As people use online grocery channels more, they have a lot of different choices to choose from, such as third-party marketplaces, direct digital channels from traditional grocery stores, and digitally native eGrocers.
Out of all these choices, grocery stores that offer curbside delivery are likely to make the most money.
Right now, only a small part of the grocery market is done online, but that share is likely to grow a lot in the next year alone, according to a recent study called “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” which was done in collaboration with Amazon Web Services (AWS) and is based on a survey of nearly 2,700 U.S. consumers.
The study shows that only 12% of food purchases are made online (half of those are done via computer and half are done via phone). But in just one year, we could be looking at very different numbers: 32% of shoppers said they are likely or very likely to buy more groceries online in the next year.
But whether or not grocers can take full advantage of this digital growth depends on how well they can make their straight digital channels interesting, simple, and easy to use. If not, they have to rely on third parties, which own the transaction and take a fee, which cuts into the already slim profit margins of grocery stores.
“In online grocery today, the biggest shift is from independent retailers relying on others in a way that is not sustainable and not profitable to independent retailers, taking the reins and taking control and investing in this channel, because of all the value that it can create,” Jeff Anders, co-founder and CEO of eGrocery technology company Grocerist, told in an interview.
Good news for grocery stores: most people who buy groceries online would rather pick them up at the curb than have them delivered. This is where companies like Instacart really shine. The study “The ConnectedEconomyTM Monthly Report: The Gender Divide Edition,” for which we surveyed more than 2,600 U.S. consumers last fall, found that 45% of men and 36% of women buy groceries online for curbside pickup. This is a higher percentage than for any other digital grocery channel.
On the other hand, 43% and 35% of people said they ordered direct delivery (either from a traditional grocery store’s digital app or from a digitally native brand), while 42% and 28% said they used an aggregator like Instagram.
Some curbside grocery shops that only sell online are starting up to take advantage of this digital demand without having to pay for brick-and-mortar stores. Alex Ruhter, co-founder and CEO of curbside store JackBe, said that the model’s best feature is that it is convenient even at the last minute.
“We’re having to retrain people in one particular area, and it’s really the game changer for why JackBe has connected in the minds of the consumer, and it’s the fact that you do not have to schedule ahead in order to get groceries,” Ruhter said. “Any [other eGrocery channel] involves scheduling at some point in the future. With JackBe, you can place an order and then go pick up those items immediately.”
But right now, only a few places have these players who only play on the street. Thus, in the coming year, brick-and-mortar supermarkets will benefit most from increased eCommerce participation. Grocers are ready to capitalize on digital demand, from Kroger integrating Albertsons’ digital infrastructure into its eCommerce operation to Target remodeling shops to match curbside demand to Walmart rolling out curbside in new cities.
