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Data for today’s episode is provided by Mercator Advisory Group’s Report: Online Grocery: Grocers Meet the Challenge of Digital Demand, but Can They Do It at a Reasonable Cost?
The Market for Online Grocery is Taking Off:
- Online grocery sales in 2020 were $106 billion, marking a staggering 307% increase from 2019.
- Online grocery made up 10% of the overall grocery market in 2020, up from 5% in 2019.
- The strong growth in online grocery in 2020 was no doubt due to rising consumer safety concerns about COVID-19.
- Mercator expects the growth in online grocery to continue beyond the pandemic that caused its initial surge in usage.
- Online grocery will make up an estimated 21.5% of total U.S. grocery sales by 2025, doubling its current market share and coming in at over $250 billion.
- 90% of online grocery consumers are expected to continue to operate in similar ways as they did at the height of the pandemic.
- Only 7% of consumers say they will return to shopping in brick-and-mortar stores when COVID-19 restrictions are lifted.
About Report
Although online grocery struggled against other online verticals prior to 2020, recent growth shows the online grocery vertical is here to stay. As consumers shopped online due to COVID-19, online grocery growth outpaced the rest of the e-commerce segment. Given recent consumer sentiment, Mercator predicts growth will remain strong in the coming years. Grocers were able to match consumer demand by utilizing cost-saving investments and implementing innovative technology to facilitate fulfillment. While consumers expressed the desire to continue shopping online, they also noted pain points with online grocery shopping. Given the new growth in this budding industry, Mercator believes that merchants and payment processors have the ability to gain market share by implementing cost effective fulfillment strategies and facilitating technology-driven payment methods. A new research report from Mercator Advisory Group, Online Grocery: Grocers Meet the Challenge of Digital Demand, but Can They Do It at a Reasonable Cost? explores the trajectory of the online grocery market and the ways in which merchants and payment processors can take advantage of consumer sentiment to cut costs and drive sales.
”The pandemic-driven, stay-at-home lifestyle in 2020 propelled U.S. online grocery sales to record volume as consumers sought ease of ordering, seamless payment, and convenient delivery. As the Great Reopening occurs in 2021, online grocery shopping will remain popular among consumers. Grocery merchants and their payments vendors can benefit from this digital channel opportunity, but must meet the challenges of online order fulfillment,” commented Raymond Pucci, Director, Merchant Services at Mercator Advisory Group, and author of this report.
