June 16, 2017

“Online grocery is failing,” according to Kurt Jetta, chief executive of TABS Analytics, a consumer products research firm. Only 4.5 percent of shoppers made frequent online grocery purchases in 2016, up slightly from 4.2 percent four years earlier per the firm’s annual surveys. The report also revealed a repeat purchase rate of just 15% for customers making online grocery purchases.

Why online grocery may be a fad:

  • Prices are too high
  • Consumers want to see fresh food items like meat and fruit before they buy
  • Limited or slow delivery service

Why it could be the future:

  • Ordering online followed by curb-side pickup at the store is gaining traction
  • Millennials are more open to online food buying and their purchasing power is growing
  • Baby boomers are aging and many can afford the convenience

At the moment, weak grocery online sales may be more of a demand problem than a supply issue as many grocer retailers offer the option of online shopping. Even so, online grocery sales represent less than 3% of the total.

There will likely be a niche for online grocery shopping, but it may be a small one, at least for now. The challenge is providing the extra service and doing it profitably. But demographic trends are favorable and if there’s a way to make it work, innovative powerhouses like Amazon and Walmart will likely find it.

Stay tuned.