The high street retail industry has seen quite a bit of highs and lows in terms of customer demands in the past few years. Online shopping became a big thing after the Covid-19 pandemic restricted people to stay at their home. While experts were starting to consider brick-and-mortar retailers as a thing of the past, customers still returned to get their groceries physically. That being said, online retail has seen significant growth, and the coronavirus pandemic has been one of the key drivers for its rapid adoption.
As per a recent study, the next decade will see a spike in online grocery revenues. The global growth of eCommerce is primarily driven by the increasing use of mobile devices by customers. People get a chance to avail of discount coupons and receive push notifications for the availability of their favorite products, making online grocery platforms increasingly popular.
1. The global online grocery shopping market size is expected to grow to USD 2,158.53 billion by 2030, at a CAGR of 25.3% from 2022 to 2030.
2. The global online grocery market size is projected to reach Multimillion USD by 2028.
3. There are over 26 million eCommerce sites in the world, with more being developed every day.
The global e-commerce boom and the rise of online shopping platforms have completely transformed the way people buy their groceries. Social distancing became quite a common word during the Covid pandemic and contributed to different outcomes for every industry. For the online grocery shopping sector, the change was positive. As customers were introduced to a new way of doing their groceries online, they quickly began to show a permanent preference for contactless shopping.
Most retailers have had to restructure their product lines and operating models to cope with the changing customer demands. Not only that, customers in general became more tech-savvy during the pandemic. They tend to rely on digital solutions to get everyday processes completed. Online shopping platforms capitalized on the growing demand for grocery delivery services, which resulted in the obvious growth of the e-commerce industry. The ideal combination of flexible payment options and the delivery of groceries to their doorstep was something that customers were bound to stick with.
4. 87% of customers say that they use their mobile devices for doing their grocery shopping online
The mass adoption of advanced technology in smartphones has made various daily tasks like payments, ridesharing, and shopping much more convenient. When it comes to customers, convenience is clearly the decisive factor in turning them towards online shopping. Buying their groceries online means they don’t have to worry about fuel costs, traffic jams, and parking.
In many cases, online grocery shopping comes free of delivery costs. That way, online grocery shopping services are available for those individuals who face difficulties in visiting brick-and-mortar stores, like the disabled. Technological advancements in the form of speech recognition software, magnifiers, and text readers have allowed handicapped persons to do their grocery shopping just like everyone else. The same can be said for pregnant women and mothers of newborn children, who find it challenging to travel to the nearby supermarket. Furthermore, customers who do not own vehicles and have to book uber or call a taxi to get their groceries find it much easier to shop online. Considering all kinds of individuals who need to do their groceries, there are also millennials.
5. 51% of Millennials say that they would switch brands if they were offered flawless digital services.
As it turns out, today’s retail businesses are on their toes and need to stay updated with ongoing and upcoming trends to ensure that they offer the most convenient services. Customers, especially millennials, have a lot of options to choose from - and it doesn’t take too long to switch to another brand and order online groceries from there.
6. 72% of customers say that they would opt for online grocery shopping just because it is more convenient.
While the online shopping boom was initially attributed to health concerns during the Covid pandemic, the trend has caught on quite well. 45% of surveyed customers say that time saving is one of the chief reasons for buying groceries online. A further 30% of customers said that their online grocery shopping habits were influenced by the pandemic but have stuck with them even after the restrictions were lifted.
<div id="Grocery_Shopping_by_Channel" fs-test-element="Grocery Shopping by Channel"></div>
Grocery Shopping by Channel
Grocery retailers big and small strive to offer their customers convenient delivery options through online platforms. In 2022, there will be a significant increase in the number of grocery items bought online, including snacks, packaged foods, and self-care products. According to statistics, fresh produce, breakfast and dairy items, staples, and cooking essentials lead are the most purchased items from online grocery stores.
Online vs. Offline Retail
7. More than 60% of offline grocery shoppers consider switching between brands.
According to studies, shoppers who buy their groceries from brick-and-mortar stores tend to search for more new brands as compared to online grocery shoppers. Customers are more inclined towards trying new items if the shop’s atmosphere is lively. Moreover, the presentation, placement, and packaging of products are more likely to have an effect on offline grocery shoppers. Various offline retailers design their marketing strategies around the fact that customers are attracted to well-presented products and services.
8. Retailers that offer minimal online grocery shopping services have experienced a decline in sales.
The reason for the decrease in sales is that customers are provided with limited available options and often face inconvenience when they visit a store to find out that their desired product is out of stock. For these retailers, omnichannel solutions can play a significant role in customer satisfaction and retention. With omnichannel retail, customers can shop for their groceries online and check the availability of items at a glance.
9. In the US, around 150 million shoppers prefer online grocery delivery over in-store shopping
Online grocery stores strategize while keeping in mind Gen Z and Millennials as these generations are highly familiar with and used to modern technology.
10. 40% of Millennials and Gen Z subscribe to various online delivery services in the US.
<div id="Online_Grocery_Market_Size_by_Region" fs-test-element="Online Grocery Market Size by Region"></div>
Online Grocery Market Size by Region
In its initial stages, online grocery shopping only attracted the younger generation. However, after the pandemic, a larger customer base began to do their grocery shopping online. As a result, the world witnessed a rapid shift to digital platforms, forcing retailers to not only include new products in their stores but also offer convenient ways for delivering them to customers. Here, we take a region-wise look at the online grocery market segment.
The eCommerce industry has gained traction over the past few years in Asia. Grocery delivery services are now available by customers for all kinds of items including food, beverages, personal care products, and household goods. Numerous sales channels are used for purchasing groceries online, but the most profitable way has proven to be omnichannel retail. Omnichannel retailing has allowed businesses to attract new customers, retain the old ones, and build brand loyalty by providing convenient services.
Asia’s online grocery revenue is estimated to grow to 248.50 billion USD in 2022.
The annual growth rate for online grocery revenue (CAGR 2022-2027) of 16.28%, resulting in a value of 528.20 billion USD by 2027.
The market's largest segment is grocery delivery with a projected market value of 188.70 billion USD in 2022.
In global comparison, China is expected to generate the highest revenue (171.00 billion in 2022).
The average revenue per user (ARPU) in the Grocery Delivery segment is projected to amount to 325.30 USD in 2022.
In the Grocery Delivery segment, The number of users is expected to grow to 1,288.2 million by 2027.
User penetration in the Grocery Delivery segment will be at 17.0% in 2022.
The Middle East
For the past decade, the Middle East has been considered a growing financial hub with huge potential for investments. Back in 2015, the middle east eCommerce sector contributed to only 0.4 percent of its GDP. However, it was still predicted that it would become one of the biggest global e-commerce markets by 2020.
11. The middle east e-commerce sector generates revenues of about $24 billion today.
12. With an online population of 1,448,471,400, the UAE is expected to increase e-commerce spending by an additional 22.32% in 2022.
With the changed purchasing behaviors of customers after the pandemic, the Middle East e-commerce sector has become the fastest-growing market in the world. A report by EZDubai has shown that the Middle East has established a foothold to boost e-commerce development pertaining to high GDP and internet penetration.
13. The UAE and Qatar have the highest GDP rising above $40,000 along with an internet penetration of above 90 percent.
E-commerce in the MENA region is rapidly growing and getting closer to superpowers like China as numerous online retailers adopt highly-optimized online solutions to scale their businesses.
According to a US survey polling over 11,000 customers, 72% say they now buy more groceries online than before the pandemic. Even though online shopping giant Amazon plans to open several new large-scale department stores across the US, the popularity of online grocery services cannot be ignored.
14. Between 2023 and 2025, US online grocery sales are expected to grow at a rate of 18% per year.
Interestingly, only 48% of customers were doing at least some of their grocery shopping online in 2018. The number has clearly increased, but what’s more impressive is that 28.3% of customers polled in 2022 said they did almost all of their grocery shopping online.
15. 54.3% of the 2,100 US adults surveyed had purchased groceries online in the past 12 months
16. The number of online grocery shoppers in the US is also expected to rise to 147.8 million in 2023 and grow further to 151.5 million in 2024.
Studies show that Walmart and Amazon topped the charts as the best online grocery stores in the US in 2022. It doesn’t come as a surprise because these two giants are also the two largest retailers in the US when it comes to numbers of sales.
17. Walmart’s online grocery sales are expected to touch $37.62 billion by the end of 2022.
If that happens, Walmart will be ahead of Amazon for the third year in a row in terms of online grocery sales. In 2020, the giant’s online grocery sales surged by a shocking 84 percent, thanks to the Covid-19 pandemic. Similarly, Amazon’s online grocery sales are expected to hit $345.1 billion by the end of this year, making it the second biggest player in the industry. Market experts say that the growth of Amazon in the online grocery industry is because of its acquisition of Whole Foods. However, it still needs to step up its game as market rivals adopt innovative digital practices for enhancing customer experience. According to studies, 131 million US citizens have reported doing their groceries online.
18. Walmart and Amazon collectively generate a revenue of $72.7 billion in online grocery sales.
19. Online grocery shopping app downloads have increased by more than 200% in the last 2 years.
20. Online grocery sales revenue in the US will reach $187.7 billion by 2024.
According to recent studies, Great Britain is the most advanced eCommerce market in the EU. Only a small portion of the population comprises non-digital grocery shoppers. It’s no secret that the UK’s fast-paced adoption of online grocery shopping platforms has made the digital-first approach a norm.
21. The UK has around 60 million e-commerce customers in 2022.
Quite naturally, having the continent’s biggest e-commerce market means that the UK’s retail sector is also the most lucrative in the whole of Europe.
22. Online sales constituted nearly 30 percent of overall retail sales in the UK in 2021, over double the amount from exactly one decade prior.
23. Due to the coronavirus pandemic, in 2020, internet retail sales grew by 47 percent, the fastest rate recorded in the previous ten years.
Initially, the rapid growth of e-commerce was attributed to the restrictions brought forth by the pandemic. However, the UK’s online retail market is forecast to grow at a steady rate in the coming years throughout all segments. Online shopping platforms in the UK are particularly popular in the fashion category, which generates the highest revenue and is expected to continue the trend every year till 2025.
24. Recent government figures show more than 1/4th of sales in the UK related to textiles, clothing, and footwear are from online retail platforms.
After fashion, electronics is the category that makes the highest revenue. Amazon is the UK’s leading platform in terms of online electronics sales. The primary reason for the popularity of online retail platforms is the convenience of comparing different products such as smartphones and getting details about their features at a glance.
<div id="Who’s_Winning_the_Online_Grocery_Race" fs-test-element="Who’s Winning the Online Grocery Race"></div>
Who’s Winning the Online Grocery Race
Grocery is the third segment after fashion and electronics that attracts the highest number of online customers.
25. In terms of revenue, online grocery platforms contribute to more than 40% of the total, which is more than any other segment.
26. Going by the numbers, the online grocery market is expected to grow to a whopping $209.28 billion by 2026. The growth rate is expected to be 24.8%.
Talking about online grocery stores, Chinese platforms like Alibaba are tough to beat in Asia. In the US, Amazon, Walmart, and Target are the leading online grocery retailers. Not to mention, Google is also not far behind when it comes to online grocery platforms. The collective global competition among their players resulted in the 41% growth in eCommerce during the Covid pandemic, which gives a clear idea of how the numbers will rise in the coming years.
Considering the statistics covered in this blog, it is safe to say that online grocery shopping is here to stay. Shoppers simply find it more convenient to order their groceries online and get them delivered without having to go anywhere. Online retailers keep an eye on the changing trends to stay ahead of the competition by offering personalized suggestions based on frequently purchased items and products added to the cart.
Online retailers can offer seamless customer experiences by adopting an omnichannel retail model, where they can efficiently manage inventory, supply and demand, and get information about every online and offline brand under one dashboard. Furthermore, hyperlocal grocery delivery solutions assist retailers in fulfilling their daily, weekly, and monthly targets and boost sales.