The online grocery industry is struggling to catch on in the US, with just 3% of grocery spend occurring online in the country, according to a report from Bain & Company and Google.
Business Insider Intelligence
This means the online grocery industry is lagging behind US retail as a whole, since e-commerce made up nearly 10% of all retail sales in the US in Q3 2018. Additionally, only a quarter of consumers report having tried online grocery in the last year, and just 6% of all consumers place orders monthly.
For context, other countries are seeing higher adoption rates: The UK and South Korea, for example, are estimated to have 10-15% online grocery penetration.
Two key issues may be preventing consumers from embracing online grocery, and a lack of familiarity is likely at their core.
- Less than half of first-time online grocery shoppers think it saves time, but consumers who place more orders are more likely to find it convenient.Consumers who continue to shop online for groceries probably find it convenient, otherwise they’d stop. Shopping for groceries online may have a bit of a learning curve, though, so while it may not save consumers time on their first few orders, it can provide more value once they know the process. Grocers therefore need to convince shoppers to make the effort to familiarize themselves with the experience.
- Consumers don’t buy perishable goods online like they do in-store. Perishables account for just 6% of Amazon’s online foods sales compared with the 65% share they have with traditional grocers, according to data from Pyxis cited by Bain. The behavior may be driven by two factors: Consumers don’t trust another party to pick out their perishable products like produce, and they’re concerned about items being fresh upon delivery. Both of these issues come down to a lack of trust and familiarity that grocers must find a way to improve.
Established grocers may have the best chance to improve trust in online grocery and drive adoption. The vast majority of nononline grocery shoppers (85%) said they would be most likely to buy groceries online from their current grocer, as opposed to the 11% who would choose a different omnichannel option and the 4% who would go to an online-only grocer.
They likely prefer to stay with a familiar grocer because they believe it will create a similar and convenient experience, and they already trust the products. Because of this, it’s important that all traditional grocers consider adding online options to capitalize on the industry’s potential growth. And they have a tremendous chance to thrive if they can drive adoption because 75% of online grocery shoppers still shop with their first online grocer.
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Source: Business Insider