According to a new report by market researcher Brick Meets Click, total US Online Grocery Sales Down 6% in March compared to March 2021, to $8.7 billion, compared to $9.3 billion in March 2021.
Why Online Grocery Sales Down and Home Delivery Business Still Growing
The online grocery market is divided into three categories by Bricks to Click defines: Ship-to-Home, Pickup, and Delivery. Ship-to-Home, which includes groceries delivered via parcel carriers (UPS, FedEx, USPS), saw the steepest drop, falling 30% from $2.1 billion to $1.4 billion. Pickup, which includes curbside, in-store, locker, and drive-thru pickups, decreased by 11%, from $4.3 billion to $3.8 billion.
It wasn’t all bad news, though. Delivery grew from $2.9 billion to $3.5 billion year over year, including both grocer first-party (Kroger, etc.) and third-party service provider (Instacart, Shipt, Doordash) deliveries.
One of the reasons for the category’s growth, according to Brick to Click, is the emergence of fast-grocery delivery.
“Delivery’s strong performance in March was driven by two factors,” said David Bishop, partner at Brick Meets Click. “First, third-party providers’ aggressive expansion into grocery is enabling more ways for people to shop online,” he added. “Second, newer services focused on faster cycle times are appealing to a broader range of trip missions and usage occasions.”
One of the first questions we had about the pandemic was how much behavior change, such as the adoption of online grocery shopping, would last in the long run. Many consumers appear to be continuing to use online grocery shopping as the country recovers from the pandemic, but they appear to be combining home delivery with trips to the
“Two factors continued to drive Delivery’s strong performance in March,” explained David Bishop, partner at Brick Meets Click, which focuses on how digital technology impacts food sales and marketing. “First, the aggressive expansion of third-party providers into grocery is enabling additional ways for people to shop online, and second, newer services focused on faster cycle times are appealing to a broader range of trip missions and usage occasions.”
The survey of 1,681 U.S. adults who participated in their household’s grocery shopping and made an online grocery purchase in the previous 30 days was conducted on March 28 and 29 by Brick Meets Click and sponsored by grocery e-commerce specialist Mercatus. Pickup options include in-store, curbside, locker, and drive-up services, as well as retailer and third-party services (e.g., Instacart, Shipt). Online grocery purchases delivered by parcel couriers such as Federal Express, UPS, and the US Postal Service are included in ship-to-home sales.
According to Brick Meets Click’s analysis, the strong delivery sales growth in March reflects year-over-year increases of 13% in the number of orders placed by monthly active users (MAUs) and 7% in the average order value (AOV). In the meantime, order frequency was down 8% and AOV was down 4% from a year ago for click-and-collect. The drop-off was much more pronounced in the ship-to-home segment, which saw a 13 percent decrease in MAU orders and a 23 percent drop in AOV.
Online grocery cross-shopping between supermarkets and mass merchants gained traction in the retail channel. In March, 29% of grocery’s MAU base shopped online with mass, up four percentage points from the previous year. This followed a 1.3-percentage-point increase in February, when the grocery/mass cross-shopping share was 26%.
Repeat intent, or the likelihood of an online grocery shopper using the same service again within the next month, increased 1.4 percentage points year over year to nearly 64% in March. Repeat intent rates at mass retailers increased eight points month over month in February, whereas repeat intent rates at supermarkets fell more than five percentage points.
According to Sylvain Perrier, president and CEO of Toronto-based Mercatus, “a key takeaway from March’s report is that online grocery sales have retained much of the gains from a year ago, proving the resilience of grocery eCommerce.” “However, traditional supermarkets must develop and strengthen their first-party web and mobile channels, rely on third-party solutions to fill in the gaps, and excel at delivering the services they provide.”