Online grocery sales hit $8bn as pickup/delivery edges out ship-to-home services

By Mary Ellen Shoup

- Last updated on GMT

Photo Credit: Getty Images /  LeoPatrizi
Photo Credit: Getty Images / LeoPatrizi

Related tags Online grocery shopping Brick Meets Click

Sales of online groceries have quadrupled since pre-pandemic levels measured in August 2019, and consumers are indicating a strong preference towards pickup/delivery services (Instacart, Amazon Fresh, and the like) over ship-to-home (grocery items - typically dry goods - shipped through parcel couriers such as FedEx, UPS, USPS), according to the latest data from Brick Meets Click/Mercatus Grocery Shopping Survey.

The online grocery market generated $8bn in sales last month. Of that, $6.7bn came from pickup/delivery services or 67% of total online grocery sales - a record high as measured by Brick Meets Click/Mercatus data - vs. $1.7bn coming from ship-to-home deliveries. 

Why is this important to call out given the obvious convenience of pickup/delivery services which often times can be picked up or delivered same day with a wider assortment of items including perishables?

According to David Bishop, partner at Brick Meets Click, the rise in pickup/delivery over ship-to-home services may not be surprising given the steep drop in in-store shopping caused by the pandemic (which is now rebounding), but it is worth noting from a consumer behavior and sentiment standpoint.

"Ship-to-home was figuratively 'king of the hill' before COVID hit. Coming into 2020, ship-to-home was 40%+ of ​[online grocery] sales prior to COVID. Today, that number is down to just around 20%,"​ Bishop told FoodNavigator-USA, adding that prior to the pandemic consumers saw value in the service as a way to procure their favorite brand of cookies or jar of specialty salsa to supplement what may be out of stock at their local grocery store.

But now, delivery/pickup has filled that need for consumers who are seeing less of a need to utilize ship-to-home services, said Bishop. 

"What we’re seeing is the perceived evolution that these various forms have, and ship-to-home’s perception of the value it delivers has really degraded over the last 18 months, primarily because people have come to appreciate what they get through pick-up or delivery instead,"​ said Bishop. 

The shift in online shopping behavior has played out in the industry as retailers focus their efforts elsewhere when it comes to online grocery services. Amazon shuttered its Amazon Pantry service in early 2021 while Target ceased its subscription service model last year. 

"It’s an important reminder that the market is shifting away from the pure plays to the traditional brick and mortar who primarily support home delivery or pickup,"​ added Bishop. 


'Once a routine is established, it's difficult to break that behavior'

From a consumer adoption perspective, online grocery shopping has become routine for many. During the month of September, 64.1 million US households - essentially one out of every two households - purchased groceries online, a 16% increase from September 2020. And many are making repeat pickup/delivery orders, indicating the behavior is no longer an experimental trial for shoppers.

Monthly active users placing one or more online shopping orders per month also grew more from 33% (of 1,718 online shoppers aged 18 and older surveyed by Brick Meets Click/Mercatus) while the ship-to-home user base decreased by over 12%. 

According to Brick Meets Click/Mercatus data, the frequency in which consumers purchased their groceries online remained elevated at an average 2.76 monthly orders, in contrast to 2.03 monthly orders pre-pandemic in August 2019.

"What we're seeing is that the volatility of order frequency has dropped by over 60% - the gap between the highs and the lows is much tighter,"​ noted Bishop. 

And of those placing at least one order per month, 61.4% said they are likely to order again through the same service.

“People have come to terms with this new reality of the prolonged nature of this pandemic, and they have really started to make more permanent adjustments. We now see the number of monthly active users stabilize over a month-to-month basis,"​ said Bishop.

"Once a routine is established it’s difficult to change that behavior unless there’s an external force or a black swan event like the pandemic,"​ said Bishop.

"We're entrenched in new elevated levels with these routines that are likely to stay."

In-store shopping, a dying practice?

The significant increase in online shopping doesn't mean consumers are ditching in-store shopping all together, as there will always be that last-minute trip to the store to pick up a gallon of milk or a dozen eggs, Bishop clarified.

"If we looked at households that spent 80% or more of their grocery dollars online, that accounts for less than 10% of total US households,"​ said Bishop. 

The takeaway for retailers, added Bishop, is to adapt to the 'newest' normal of grocery shopping and offer their customers and way to order their full grocery order online.

"If they're not online, then what's a certainty is that they're not getting their fair share of that online spend,"​ he added. 

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