmers market organizations, which in most cases don’t own the products themselves; they organize the marketplace, made up of vendors who own their own products. Owning the products as inventory remains a key criteria to FNS, in part because in the minds of the USDA, it will ensure that only SNAP-eligible products are being purchased online — think fresh produce, not t-shirts. Because retailers have documentation of their own inventory and take full liability, FNS can track all purchases easily through inventory records and ensure compliance. 

IF it becomes legal for farmers markets to process SNAP on behalf of farmers, let’s return to the technology. To date, there aren’t any options for farmers markets to legally implement online SNAP purchasing; though we are mighty in collective impact, we are much smaller in sheer volume of transactions compared to big retailers, despite our growing SNAP-EBT sales numbers. Naturally, this difference in transaction volume incentivizes processing companies and innovators to develop solutions for online transactions tailored to bigger retailers, under-serving the farmers market community as we wait for solutions to trickle down. But, farmers market-oriented online SNAP solutions are on the horizon. Many tech companies that serve the farmers market industry or comparable industries, like independent retailers, corner stores, and farm stands, are working on developing the solutions. Even independent retailers are struggling with the ability to offer online secure PIN transactions — to date, there is only one online “PIN on glass” technology that enables safe entry of PIN verification for online purchases — FNS expects to approve more in 2021, but we are again left waiting. Rather than throwing up our hands in the meantime, we can pilot pre-order models while technical online transaction solutions are developed. 

The last, overarching “barrier” is the slow shift in consumer behavior in terms with shopping online, and the time it takes to build a SNAP-EBT promotional program at your market. It’s more of a consistent trickle than an opening of the floodgates — which is an advantage to market models. Considering the shift to online shopping as merely a trend brought about by the pandemic doesn’t fully explain what’s behind it, nor does it prepare farmers markets for a post-pandemic world. Though online shopping has been steadily increasing thanks to “big” players like Amazon and “small” players like Etsy and online food boutiques, the increases overall have been somewhat slow and have naturally excluded farmers markets; prior to the COVID-19 pandemic, total online purchasing was only increasing overall by about 10% year over year. This slow but steady increase had a lot to do with the general public’s interest in shopping online and the retailers’ ability to offer seamless online transactions and fulfillment. The pandemic naturally accelerated both demand for online options, as well as the technology available, which in part pushed FNS to accelerate the online SNAP pilot. Brandon Lipps, the deputy secretary of FNS, recently shared that “online ordering is and will continue to be an important tool in increasing food accessibility across America.” As more families shop online, equitable access to nutrition benefits has become a focal point for FNS; it’s clear online SNAP isn’t a flash in the pan, and this future prediction brings a great deal of questions about our own responsibility to offer online processing of SNAP benefits to shoppers. How do we offer our customers the same convenience as larger retailers? Should we? Can we? And when is the right time?

Looking inward instead of outward

To consider these questions, we return to what our models are, as pioneered and piloted amidst the challenges of 2020 — farmers markets across the U.S. offered online pre-order for SNAP shoppers without the final transaction captured online. This sort of pre-order form model is key in piloting whether or not there is enough demand to make an online SNAP or curbside pickup option work for your market. In this work-around, markets can enable pre-sale of products online under a special “SNAP-EBT” option, and the balance can then be paid in person through the market’s existing point-of-sale system upon pickup. Many markets have innovated on this model in response to COVID-19, through concepts like curbside drive thru, pre-order, and more, which we covered through a recent webinar. It may be an imperfect solution, but without tailored technology, it’s pretty close to the actual amenity of offering online pre-order to shoppers using SNAP benefits. 

Now that the crazy rush of adapting to COVID-19 is transforming into slower daily adaptations, how can markets design a contactless program that will help them evaluate community needs? It’s worth considering any changes with the mindset of what markets do best — core operating values, commitment to equitable access to food choices, marketing, and customer service.  With these core assets, will it make sense for farmers to manage the incentives themselves, or will markets continue to act as the conduit? We know markets excel as a conduit for farmers and their customers, both from a promotional and point of sale perspective; by collectively managing incentives at the market level rather than individual farm level, market operators are able to facilitate additional purchasing options through other currencies, including incentive currencies and SNAP benefits. It can be tough for farmers to manage this process on their own, which could in turn limit the number of farms who accept incentives and SNAP-EBT. For this reason, considering an online SNAP pre-order pilot, or fighting for an option that protects the market’s ability to offer incentives may be crucial to your model and maximum shopper benefit

Knowing we don’t yet have a solution oriented to the market community leaves a sort of a plastic window of time in which we can prime ourselves to understand the intricacies of what markets would need from a technology perspective, as well as an operational perspective. We can work with both FNS and tech companies to advocate for and mold solutions that will benefit farmers markets and the vendors and customers who rely on their services. As we advocate and innovate for other potential online SNAP-EBT solutions, we need to remember what markets do best, taking it a step further rather than simply pushing for analogous access to the same solution that Walmart and Amazon have, which may not work for our models. The farmers market industry has always had unique value to customers and unique technology needs — online SNAP and both its benefits and challenges presented will be no different.