Online grocery sales to reach $100B by 2019
Packaged Facts, a consumer research company based in Maryland, estimates that online spending on groceries will total about $23 billion this year, or about 3.4 percent of the projected $667.5 billion for all grocery spending in 2014. That’s nearly a 22 percent increase from the year before.
By 2019, the online category is expected to account for roughly 12 percent of all grocery spending, according to the study.
Most of that growth will likely come from in-store pickup programs, said Tim Kenney, president of MyWebGrocer, a Vermont company that provides Web and digital marketing services for grocers.
Consumers have been ready to buy their groceries online for years, he said. The only thing holding them back has been access.
Only a handful of online grocery services have emerged with the potential to succeed nationally at transforming people’s grocery-shopping habits, which tend to emphasize a personal and sensory experience. Leading the pack are the same-day delivery services Peapod, AmazonFresh, Google Express and Instacart.
Peapod, the longest-running of these operations, has been delivering groceries since 1989. The Illinois-based company handles more than 23 million online orders across 24 markets, it said.
Its competitors aren’t widely available yet, but all are expanding fast.
Packaged Facts said Amazon and Walmart have an edge on their competitors because of their vast distribution networks across the country, along with robust logistics and delivery systems.
Here’s the good news for brick-and-mortar stores: Among MyWebGrocer clients that offer both in-store pickup and home delivery, in-store pickup is more popular by a margin of three-to-one. Far from becoming obsolete, the store’s physical presence is becoming a linchpin of its online business model.
“A good store can move about 10 percent of its shoppers to online, so it becomes a big business,” Kenney said.
The fee for an in-store pickup, which ranges from $6 to $10, is often lower than for home delivery, he added. Vons charges $12.95 to deliver orders that are less than $150.
In addition, the pickup option might be more appealing to people who can’t be home to receive their groceries during business hours.
Regardless of whether a store opts for in-store pickup, at-home delivery or both, having the entire store selection available is important to online shoppers, Kenney said.
Source: utsandiego.com
