Amazon and Walmart – along with a host of other major retailers – battled for their share of the lucrative online grocery market in 2018. But which companies will achieve the most growth in 2019? And how will they succeed in the competitive market?
One thing is clear: Consumer demand for buying groceries online is not slowing down in the United States. Overall spending on online groceries in America is forecasted to grow 15 percent in 2019 versus 2018, according to strategic advisory firm Brick Meets Click.
Online grocery sellers that offer delivery and pickup are expected to grow their online sales between a whopping 25 percent and 30 percent, according to the Barrington, Illinois-based firm.
Brick Meets Click forecasts that a larger share of online spending for groceries will shift toward the brick and mortar retailers offering these services. However, “the gains will not be evenly distributed as winning more sales depends largely on how well providers are improving the shopping experience,” the firm wrote.
Walmart significantly enhanced both pickup and delivery services in 2018, and the nation’s largest retailer plans to continue expansion of both in 2019. Marc Lore, president and CEO of Walmart's U.S. e-commerce business, told Jim Cramer of CNBC’s Mad Money that 4,700 of the retailer's stores (which the company is leveraging as hybrid warehouses to compete with Amazon) are within 10 miles of 90 percent of the U.S. population.
Lore, who co-founded jet.com, a subsidiary of Walmart, also said that "delivery right into the fridge" is possible for Walmart customers in the future.
Shoppers could receive a one-time code at the start of the process, and then the delivery person will arrive with a camera on their chest, Lore said.
"You can watch it on your iPhone and see them come in, put it in your fridge and leave, to sort of build confidence and trust in these Walmart associates doing it. So, ... imagine going out to work, coming home, and there it is. The stuff's in your fridge already," he said.
After Walmart’s e-commerce sales spiked 50 percent in its fiscal third quarter, Deutsche Bank Analyst Paul Trussell said the massive global chain is “best positioned” to take both mind share and market share in the online grocery market now and into the future.
While Walmart claimed 11 percent of the U.S. online grocery market in 2017, Trussell predicted Walmart’s market share will rise to 17 percent, versus Amazon's 19 percent, in 2025.
However, Amazon currently remains the dominant online grocery provider in the U.S., capturing nearly 30 percent of online grocery market, Brick Meets Click's David Bishop told SeafoodSource.
In addition, Amazon plans to continue to expand its brick and mortar footprint with additional Amazon Go stores and by expanding its Whole Foods Market portfolio. Amazon plans to add Prime Now two-hour delivery service to nearly all of its 475 Whole Foods stores in the U.S., according to The Wall Street Journal.
The online retailer is also eying potential retail spaces for new Whole Foods stores in parts of Idaho, southern Utah, and Wyoming where the natural foods chain currently does not operate stores, the WSJ reported.
Despite Amazon’s growth, households that use an online grocery or delivery service – compared to those that use Amazon – place more frequent orders and spend considerably more money per order (an average of USD 105 [EUR 91] versus USD 46 [EUR 40]), according to Brick Meets Click.
“Whether an online grocery shopper uses delivery or pickup, both services offer shoppers greater convenience, more control, and better ability to accomplish more of the household’s grocery shopping than providers who ship orders to the home in two or even three days,” Bishop said in a press release. “Where else can a grocery shopper receive an order in one hour or less, select a specific time slot for receiving the order, and get almost all the same things as when shopping in the store?”
Image courtesy of jet.com
