A new report from Packaged Facts looking at Walmart food shoppers finds the retail giant is still dominant in the grocery segment. Walmart currently generates more than half of its sales from groceries and consumables.
There is a major difference between in-store purchasing and those who buy their Walmart groceries online. Walmart has achieved only a 5% purchasing penetration online, versus 59% in store. Those who do make online purchases from Walmart are typically between 25 and 34 with annual household incomes between $75,000 and $149,000. They are also more likely to live in the northeastern U.S. or in rural areas, according to the report.
About 40% of shoppers who make online grocery purchases from Walmart cite lower prices and free delivery as important factors in their purchasing decisions. Freshness and brand selection remain a motivating factor with about one quarter of online shoppers. Online grocery shoppers at Walmart are also more likely to cite website grocery descriptions, customer service and one-stop shopping as convenience factors that are important to them.
Walmart is the largest retailer in the world and the largest grocer in the U.S., with low prices, convenience and fresh food as top priorities for its shoppers both in store and online. It has continued to build its grocery business, increase its online sales and attract new customers — yet its online purchasing penetration remains low.
There is no shortage of effort from Walmart to keep innovating to increase online market share and stand out from competitors. This season alone, the company has unveiled a new e-commerce website featuring virtual shopping, introduced its own wine label, and announced a pilot partnership with Waymo to transport shoppers to pick up online grocery orders from their local stores. It may just be a matter of time before these efforts convert to real numbers.
Cost is king, even for online grocery shoppers. Many of Walmart’s existing shoppers find what they need at the lowest prices with Walmart. Other retailers like Amazon may win out if it comes down to cheaper delivery or product availability. Amazon remains a massive threat to Walmart’s online grocery growth, and according to the report, it is a big reason why more online shoppers haven’t flocked to Walmart. Amazon is the only retailer to grow usage penetration at a higher rate, with 39% in the last four years, the report says. Those shoppers who prefer Amazon cite free delivery as their top priority.
But while just 24% of Amazon customers had purchased something from Walmart in the past three months in 2014, this year about 60% of Amazon customers have purchased something from Walmart in the past three months. Clearly Walmart’s efforts to reach more shoppers online, especially Amazon customers, is moving the needle.
Walmart will need to connect with shoppers on more than just price to increase online purchasing penetration. The company may need to look at its key online demographics to learn more about what appeals to them in addition to price competition and convenience — whether that is brand choice, variety, delivery speed and cost, or another factor. Additionally, if Walmart can continue attracting and converting Amazon shoppers, they are likely to see greater success moving forward.