Most people have gotten a taste of online grocery shopping during the pandemic. Shopify became a go-to platform because of its convenience, and it saw unprecedented growth in recent years. In Q3 2020, it grew 96 per cent compared to the year prior. A new study from Juniper Research has forecast that the value of global ecommerce payment transactions will exceed $7.5 trillion globally by 2026, up from $4.9 trillion in 2021 – a growth rate of 55%. Juniper Research predicts that this growth will be driven by “retailers offering compelling omnichannel retail experiences that increase user ecommerce spend”, and that online, mobile, and physical retail locations will all be instrumental to retailers’ future success.
The online shopping craze started in the late ‘90s. People had just started ordering things online and the retail industry saw this as something that would completely revolutionize the business. Offering this method of shopping for the grocery sector meant that it increased convenience and was a time-saver for consumers that didn’t really like grocery shopping.
There were a few online-only markets that emerged, such as HomeGrocer.com but soon after, these online grocers crashed. The margins were low, and they didn’t have the infrastructure to keep up or keep costs low. The companies also overestimated the profitability of online orders. Despite these early failures, the hybrid model of online shopping with traditional grocery stores like Walmart or Whole Foods was much more successful. People preferred the familiarity, and the option to pick up the groceries from a physical store rather than have them delivered. Online only grocers tended to be more expensive than the traditional grocery store as well.
Services like Instacart, founded in 2012, partnered with grocers to bring consumers food from the stores they were familiar with. It was also flexible in that it allowed third-party contractors to pick and deliver products to peoples’ homes. In both these cases, it worked because the grocery stores already had the infrastructure in place that the purely online grocers lacked.
During the COVID pandemic, things really took off for online grocery shopping. At this point, pick-up and delivery was no longer just a bonus, it was a necessity. Grocery stores were expected to have delivery and online shopping platforms that were up to date and user-friendly. Many businesses put more effort into making delivery a prominent part of their service. They also had to meet customer needs. This meant that they had to offer as many varieties online as they did in-store. In 2021, Sobeys said the e-commerce sales rose by 241 per cent compared to 2019. In the U.S., more than 40 per cent of Americans who ordered grocery delivery in March was doing it for the first time in 2020. According to a study by Mercatus/Incisiv, 90 per cent of e-grocery customers are anticipated to continue shipping online.
There are a few factors that a customer will consider before buying groceries online. The first is how user-friendly it is. As mentioned above, the online shopping portion of grocery stores was not just a bonus anymore. It became a necessity almost overnight. In turn, websites and apps had to be designed to make the experience convenient and easy for everyone. The cost as well as availability of supply also plays a big role in where people get their groceries. Online retail giants like Amazon can offer lower prices because of its size and stock. Amazon also review its prices for millions of its SKUs every 10 minutes to offer best prices. It also has the advantage of users being able to buy bread and a side table at the same time. While other specialty e-tailers such as Good Food Box cannot compete with their prices, they offer niche products that may not be available at bigger online stores. Other than being affordable, reliability is also important. Brick and mortar stores have an advantage because their inventory is already near their local customers, unlike online-only sellers. The online grocery shopping has revamped the food supply chain by creating a demand for end-consumer delivery of perishable foods.
There was also a shift in where people shopped. Consumers put an emphasis on minority-owned and small businesses, especially after the events of the pandemic. The younger demographic have been more mindful of what brands they support and purchase from. There’s been more interest in women and BIPOC-owned brands, and 4 out of 10 online shoppers say that less than satisfactory environmental records affect their decision to purchase.
There are many pros to online shopping, but there are a few cons as well. It’s convenient and you don’t have to waste time in the stores. However, it may not be convenient when something is missing, or you got the wrong item. Or the produce is a little wilted. Some people also like the experience of touching and feeling produce, or discovering new products or items they wouldn’t usually buy or know were in the stores.
With the widespread use of online services and smartphone apps, as well as the availability of virtual payment methods, the convenience of online shopping led to an increase in demand for the grocery sector. It’s grown rapidly over the last few years and will continue to do so. Eco-conscious packaging and delivery are also at the forefront of industry growth. Companies may soon try to gain a competitive edge and expand into new geographical regions and upgrade their tech to keep up with consumer demand.
Helen Jacob | Contributing Writer