What’s Fueling the Popularity of Online Grocery Shopping and Its Future
Global online grocery sales have been on an upward momentum for the past decade. The sales figures from this particular niche reportedly tripled in the past five years alone and they’re expected to quadruple in volume by 2022 or in the coming five years, according to the U.S Online Grocery Survey carried out in 2019.
What is fueling this demand?
The unprecedented demand for online groceries has been fueled by a number of key factors. For starters, the increased use of smartphones and other Internet-enabled devices has made it remarkably convenient for the modern shopper to get ready access to all the groceries they want with a few clicks.
Better Shopping Experiences
Another reason that seeks to explain why the online grocery industry is destined for greatness has to do with the improved e-commerce shopping experience. The latest e-commerce stores for online fresh produce were incredibly user-friendly. Finding your desired groceries became almost self-explanatory on these intuitive mobile apps and websites.
Crowd-Sourcing
Another yet important factor responsible for the ever-rising popularity of the online grocery industry is the heightened crowd sourcing among different stakeholders. For instance, the online grocer might be working in partnership with the local pizza delivery firm to ensure that you always get your produce as fast as possible.
Amazon versus Walmart
The e-commerce titan of industry, Amazon has a lot of expectations in the online grocery shopping realm. From the onset, Amazon has remained vocal of their ambitions to invest whatever it takes to ensure that they become the world’s premier online grocery. Together with Walmart, these retail giants are responsible for shipping 28% of all fresh produce sold in the US.
63% of the 28% of shoppers who preferred to order their groceries online shopped with the giant retailer, Amazon.
According to research findings by Coresight Research group of 2019, there are now an estimated 35 million new consumers buying online produce than there were in 2018.
New Online Groceries
There are other new debutants that are threatening to rival the online grocery domination quest by Amazon and Walmart. These include:-Kroger, Fresh Direct, Peapod and Mercato. Investors have clamored in droves to pour in essential seed money into these online grocery start-ups. In 2018, Instacart was on record having raised a whopping $600 million in the first round of financing.
The renaissance of the online grocery business reached an in flexion point sometimes in 2016. By then, people were already getting used to the concept of online buying and selling. What’s more, e-commerce platforms that were more intuitive and secure had just been launched.
Amazon’s Success
Amazon has a clearly laid out strategy to conquer this lucrative niche that still has a long way to grow. One of the factors that has attracted so many online grocery shoppers to Amazon is their massive Prime membership option. Additionally, Amazon has recently shared the excellent news that it has introduced the one-day delivery option and that it also added that they were almost launching their own grocery chain.
Walmart’s Leverage
Walmart is not that far behind the titan, Amazon as far as online grocery sales revenues is concerned. This American retail chain has come up with smart initiatives to popularize the idea of buying produce online. Walmart has gone all out in laying out a well-thought out road map on how to improve their fresh foods deliveries to their ever-growing clientele.
For instance, this NASDAQ-listed retailer boasts of having well over 2,000 physical stores and work is being done to see extra 1,000 stores completed by the end of 2019.
Attracting more Online Shoppers
Research has shown that the retailer who succeeds in cajoling their prospective shoppers to make larger transactions will carry the day. Moving forward, these retailers are supposed to do all that it takes to earn the confidence and trust of their online grocery shoppers.
It’s no secret that most consumers are still wary of eating produce that has been handled by all sorts of strange hands out there.
Challenges Facing Online Fresh Produce Startup Ventures
As is often the case with any emerging industry, challenges are to be expected. It’s important for the stakeholders and investors to have a thorough understanding of the challenges facing this particular sector so that they can be able to formulate effective solutions. The biggest challenges facing aspiring online grocers include:-
1. Storage and Delivery Costs
It is quite expensive to handle the highly perishable fresh produce. Setting up a state-of-the-art HVAC system for the temporary storage of the fresh produce costs many thousands of dollars. The high entry costs associated with building specialized warehouses, specialized delivery vans and delivery containers have effectively locked out startups seeking a piece of the online grocery cake.
2. Low Profits
The profit margins arising from selling fresh produce online are ridiculously low. The problem is that online grocery shoppers remain adamant to pay extra for having fresh produce shipped to their doorsteps. The solution lies in the online grocery retailer having their own dedicated delivery fleets.
In conclusion
There’s a huge demand for online grocery shopping and this trend is poised to relent for years still ahead. Retailers like Amazon, Walmart, Target and others simply need to improve their customer’s experience while at the same time ensuring that they keep their operational costs at a minimal to make it big in the lucrative niche of online grocery shopping.
