Healthy, Active & Sustainable Living

Groceries Are The Biggest Untapped Opportunity In E-Commerce

Business Insider, 12/10/14 —

Grocery shopping hasn’t changed for more than 90 years. Most traditional supermarkets still look like this — large indoor spaces that look like warehouses where people have to drive to, and pick and pack their own items.

Americans spend more than $600 billion a year on food and beverages, making it the largest retail category by far.

But, less than 1% of these sales currently occur online. In fact the grocery industry has been the least disrupted relative to its size compared to all other retail categories.

Online grocery sales will grow at a much faster rate than sales at traditional supermarkets. We forecast that the online grocery market will grow at a compound annual growth rate of 21% between 2013 and 2018, reaching nearly $18 billion in 2018.

For some context, the e-commerce sector at large is growing at an annual rate of approximately 16% YoY. So groceries are one of the best growth opportunities in e-commerce.

Companies are entering the e-grocery market by providing the selection and convenience that traditional supermarkets cannot.

But until e-commerce can turn over inventory as quickly as supermarkets, maintaining the quality and freshness of orders remains a huge hurdle.

This is a problem for consumers — who across nearly all food groups, say freshness is the most important factor when shopping for groceries.

This is one reason why it’s very difficult for e-commerce to compete with supermarkets on basic grocery products. More than three-fourths of US consumers say they prefer to buy general food items in person.

But, e-commerce can compete with specialty groceries — such as exotic foods or foreign ingredients that standard supermarkets don’t typically carry. One in every four US consumers say they have purchased specialty food and beverage items online.

As same-day delivery becomes more commonplace with online purchases, grocery e-commerce may benefit too.

25% of millennial-aged shoppers are already willing to pay a premium for same-day delivery, so they turn out to be a core customer demographic for e-commerce grocery businesses as well.

For our complete report on the groceries market, please visit BI Intelligence.