- Groceries are the biggest untapped opportunity in e-commerce. Americans spend $600 billion a year on food and beverages, the largest retail category by far, but less than 1% of those sales currently occur online.
- Online grocery sales are expected to grow at a much faster rate than sales at traditional supermarkets. We forecast that the online grocery market will grow at a CAGR of 21.1% between 2013-2018, reaching nearly $18 billion in 2018. Meanwhile, e-commerce at large is growing at an annual rate of approximately 13%.
- There are a number of disadvantages to buying groceries online on both the consumer and business side, such as the cost and complexity of logistics, shipping fees, and the quality and freshness of orders. For online grocers to deliver the freshness consumers want, they have to be able to deliver orders fast while maintaining the quality of easily damaged foods like produce.
But there are still some advantages to online grocery shopping, in particular convenience and a large selection of products. Only 15% of U.S. adults have purchased general food items online, but 25% said they have bought specialty food and beverages online, which are hard to find elsewhere.
- New startups that focus on concierge shopping and subscription prepared meals are innovating on the online grocery model and offering services that really are differentiated from traditional supermarket shopping. We believe these services could change the way people shop for food. In addition, established online grocers have an opportunity in enterprise grocery sales, which lowers costs through bulk purchases.
- Some of the biggest names in tech — Amazon, eBay, and Google — are beginning to offer and promote same-day delivery services. As consumers get used to the convenience of ordering something online and receiving it the same day, grocery e-commerce may benefit too, with people more likely to buy food they know they will get quickly. While same-day delivery comes with a big price tag, 25% of millennials said they would pay a premium for same-day delivery.
At $600 billion a year in sales, food and beverage is by far the largest retail category in the U.S. by a wide margin. However, it's also the category that has been the least disrupted by e-commerce; less than 1% of [...]