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The ecommerce retail market has been going strong for two decades, but shifting grocery shopping from the supermarket to the online marketplace has proved challenging. Amazon, Walmart and other grocery giants have tried to blaze the trail in delivering quality food and beverage items to front doors over the years, but success has come slowly.
The past five years have shown what striking at the right moment with the right strategy can do. More online sellers than ever are finding their own path to success in the growing grocery ecommerce market.
Grocery has flourished online because retail leaders are focusing on what really matters to shoppers: combining freshness and selection with value and convenience. These pillars create the kind of customer experiences that consumers will pay more for, making them opt for groceries on demand over a trip to the market.
Learn why grocery ecommerce is working now better than ever, and where to begin or refine your omnichannel strategy to win in this hot and growing market.
- U.S. online grocery sales are expected to grow by 129% by 2022.
- Amazon and Walmart lead the pack in ecommerce grocery shopping, but other players like Instacart are taking to the field to give them a run for their money.
- Omnichannel grocery retailers have a golden opportunity as the industry gets a second chance at making online grocery shopping work for consumers.
Grocery ecommerce growth is powered by omnichannel
In May 2018 Post & Parcel reported, “The online food and grocery sector is set for significant growth and transformation.” Research from IGD and the Consumer Goods Forum confirms the claim, citing huge numbers from three vital markets around the globe:
- U.S. online grocery sales will grow by 129% by 2022 for a 2% total of the market.
- China online grocery sales will grow by 286% by 2022 for an 11.1% total of the market.
- UK online grocery sales will grow by 48% by 2022 for a 7.5% total of the market.
As omnichannel continues to grow in importance for shoppers, ordering groceries online mirrors the experiences of ordering an electronics device or a household product. Ecommerce sellers can now easily integrate fresh grocery items into their sales strategies and capture wider audiences.
Walmart’s expansion into grocery ecommerce helped the industry boom over the last few years. In August 2017, Business Insider reported some interesting numbers regarding Walmart’s sales figures. Together with Sam’s Club, Walmart grew 73% year-over-year in Q2 2017. More to the point, grocery sales accounted for a full 26% of Walmart’s U.S. ecommerce numbers in Q2. The retail and grocery giant has steadily invested in online grocery improvements over the years to maintain its leading position in the industry.
As of November 2019, 3,100 U.S. Walmart stores provided buy-online-pickup-in-store (BOPIS) grocery services, and about 1,400 other stores delivered online orders to shoppers’ homes. The U.S. online grocery industry is projected to be worth $100 billion by 2025, making it crucial that Walmart and other grocery ecommerce players stay sharp and focused on maintaining current customers — and attracting more shoppers.
Online grocery shopping hasn’t always been a slam dunk. Previous attempts to connect rapidly improving technology with the often tedious chore of stocking up on essentials for the upcoming week failed once before. Watch out for the missteps of the previous generation of online grocery sellers, and apply those lessons to today’s sales strategies.
Grocery ecommerce gets a second chance
Ever since the dot-com boom of the late 1990s, online grocery shopping was set to become “the next big thing,” according to Forbes. But it wasn’t always so easy to achieve online grocery strategy success. Here are some reasons grocery ecommerce has taken so long to catch on:
- Freshness matters. Whether a shopper wants to find a melon or avocado at peak ripeness or the perfect cut of meat or fish, good quality and selection are chief concerns. Consumers shopping for these types of foods tend to prefer visiting the store and shopping the aisles for the healthiest and freshest foods possible.
- Grocery shopping is a social experience. Happy couples like to shop together to find food to prepare for cozy dinners, while families gather the troops to help make lighter work of shopping. In any case, grocery shopping can be a time to catch up. Many grocery stores even help singles enjoy the social aspects by offering happy hours, wine tastings and live music events.
- Sometimes online grocery shopping offers little cost advantage. Delivery fees can be turnoff for shoppers. Most online grocers set a minimum purchase amount around $35 then add a service fee — plus good manners dictate providing a tip to the driver. But as grocery ecommerce becomes more widespread and customers demand more omnichannel options, shoppers are reconsidering the additional costs a necessary investment.
Consumers have begun to look at these factors differently, with many finding more value in time saved. They would rather not navigate the aisles among other busy shoppers on the way home from a long day at the office. Add in the fact that a growing number of grocery shoppers are millennials who strive for practicality and convenience using digital devices, and the picture becomes increasingly clear. With the digital natives of Generation Z right behind millennials, the more laid-back and accepting attitude toward grocery shopping is likely to grow.
As the trend normalizes, all generations are likely to become more comfortable with the idea and process of online grocery shopping. An additional measure that is helping ease consumers into ecommerce grocery shopping is the pairing of online giants like Amazon and Whole Foods. Consumers see two brands known for fast delivery and high-quality foods, so it is much easier to sell the idea to the most apprehensive online grocery shoppers.
Just like any other retail relationship, grocery shopping requires trust. Consumers must be able to trust the stores where they shop to provide consistent experiences, fair prices and quality goods. The major players in today’s grocery boom understand this and are applying these qualities to find success.
Growing beyond the cart
Groceries are a necessary commodity. That’s why U.S. grocery ecommerce grew 18.2% to $19.89 billion in 2019 and ranked as the fastest-growing product category online according to eMarketer research. The competition for online sales is heating up as more brick-and-mortar stores launch their own home delivery services in an attempt to convert on-site sales to online sales.
Amazon’s acquisition of Whole Foods has put Walmart on notice for fierce competition, plus the development of Amazon’s own grocery brand means the mega-retailer can set the tone for omnichannel shopping for the entire industry.
Another player to watch in the online grocery industry is Instacart. The online shopping source pairs with local grocery stores to allow for a seamless local online grocery shopping experience where drivers do the shopping and delivery. Instacart has grown as its own entity since breaking its partnership with Whole Foods in the 2017 Amazon acquisition. It’s another option for convenient, technology-based home grocery delivery.
Online grocery has grown up a lot in the last 20 years. The fresh retail perspectives from omnichannel grocery have allowed traditional grocers and omnichannel juggernauts to try new things — which has resonated with millennial and Generation Z shoppers. As the online grocery game grows, each player faces a lot of competition, from within their own circles and the changes coming from food delivery services like GrubHub getting into the grocery delivery game and competitors who offer drive-up grocery services.
Customer experience will always be key in winning online grocery shoppers’ loyalty. Expectations are changing. Demand is shifting with the evolving needs of key retail demographics. Retailers that specialize or want to branch out into grocery ecommerce should learn from the lessons of failed online grocery that came before, observe what’s working in the grocery ecommerce boom now and look to the future of what omnichannel grocery shopping can be. It’s important to stay fresh in such a competitive industry.
Navigating curbside pickup and delivery in the COVID-19 era comes with new challenges. If you’d like to talk about what we’ve seen work, reach out to us.
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