At the end of 2018, consumer sentiment for online shopping was high compared to recent years as nearly 55% of consumers reported their households were in 'good financial shape' in Q4 2018, up 4% from Q3 2018 and 2% from Q4 2017.
E-commerce sales for the latest 52 weeks ending Dec. 30, 2018, were $58.9bn, a 35.4% increase from a year ago.
"Consumers are increasingly comfortable with online purchasing, and retailers of all stripes are upping their online offerings, working to enhance the shopper experience with simple navigation, assortment, good values and delivery options," IRI said.
'E-commerce should be touted as a tool for helping shoppers stick to their budget'
“Millennial and Gen X consumers are more at ease with online purchases than older generations, and as e-commerce becomes more of a routine, those shoppers are migrating offline efforts to save money to their online practices,” said Joan Driggs, vice president of content and thought leadership for IRI.
“Online offers a lot of additional outlets for smart shopping, including easy comparison shopping and keyword search for more informed purchases.”
Survey respondents report that buying online allows them to find lower-priced household items in the beauty/personal care and home care categories. However, when it came to purchasing food online respondents were less likely to feel they were getting a deal.
For instance, 31% of millennials agreed that 'Buying online allows me to find lower-priced food and beverage options' compared to 45% of millennials who felt they were able to find lower-priced beauty/personal care items.
Consumers reported that they were most likely to utilize grocery click-and-collect services for purchasing food and beverage items as a way to avoid shipping fee. According to IRI, 38% of all shoppers across generations prefer ordering online and picking up in the store.
Shoppers also reported watching their wallets more closely shopping online than in physical stores, IRI's survey found.
Millennials and Gen Xers, the two generations most likely to find value in shopping online, are also the generations that report having the most difficulty affording needed groceries (34% of millennials, 36% of Gen Xers). More than half (54%) of millennials and Gen Xers report they are less likely to make impulse purchases when buying online. Overall, 50% of total respondents report they are less likely to make impulse purchases online, including 49% of boomers and 44% of seniors.
"With this in mind, e-commerce should be touted as a tool for helping shoppers stick to their budget," noted IRI.
Fresh and frozen food items register strong growth
Shelf-stable pantry items have been the bread and butter of online grocery sales while fresh and frozen food have lagged behind. In fact, the bulk of Amazon's grocery sales were coffee, cold beverages, snacks, and cereal.
According to IRI, online coffee sales ranked as the fifth highest grossing category with $2.2bn in annual sales, no other food or beverage category made the top 10 list.
However, when looking at the e-commerce categories with the most year-over-year growth, hot cereal was in the #2 spot growing 151% in sales to $273m. Refrigerated lunches came in fifth with 81% yearly growth and sales of $48m. Frozen appetizers and snack rolls, frozen breakfast food, refrigerated biscuit dough, baking mixes, and cream cheese/cheese spreads claimed the sixth through tenths spots, accordingly.
"While fresh and frozen items rank among the bottom of e-commerce sales categories, there are signs of significant growth, indicating that retailers — likely with the support of such flexible options as click-and-collect — are starting to crack the code on delivering fresh and frozen items via online," IRI pointed out.
Global consultancy firm KPMG reported that 59% of US consumers will shift to buying more food online compared to 48% in 2018.
IRI added that it is crucial for traditional retailers to respond by offering convenient online shopping options and improve the user experience to seize the increasing number of consumers purchasing their everyday needs online.
“Pure-play retailers garner more than half of all online CPG purchases, but traditional brick-and-mortar retailers continue to invest and win share of the e-commerce pie,” said Sam Gagliardi, head of e-commerce for IRI. “It is incumbent upon the future success of these traditional retailers to invest in the shopper experience both in-store and online.”