Today online grocery shopping represents between 2-4% of the market and is forecasted to be 20% of grocery sales by 2025. Grocery shopping is the next major retail sector to be disrupted. However, there are some myths about online grocery shopping that may need to be reconsidered.
The first myth is that no one buys fresh food online. This is more about perception. The idea that people want to touch fresh fruits and vegetables before buying still prevails but it’s fading quickly. Stats show that 30 percent of orders include fresh items and this number continues to grow. Sixty-five percent of online grocery shoppers have bought fresh produce, making it the top choice along with chilled dairy products. Thirty-one percent said they bought fresh fruits and vegetables on impulse, beating out snacks (23%) and candy (14%). To overcome some of these concerns, many people shop through retailers that they trust to pick their produce, and have it delivered quickly. Knowing how to target what’s in season and targeted communication to shoppers including high-quality pictures and content can go a long way. Some retailers have even gone the extra step of letting shoppers communicate with in-store pickers to make sure they get the right selections, special instructions and so on. From a shopper standpoint, buying produce online comes with other important benefits, like convenience and time savings.
A second myth centers around the idea that online grocery shopping does not have wide appeal and is only for millennials. In fact, nothing could be further from the truth. Penetration is growing rapidly across age segments with the 55 to 64-year-old segment being one of the fastest growing. Families are also one of the biggest users of online grocery at least 50% of households use online grocery at least some of the time.
Online grocery shopping only works in urban areas: wrong. Although rural sales of online groceries make up the smallest percentage of sales, if we look across urban, suburban and rural areas, online penetration for all consumers is about 20% regardless of geographic location but rural numbers are still solid.
While many current online grocery shoppers prefer to click and collect over delivery this is also changing as studies have shown that overall, customers prefer home delivery and are willing to pay for it. Giving people the option should be the goal. It doesn’t have to be one or the other.
There is a tendency to think that convenience alone will drive grocery shoppers online. In fact, shoppers expect value across multiple areas including savings, convenience and unique online features.
Many also say that online grocery has no future and point to the small percent of all grocery sales that are online. This is rapidly changing, and experts predict that online grocery will grow at an compound annual growth rate of 21.1 per cent. Much of the holdback currently is due to lack of availability. In North America, the first to deliver low prices, product variety, one-hour seven days a week will win in the end.
There also seems to be this belief that selling online groceries will curtail brick and mortar sales. In fact, when consumers are given multiple options to purchase they tend to buy more from an online store with better customer service. Shoppers also spend more with grocers that offer multi-channel shopping. Moreover, retailers can reach a wider audience by offering online shopping, boosting overall sales.
One big reason for retailers to embrace online and establish a presence early is loyalty. Unlike books and electronics, order sizes for grocery are likely to be larger and once a customer has tried an online food retailer, they may be less likely to switch. Customer loyalty is then established when they get customized services that can make recommendations based on past purchases to make ordering faster and easier.
Please reach out to us and let us know we can help with any of your online, click and collect or mobile testing needs.
Anne Stephenson
Chief Growth Officer, Explorer Research
