Online grocery shopping is rapidly expanding and according to analysis could become a $100 billion industry by 2020 with as many as 70% of consumers potentially doing a portion of their food shopping online, and Walmart is looking to expand in this area.
Walmart Inc., the country’s biggest grocery retailer, recently announced that it was expanding drastically the number of places where shoppers can place food into a virtual shopping cart and have their purchases delivered, Bloomberg reported.
Food and beverage retail is one of the largest categories of consumer spending, accounting for yearly sales of $800 billion or more in the U.S., however online shopping for groceries and similar goods accounted for just 1.5 percent of the U.S. market, according to Kantar Worldpanel.
When Amazon announced the purchase of Whole Foods for $14 billion in June, most of the major grocery retailers jumped into the online grocery realm. Target Corp. late last year purchased delivery startup Shipt and said recently that it would offer same-day delivery of assorted groceries and other goods from the majority of Target stores this year. Supermarket chains Kroger Co. and Albertsons Cos commenced their online grocery service, in addition to Costco Wholesale Corp.
Walmart has the largest share of the $800 billion U.S. groceries market in a highly fragmented market. This year they will expand their online grocery delivery from six markets, to 100 metro areas.
While home delivery is popular, the shipping process itself has made the business of online grocery shipping quite complex. Many retailers are investing in “click-and-collect” shopping, which lets customers order groceries ahead of time, pull up curbside at the store and have an employee place the shopping bags in the trunk.
Food Marketing Institute and Nielsen determined in their study that online grocery shopping could be a $100 billion industry, and as many as 70 percent of consumers could be doing a portion of their food shopping online.
“Depending on what happens the next two or three years, we may revise it again… food is like the holy grail because we all have to eat. Food has, categorically and broadly speaking, more trips than other category, consumers can relate to it easily, and it’s is an area of growth”, Mark Baum, the chief collaboration officer at FMI told ABC News.
Still, there are many factors and logistics that make online delivery a challenging area. Managing large numbers of employees that pack items from traditional stores to pack for home delivery, could result in the need to invest in dedicated warehouses optimized for online orders. Amazon reportedly blamed mishaps with U.S. Postal Service deliveries for its decision to curtail Fresh deliveries in a few areas.
With Walmart, America’s largest retailer, placing emphasis on online grocery shopping as a response to Amazon’s aggressive expansion, and other major grocers jumping in; online grocery delivery should live up to its expectations set by the experts.