The fact that online grocery sales are soaring is indisputable. Major grocery players – including Walmart, Target, and Amazon – are all competing for a share of the lucrative market. However, while many consumers, particularly millennials, are comfortable buying groceries online, many are wary of purchasing perishables such as seafood via e-commerce outlets.
Sixty-three percent of shoppers did not purchase groceries online in the past year, according to the 2018 “Inmar e-Commerce Study: Engaging Online Grocery Shoppers In-Store and Online.”
The Food Marketing Institute’s (FMI) “Power of Seafood” report indicates that when it comes to selling seafood online in particular, consumers still seem slow to engage.
“Aside from their primary seafood store, seafood consumers shop for their seafood at a wide variety of other places, such as seafood markets – but not online,” said the FMI report.
“Consumers are more comfortable buying meat, seafood, produce, and other perishables in-store where they can use their five senses to choose the best, freshest meals for themselves and their families,” said Craig Rosenblum, regional vice president of enterprise retail for data analytics firm Inmar.
However, online retailers can “overcome that basic need to select our food using those senses” by incorporating more ways for shoppers to see and select their perishables in a virtual model, he said.
“Using blockchain, for example, we can tell shoppers the story of the fish they are about to order online: where it came from and ties to local communities and farms,” Rosenblum said.
“With cameras placed in-case at their local store, shoppers could have a real-time view at the meat selection from their desk at work,” Rosenblum added.
Where do online grocery shoppers go?
Despite consumers’ misgivings, online grocery shopping is becoming more mainstream, as most major grocery chains and mass merchandisers offer grocery pickup and delivery services.
But where are most online shoppers going to buy their groceries?
While Amazon is undeniably the largest online retailer globally, consumers are not necessarily looking there for groceries. Walmart Grocery, which operates in nearly every U.S. state, had 62 percent more customers in June than its nearest competitor, Instacart, which also operates nationwide, Second Measure reported.
The global retailer said that its U.S. e-commerce sales soared 37 percent in the second quarter for its 2020 fiscal year, which “includes strong growth in online grocery,” Walmart explained in a press release. Sam’s Club e-commerce sales also soared 35 percent in the quarter, Walmart confirmed.
While Amazon is working on expanding its brick-and-mortar store footprint, Walmart is still king in terms of physical places that consumers can pick up their groceries – or have them delivered. Walmart U.S. now has more than 1,100 grocery delivery locations and more than 2,700 pickup locations. Additionally, Walmart.com’s NextDay delivery service now covers around 75 percent of the U.S. population, the retailer said.
Amazon has been steadily expanding its physical stores’ footprints, adding more AmazonGo outlets as well as 4-Star and Amazon Books locations. And, of course, it is able to capitalize on grocery sales through its 500 Whole Foods Market locations in the United States.
Following Amazon’s acquisition of Whole Foods, which was finalized last summer, its sales of fresh seafood and other perishable items jumped, research firm OneCickRetail said in a 2018 report.
Whole Foods’ private-label line, in particular, has helped boost Amazon’s overall grocery sales. Amazon sold an estimated USD 11 million (EUR 9.9 million) worth of Whole Foods’ 365 Everyday Value natural and organic products in 2017, OneClickRetail found. The private label brand includes seafood items such as frozen fish sticks and canned albacore tuna.
In addition, 31 percent of digital shoppers bought online groceries from Amazon in 2018, according to eMarketer.
However, Amazon’s physical stores segment realized USD 4.3 billion (EUR 3.8 billion) in sales in the second quarter of 2019, growing just 1 percent versus the previous year.
“Expanding its push into new markets and investing in new locations could help it grab a larger share of overall retail in the U.S.,” Second Measure said.
According to Second Measure, AmazonFresh is one of the few grocery delivery services in decline.
“Founded more than a decade ago, AmazonFresh delivers groceries from Amazon warehouses, but it never really caught its stride. It now operates in just 15 U.S. cities and has closed operations in others,” the firm said.
AmazonFresh sales dropped 19 percent in June 2019 compared to June 2018. At the same time, Amazon Prime Now’s sales nearly tripled in June – the highest growth in Second Measure’s analysis.
“Prime Now operates in 90 U.S. cities, and the service is included with the regular Amazon Prime membership fee,” Second Measure said.
Walmart and Amazon are not the only grocery e-commerce players, either. Target, Kroger, Instacart, Peapod, Shipt, and many others are vying for their share of the digital grocery shopper’s wallet.
For example, Target purchased grocery delivery company Shipt in December 2017, and Shipt’s customers have increased by 69 percent since then, Second Measure reported.
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