Online grocery shopping is currently one of the smallest segments for food and beverage sales, but this rapidly changing business is poised for tremendous growth over the next several years. Market research publisher Packaged Facts forecasts that online grocery shopping sales will grow from about $23 billion in 2014 (accounting for 3.5% of total online and offline grocery spending) to approach $100 billion by 2019 (capturing 12% of total grocery spending).
“Meeting at the crossroads of technology and service, online grocery shopping offers the grocery industry’s most exciting potential because it is the fastest growing channel in the grocery arena,” says Packaged Facts research director David Sprinkle. “It’s clear that U.S. consumers have become increasingly comfortable with shopping for groceries via Internet and reliant upon home delivery and easy pickup of prepicked orders.”
The online grocery business has become crowded with participants—some well-established, and many of which entered this business only in the past two years. To date, fewer than a dozen online grocery services with the potential to be viable on a national level or across a wide swath of the country have emerged from the fray. Although they are still at early stages of test-marketing, companies such as Amazon.com and Walmart have a leg up in operating nationwide online grocery services because of their large infrastructures of warehouses dotting the country, advanced logistics and delivery systems, clout with suppliers, and wide assortment of products—resulting in the potential to cross-sell and deliver high-ticket and more profitable items in the same order, shipment or truck.
In contrast, supermarkets—even the nation’s largest chains—operate primarily under regional or local banners. And while few major players have emerged as yet, all across the United States, both in cities and suburbs, a multiplicity of local grocers and shopping/delivery services are springing up under the radar, providing online ordering of groceries from their stores, or farm-to-fridge services in their local trading areas. Packaged Facts guesstimates that these online grocery services could easily number in the hundreds.
Looking ahead, online grocery business has unique challenges as it strives to reach its potential. However, Packaged Facts anticipates that over the next five years, online grocery service providers will develop models that solve the logistics problems while being profitable for the operators. As this happens, online services will become more widely available throughout the country and consumers will become more confident in shopping for food and beverages online. It’s expected for these developments to take place in leaps and bounds as, for example, Amazon Prime Pantry rolls out across the country, AmazonFresh spreads to more cities, and more retailers get on board the United States Postal Service’s planned delivery system.
The research was published in Packaged Facts’ recently released report Online Food Shopping and Grocery Delivery in the U.S.: Future of Food Retailing, which can be found at: http://www.packagedfacts.com/Online-Food-Shopping-8425413/.