Online grocery is a promising but formerly niche industry because of the coronaviruses. Online grocery delivery services from retailers like Walmart, Amazon, Target, and Instacart are indispensable because of the combination of shoppers interest in avoiding public places, government orders to stay at home, and the continued need for groceries and essential goods.
E-Commerce made up 2% of total food and beverage sales, but many US consumers have turned to online grocery shopping services for the first time during the pandemic. The emergence of online grocery, curbside pickup, and same-day delivery in the US is being accelerated by the coronaviruses.
Consumers used to resist the shopping method because they wanted to pick out their groceries themselves and avoid extra fees, but the Pandemic has forced many to change their priorities. The focus on grocery delivery is set to change consumer behavior after the swine flu goes away.
Online grocery sales were growing and the segment was becoming an important part of grocery's future, but it still made up a tiny piece of market share. US food and beverage retail e-commerce sales were expected to reach almost $24 billion in 2020 and surpass $38 billion in 2023, giving the industry a compound annual growth rate (CAGR) of 17.3% during this span.
This would only account for 2.5% of total US food and beverage sales in 2020. Even though online grocery sales were on the rise, they only represented a tiny part of the grocery industry and it wasn't set to take off as it is now.
Insider Intelligence believes that online grocery adoption will reach 45% of US consumers by the end of the year. The online grocery market would have reached greater penetration without the Pandemic. If we wait too long for a vaccine or other treatments, it will climb quickly, hitting 70% in 2024.
The coronaviruses are pushing consumers to buy essential products digitally, which is rapidly increasing adoption of online grocery services in the US
The online grocery adoption push was a big one, but the industry's staying power will come down to the length of the Pandemic. If the crisis continues, more consumers may be encouraged to try an online grocery service, and how well online grocers meet surging demand will become critically important.
Consumers will be able to rely on online grocery services to bring them groceries after the Pandemic wears off because they will be able to handle surging order volume. Consumers may abandon online grocery if it is difficult to receive orders.
Walmart and Instacart are best positioned to lead the pack post-pandemic because of their platform models.
The Online Grocery Report from Insider Intelligence shows how the Pandemic has accelerated online grocery adoption. The companies mentioned in the report are: Walmart, Target, and H-E-B.
How well online grocers meet demand during the Pandemic will be a big factor in determining the top online grocers. Grocers will need to be able to fulfill as many orders as possible in a variety of convenient channels, as consumers may turn to different providers if they can't place an order from one grocer through the channel they want.
75% of online grocery shoppers are still shopping with their first-ever online provider, according to a survey from Bain and Google. Grocers that meet the most consumers needs will likely lead the industry after the Pandemic.
Before the shopping method became important to many consumers, the Online Grocery Report looked back at how online grocery adoption was progressing prior to the coronaviruses. The impact of the Pandemic on adoption is examined next. We forecast how online grocery penetration will grow in the coming quarters and years due to the Pandemic, and consider the factors that will determine the industry's staying power. We analyzed the ability of top online grocery players to meet surging demand during the Pandemic and how that positions them to build customer bases that can last well beyond the epidemic.
The report is in full.
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