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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 Rise of Online Shopping Subscriptions:
- One way online grocery merchants are hoping to pick up market share and retain shoppers is through subscription options that provide rewards or savings.
- Nearly every major competitor in online grocery has added a subscription option.
- Kroger’s offers a $79 annual subscription labeled the “delivery savings pass”, which waives delivery fees customers would otherwise pay.
- Albertsons’ subscription service is $99 a year and waives delivery fees on all orders $30+.
- Walmart+ costs consumers $98 per year for free delivery on all grocery orders over $35.
- These subscription services will likely benefit consumers by offsetting delivery fees.
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.