For a long time, the grocery industry was a major holdout on the move to ecommerce. Most grocers lacked the resources to make online grocery buying as convenient and satisfying as in-person shopping, and it was easy to assume that it couldn't be done.
Those assumptions are still holding the industry back. As of early 2019, only 3% of sales in the grocery retail sector happened online – compared to around 10% for all retail sectors. Online grocery has some catching up to do, but it’s on its way.
Experts predict that revenue from grocery ecommerce in the US will increase by 18.2% to hit $19.89 billion by the end of 2019. If this plays out, grocery will be the fastest-growing product category in the online market, bringing new opportunities to grocers of all sizes.
The “big guys” still dominate the world of online grocery, with Amazon predicted to capture 32.7% of US grocery ecommerce, the largest market share in the industry. Unsurprisingly, Amazon’s biggest challengers are other large corporations. Walmart, Kroger, and Target have all begun to leverage their brick-and-mortar resources to offer online sales with click-and-collect options.
Historically, US grocery ecommerce has been so expensive and time-consuming to penetrate that only big companies could manage it. Independent grocers have largely found online grocery to be inaccessible for two reasons:
A lack of resources and expertise to dedicate to ecommerce projects.
The inherent difficulty in implementing and maintaining ecommerce platforms.
Both roadblocks stem from the prohibitive cost of ecommerce platforms. For online shopping to compete with physical store locations in terms of convenience, grocers need to invest in fully-featured ecommerce systems. These systems are expensive and require technical expertise, which most independent groceries lack and cannot afford.
Recently, however, an increase in consumer demand for online grocery has brought the market to a tipping point. A recent study shows that 59% of US consumers plan to do at least some of their grocery shopping online by the end of the year, up from 48% in late 2018. The biggest increase is happening among shoppers who buy 40% or more of their groceries online. The increase comes from changes in consumer demands and preferences, as well as advancements in ecommerce technology.
The trend toward healthy eating is a major factor driving the increased interest in online grocery shopping. Add the explosion of diet types from vegan to Keto to carnivore and today’s buyers are more inclined to look outside of their normal grocery channels to find what they want. A store-supported ecommerce platform can help retailers capture that business.
Shoppers are also committing to retailers that source their products ethically and are transparent about their processes. Buying online allows them to research ingredients, logistical partners and anything else they need to know about a company’s dealings. A store-supported ecommerce platform can help retailers capture that business.
Similarly, today’s grocery buyers are accustomed to being able to find unique products at affordable prices with simple online searches. Their taste for the unusual and need for convenience are both affecting their grocery shopping habits. A store-supported ecommerce platform can help retailers capture that business.
Consumers want a grocery ecommerce experience that is convenient and cost-efficient, with no sacrifice to freshness or other measures of quality. Fortunately, grocers are now increasingly able to meet those demands thanks to advancements in order management systems (OMS). Today’s OMS’s allow grocers to route and fill orders efficiently enough to reduce or eliminate communication orders while maintaining attractive delivery speeds. As a result, grocery ecommerce is beginning to compete with traditional shopping in terms of convenience.
Efficient delivery is critical to the success of grocery ecommerce. Consumers are used to two-day and next-day shipping, thanks to standards set by Amazon and other major market players. To keep up, smaller grocers are embracing both buy-online-pickup-in store-and courier software that simplifies the critical “last mile” element of delivery logistics.
The online grocery industry is at a critical point in its development, and grocers need to invest in ecommerce resources and expertise in order to keep up. Thanks to advancements in technology and growing awareness of grocery ecommerce customer demands, grocers of all sizes can get there.
Independent grocers may feel that they still have resource shortages to overcome, but Local Express is here to help. Our user-friendly self-service platform lets grocers quickly set up and run an eCommerce business, complete with order management and inventory synchronization. Find out how we’re helping to level the playing field in US grocery ecommerce.
By Bagrat Sarafian and Tigran Zograbyan, founders of Local Express
Bagrat Sarafian and Tigran Zograbyan are serial entrepreneurs and the founders of Local Express, which provides a DIY ecommerce service solution that allows retailers to build an online store presence on par with their much larger competitors.
About Local Express: Local Express provides a seamless ecommerce order to delivery platform experience to drive your online sales.