The Massive Growth of Grocery Deliveries Continues to Impact eCommerce

by | Posted on Oct 31, 2018

Online grocery deliveries continue to have a massive impact on the ecommerce ecosystem. And why shouldn’t they? After all, this is the combination of the $5.75 trillion groceries market and the $600 billion ecommerce market. It’s also changing the way people shop – and live. Consumers no longer spend hours in the supermarket. They can order online for more convenience, less hassle, and a better experience.

This Is Big…

This market is estimated to be worth $17.5bn and is growing actively. This is even more impressive considering that currently only 5.5% of grocery shopping is done online. In 4 years’ time, 10% of all grocery sales will take place online.

According to a study by the Food Marketing Institute, online grocery sales are set to capture 20% of the total grocery retail market by 2025 and reach an incredible $100 billion in sales.

Big Players, Big Moves

There are, of course, some big players in this market. Chief among these is Amazon, with Walmart playing catch-up. The rest of the market is shared among smaller players.

Amazon really entrenched their leadership position with their acquisition of Whole Foods. Amazon now has an 18% share of the online grocery market, with sales topping $2B. Regarding online grocery delivery, Amazon provides this through its AmazonFresh and Prime Now offerings. In comparison, Walmart has about half the market share of Amazon.

Other players in the market include Shipt, Instacart, and Peapod, which are generally integrated with other grocery chains and supermarkets.  Instacart, for example, just raised another $600M at a $7.6B valuation. The explosion of these companies shows how easy and inexpensive it has become to order groceries online and get them delivered. Anyone with a smartphone can place their order in minutes, and with the click of a button, their groceries are delivered to their door. And pricing ranges by company, city, and demand levels, but is on average around the $10 mark.

Recently, Walmart has been expanding its online grocery deliveries, with Sams Club also getting in on the action (through Instacart). Amazon meanwhile continues to expand to cities across the US.

Online shopping and deliveries have been around for a while (the first online food order was from Pizza Hut in 1994). Since then this space has expanded, with a boom during the “dot-com” years of the early 90’s, followed by the big bust experienced by the sector. There has been a gradual increase, driven by other on-demand services, increased purchasing by millennials, and tremendous smartphone penetration. This space is set to grow even more, as the numbers show that shoppers are prepared to pay a premium for convenience.

The Smart Will Win

It’s imperative to understand how this is unfolding, in order to grasp the current state of the ecommerce ecosystem. It also points to what the future of ecommerce will look like. For any business in the ecommerce space, getting a deep understanding of these trends can be a catalyst to further success. 

With such a massive market, the opportunities are more than appealing.

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