As online grocery shopping rises, many are rushing to take advantage of this potential.
As online grocery shopping has rapidly doubled its market value from 2016 to 2018, it seems a new trend in e-commerce may be establishing.
Consumer packaged goods (CPGs) have seen the majority of its growth come from online, and although consumers may not be entirely comfortable buying items like produce online yet, that will likely come as their familiarity and trust in online grocery grows.
Grocers are rushing to take advantage of this potential, resulting in a highly competitive market, expanding their curbside pickup and delivery offerings — the two basic components of online grocery — in an attempt to grab market share.
According to the E-Commerce Research Team from Business Insider Intelligence, all are employing different strategies to find success. For example, Amazon is leaning on its e-commerce and fulfillment capabilities to offer a variety of online grocery services, for example, while Walmart is using its strong brick-and-mortar footprint to its advantage.
Others, like Kroger and Aldi, are working with third parties such as Instacart to provide their services.
- Online grocery currently comprises a small portion of grocery overall but is on a rapid rise. Adoption is still fairly low, with about 10% of U.S. consumers saying that they regularly shop online for groceries, according to NPD.
- However, the value of the U.S. online grocery market has grown from $12 billion in 2016 to $26 billion in 2018 and it has plenty of room to grow, given that the size of the overall grocery market was $632 billion in 2018, according to IBISWorld.
- Both established grocers like Walmart and Kroger and players new to the space like Amazon are rushing to improve their curbside pickup and delivery options, and all of them are employing differing strategies suited to their size and strengths.
- Regardless of grocers’ individual strategies, they will all need to find a way to run their online grocery offerings in a profitable way and to address consumers’ barriers to adoption.