Online Grocery Sales Soar as More Americans Shop From Home

As grocery products and essential goods fly off the shelves across the United States in the face of the COVID-19 pandemic, online shopping has also boomed. A surge of orders has hit online retail grocery platforms like Amazon Fresh, Walmart To Go, Instacart, and Kroger.com over the last few weeks. In fact, “buy online pick up at store” and delivery orders grew 151.1% for full-assortment grocery merchants between March 12 to March 15, 2020.

Many brands have been caught off guard by this sprint to online shopping, scrambling to stock Amazon and other online channels. And though a pandemic will inevitably shift buying behavior, the current crisis isn’t the only reason grocery brands should start improving their ecommerce presence.

Online Grocery

Online Grocery is Only Going to Grow

Even before COVID-19, the switch to online shipping was well underway. According to The Food Industry Association and the Nielsen Co., consumers are predicted to spend $100 billion a year on online groceries by 2022. Additionally, 70% of US consumers will regularly purchase consumer packaged goods online in the next five to seven years.

And remember: These numbers were released before the prospect of possible extended periods of social distancing and staying at home, so those numbers are now likely low. Grocery brands should up their online ecommerce presence now so they don’t fall behind.

Why More Consumers Are Shopping Online

Thanks to online grocery services, you no longer have to peek inside every aisle to find that specific special ingredient, or run to another store when your first option doesn’t have everything (or anything) you need.

You can also have a better idea if that new snack or trendy nut milk will be as tasty as it claims, because there are reviews and ratings for these products online. More and more people buy their groceries online because it saves time, provides convenience, and allows customers to purchase items they can’t find in their local stores.

The Omnichannel Convenience Gap

But as it stands, most US consumers don’t think online shopping is consistently more convenient than physically going to the store, and this “omnichannel convenience gap” has kept the online grocery sector from growing more rapidly.

Many brands are hard at work on omnichannel solutions that combine brick-and-mortar stores and pickup/delivery options, to make the transition between the two as seamless as possible for customers.

One of the most interesting findings from Bain & Company is that customers seem to significantly warm up to buying groceries online the more they do it. Only 42% of first-time online grocery shoppers felt that it was more convenient than physically going to the store. Meanwhile, around 80% of shoppers who have bought online 10 times or more feel that digital is the more convenient option.

Online grocery graph

 

The switch from brick-and-mortar to the buy button simply takes some getting used to. Now that more Americans are turning to buying groceries online, it will be interesting to see what percentage continues to use the services once the pandemic is over.

Shopping online is unique in that it lets customers to pick and choose from different channels, but it hasn’t quite found a way to duplicate the sensation of strolling through a curated grocery aisle and picking whatever looks best. Where online grocery has disadvantages, in-store has advantages, and vice versa. Omnichannel grocery shopping is still in its infancy, but once realized, the successful blend of traditional and online should offer customers grocery shopping at its full potential.

Amazon’s Place in the Online Grocery Market

As expected, Amazon is cultivating dominance in this industry, just as they did previously with books and apparel. Amazon is currently taking a 29% market share of the grocery industry, with Walmart and other supermarkets being its closest competitors. And it isn’t hesitant to try new things: Amazon is currently building an omnichannel concept grocery store in Woodland Hills, California that is set to open in 2020. Designed to combine aspects of online and traditional shopping in new ways, the store would be separate from Prime Now (Amazon’s stand-alone site and app that delivers products from Whole Foods).

In addition to brick-and-mortar innovation, Amazon continues to lower convenience and cost barriers for hesitant online shoppers by removing the $14.99 monthly fee for Amazon Fresh and giving Prime members free two-hour delivery for orders over $35. Shoppers are spending more time with ecommerce, and grocery brands will need to follow.

What Should Brands Do Now?

Whether customers are having food items delivered straight to their home or picking orders up at a store, grocery brands need to take advantage of this uptick in their category. Across the board in grocery, both traffic and Amazon Advertising spends are significantly up.

This an ideal opportunity for up-and-coming grocery brands to join the scene and make their online presence known. Improving your brand on Amazon with informative product pages and organic and sponsored search through Amazon Advertising is a necessity for companies large and small. Though no retailer has created a perfect solution yet to overcome the omnichannel convenience gap, the current stay-at-home climate is already transforming many Americans from brick-and-mortar-only to online grocery shoppers. Brands should be ready for the change.