The percentage of consumers who buy groceries online is expected to grow significantly in 2018, a survey says. And more than half of online grocery shoppers are likely to try buying them from Amazon.
According to the survey of 1,000 U.S. consumers from online grocery technology firm Unata and order fulfillment platform ShopperKit, 36% plan to shop online for groceries this year, up from 22% in 2017 and 19% in 2016.
Chris Bryson, founder and CEO of Unata, which last month was acquired by e-commerce grocery delivery company Instacart Inc., says he was surprised to see that the adoption of web grocery shopping did not grow more in 2017. But at least part underlying cause, he says, was a lack of options for consumers who otherwise might have bought groceries online.
Among those surveyed, 20% say they didn’t shop for food online because their grocer didn’t offer it. Bryson says that indicates an unmet demand for grocery e-commerce in 2017—a demand that grocery retailers are now in a much better position to capture. The availability of grocery e-commerce, he says, is “night and day different from 12 months ago.”
One massive change in the world of online grocery sales was the acquisition of Whole Foods Markets by Amazon.com Inc., No. 1 in the Internet Retailer 2017 Top 500. Meanwhile, major grocers like Walmart Inc., (No. 3) and The Kroger Co. (No. 88), have expanded their investments in e-commerce.
Moreover, Instacart expanded from just 30 markets at the start of 2017 to 190 in North America, including Ontario, Canada. One of Instacart’s competitors, Shipt Inc., has expanded to 72 cities since its launch in 2014. In December, Shipt became a unit of Target Corp. (No. 20), helping the retailer step up its challenge to Amazon by expediting the rollout of same-day shipping.
Bryson says grocers that don’t offer e-commerce—or fail to do it well—run the risk of being blindsided, as customers move toward retailers who do. The Unata/ShopperKit survey found that 58% of those who bought groceries online in 2017 did not shop at their local grocers. Among that 58%, more than half (51%) say they didn’t shop online at their local grocers because those grocers didn’t offer e-commerce.
Amazon: The threat is real
Of those surveyed, 42% of those who grocery shopped online in 2017 did so with their local grocers, 34% of ordered from Amazon and 32% chose Walmart.com. Other choices included Instacart (12%), Peapod (8%) and FreshDirect (6%). Looking ahead, the survey shows that shoppers are interested in buying food from Amazon.
Among online grocery shoppers surveyed by Unata and ShopperKit, 54% are likely to try ordering Whole Foods items through Amazon.com in 2018, and 54% are likely to buy an Amazon Prime membership to save money at Whole Foods. Also, 51% say they are likely to purchase groceries from Amazon Fresh, and 54% are likely to shop at an Amazon GO store if it becomes available to them.
Prime members get special offers at Whole Foods that other customers do not get. For example, Amazon is currently offering Prime members a coupon enabling them to buy two-dozen roses for $19.99. Non-prime customers pay $24.99.
Amazon Go is Amazon’s no-cashier convenience store. To enter the Amazon Go store, customers download a smartphone app and scan a QR code to open a glass turnstile. Machines watch the items plucked from shelves and add them to a shopping cart. Shoppers are billed once they leave. The prototype Amazon Go store in downtown Seattle opened to the public in January.
Flexibility is increasingly important
Increasingly, the survey found grocery shoppers want flexibility. Among those surveyed 50% of online food shoppers in 2017 say they looked for grocers that offered home delivery of online orders, while 30% preferred the option of in-store or curbside pickup and 20% wanted both. Unata projects that in 2018, the percentage of shoppers who want both pickup and delivery options will grow to 36%, while delivery only will drop to 41% and in-store or curbside pickup will drop to 23%.
How to win over online grocery shoppers
The 78% of U.S. consumers who did not shop for groceries online in 2017 cited barriers such as: “I enjoy my weekly trip to the store” (41%); “I didn’t want to pay extra” (36%); “I didn’t trust someone else picking up my food” (33%); “My local grocer didn’t offer it” (25%); and “I intended to but didn’t find the time” (11%).
Enticing shoppers to change lifelong habits can be a challenge, but the Unata/ShopperKit survey provides evidence that, once they try it, grocery shoppers stick with online ordering. In 2017, 85% of those who shopped online for groceries did so more than once, with 64% shopping for food online once a month or more. Another 21% say they do online grocery shopping a few times per year and just 15% say they tried it only once.
But merely offering online shopping is not enough. The Unata/ShopperKit survey finds that 76% of online shoppers say they would switch grocers to one that offers a better digital shopping experience.
Shoppers also want a personal touch. According to the Unata/ShopperKit survey, 51% of online shoppers say it’s important to be able to communicate in real time with the person picking out their grocery orders (an option available from Instacart and Shipt), and 34% say they would switch grocers for the ability to communicate with the pickers filling their orders. Other options they want from a picker include substitution suggestions for items that are out of stock (56%) and suggestions based on coupons and special deals (52%).
Other factors that would encourage e-commerce food shoppers to switch grocers include: More coupons and deals (cited by 65%), lower-cost delivery (58%); faster delivery (40%), personalized offers (36%) and a digital weekly ad from which they can shop or make a list (35%).
The Unata/ShopperKit survey was conducted in November 2017.Favorite