As delivery service fees go up, your grocery e-commerce platform matters more to consumers looking to save money and find what they need.
As delivery service fees go up, your grocery e-commerce platform matters more to consumers looking to save money and find what they need.
The grocery industry is still riding the wave of a historic rise in online shopping precipitated by pandemic-era restrictions and concerns. US shoppers spent a whopping $1.7 trillion online from March 2020 to February 2022. Compared to the previous two years, this swell represented $609 billion worth of increased spending. The doubling of online grocery sales represented the retail industry’s biggest habitual shift overall.
When the pandemic unexpectedly hit, not every supermarket chain was prepared with the technology to handle the unprecedented demand for online ordering. Third-party grocery delivery providers were quick to provide a means for grocers to offer online ordering. As a result, third-party delivery orders grew 77% from 2019 to 2021. These partnerships created a dependency that often came at the expense of grocers whose profit margins were already razor thin.
E-commerce continues to rise with online grocery spending still up 15.5% and expected to reach $1 trillion this year. As runaway inflation continues driving up food and fuel prices, third-party delivery services are passing the buck to shoppers with high fees that offset savings. Grocery retailers, on the other hand, have a unique opportunity to deliver the value shoppers seek. By taking advantage and leveraging retail media tools they can help drive traffic in-store, increase basket size, and build loyalty.
The Pandemic-Fueled Rise of Online Grocery and Delivery
Safety concerns and government stay-at-home orders turned tens of millions of Americans into first-time online grocery buyers, prompting 54% growth in online grocery sales in 2020.
Even as consumers flocked back to stores, US online grocery sales were still up 43% in March 2021. By March 2022, online grocery sales were down 6% from the previous year’s record high, but the $8.7 billion in spending shows the resilience of omnichannel shopping. All told, online grocery will only account for 11% of the $1.124 trillion in grocery sales this year, but experts predict the trend isn’t going away any time soon and will reach 20% by 2026.
Whether shopping in-person or online, The Washington Post noted some differences in post-pandemic shopping trends that seem to be sticking, notably increases in:
- Auto-ship comfort food, coffee, paper product, pet food, and shelf-stable orders
- Money spent per trip as Americans “stock up,” with less time spent browsing
- List-making based on tried-and-true name brand items
- Immune-healthy probiotic yogurts and garlicky foods
- Willingness to try private-label store brands to save money
- Redemption of buy one get one offers, coupons, and special promotions
During the pandemic, grocery shoppers accepted third-party delivery fees in exchange for safety and convenience, but market forces will continue to shape their behaviors and preferences. Third-party grocery deliveries were up 20% in March 2022 over March 2021 — mostly because shoppers liked the ease and convenience of ordering, as well as the ultra-fast shipping options. However, only 36% of consumers indicate a willingness to pay a price premium in order to buy groceries online, and two-thirds of consumers say they’d only pay a premium if it was less than 5%.
With the pressure of inflation and gas prices, customers are looking for ways to save, and they are more than willing to shop in-store if they will get the best deals and avoid extra fees…
***
To read the rest of the article, visit How Retail Media Can Help You Ditch Third-Party Delivery.
