Study: Online grocery sales growing by 25% per year
- Total online grocery sales are growing at 25% per year, according to the latest “Ecommerce Supermarket Scorecard Report” from consulting firm Brick Meets Click, reports Supermarket News. The average number of e-commerce orders per store, meanwhile, is up 20%.
- The firm also found grocers that have offered e-commerce for more than four years see 5.2% of total orders online compared to 3.4% for other retailers that offer the service.
- The study, which took place over four weeks ending March 31 and included close to 200 stores under 26 retail banners, also found that average order size grew 5% over last year, to $148, and that consumers bought perishable goods at a surprisingly high rate. Eighty-five percent of orders included a produce item, while 66% included a meat/seafood or deli selection. Half of all orders included a product from the bakery.
Amazon may be generating all the buzz lately around online grocery, but the fact is, retailers across the industry have expanded their e-commerce capabilities in recent months. And no wonder, judging by the growth figures highlighted by Brick Meets Click’s research.
Publix, Wegmans, Smart & Final, Schnucks and Sprouts Farmers Market are just a few grocers that have taken part in what’s seemed like a mad dash to upgrade e-commerce capabilities. This is in part a defensive move, considering the rapid growth of Kroger and Walmart’s click-and-collect programs, along with the looming threat of Whole Foods under Amazon. But it’s also a move to capitalize on shopper demand, and potentially profit off the venture down the road.
Right now, profit is elusive in grocery e-commerce thanks to high overhead costs and the inefficiency of last-mile delivery. But the increase in basket size and order frequency indicated by BMC’s research are good signs. The firm also found that high-margin perishable products are on many ordering lists, which goes against the current conventional thinking that shoppers want to see and touch their meat and produce before they buy. Certainly, retailers have stepped up their “freshness” messaging in recent months, and some even put customers in touch with their order fulfillment staff so that they can issue special instructions and even see items before they’re selected.
Even with the recent movement, early e-commerce adopters are the ones benefiting most, as BMC’s study shows. Walmart and Kroger have raced ahead to claim shoppers, and may profit handsomely in the long run by solidifying loyalty and new business. Even these top performers, though, face operational hurdles to growing sales.
“One element to winning in the marketplace these days is convenience, and Kroger has really done a nice job with ClickList,” Ben Bienvenu, a research analyst with Stephens, told Food Dive. “But I think it is putting pressure on operating margins, at least as they build that capability.”
It will be difficult for other grocers to stand out in a crowded market, meaning e-commerce for now is mainly a customer retention strategy. But as demand increases, innovation could fuel bigger baskets and deeper customer loyalty.
- Brick Meets Click Supermarket Ecommerce Scorecard shows online grocery growth is accelerating
- Supermarket News Early adopters capturing more online grocery sales
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