Online shopping of groceries has been picking up in the US steadily from the last few years. However, 2020’s global pandemic sped up the process by putting the online platform at the center for grocers.
In the U.S., online grocery sales surged by 40% in 2020. Almost 49% of shoppers reported purchasing more groceries online or started purchasing online in 2020.Among the 1652 US adults polled in April, 59% revealed they shopped online for groceries in the past 12 months.
So, there is a significant upsurge in the number of shoppers purchasing products online, indicating that the US grocery eCommerce currently has a meaningful share of full-basket grocery shoppers. Online sales are expected to hold onto at least 21.5% of total U.S. grocery sales by 2025.
Product Categories Sales Distribution
As overall online grocery shopping increased significantly, there is an interesting mix of the products that saw the most significant number of sales. When the consumers were asked about the items, they purchased the most online, household cleaning products topped the list, which was not surprising as people focused more on home hygiene during the pandemic. This is closely followed by the core perishable products that saw a significant rise from 2020 to 2022, such as:
- Fresh fruit and vegetables – 13.4%
- Fresh dairy, eggs, meat, and seafood – 10.3%
- Frozen food – 9.8%
- Bread and baked goods – 7.8%
- Alcoholic beverages – 6.1%
- Pet care – 6%
- Cold non-alcoholic drinks – 4.1%
- Hot beverages – 3.9%
- Chilled prepared foods – 2.6%
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Retailers Topping the Favorite List
Among the eCommerce retailers, the industry stalwarts such as Amazon and Walmart topped the online platforms frequented by the shoppers. Out of the number of online shoppers surveyed, 53.2% said they purchased groceries from Amazon in the past 12 months, while 50.9% shopped at Walmart. However, though Amazon tops the chart as the most-shopped retailer, online grocery shoppers buying on Amazon slid by 9.4% compared to 2020. Driven by a surge in contactless shopping, most grocers observed their business shifting online by 20 to 30%, thus providing more diverse choices to the shoppers.
Shifting eCommerce Modality
With the shift in consumer behavior and the significant upsurge in online shopping, the US online grocery market is also progressing towards a blend of instant, same-day, or click and collect. Online grocers provided a contactless shopping experience and accelerated a market shift with same-day delivery in the U.S.
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2020 has also seen a shift in consumer adoption of buying online and picking up curb-side as click and collect observed the highest increase in consumer intent. Apart from the modality, retailers adopted fast with the shift in consumer behavior and started offering lower service fees, greater availability of time slots, and the convenience of picking up while on the road. Click and collect is an emerging trend that is gaining popularity.
However, on-time delivery and mainly same-day delivery is still the preferred mode of fulfillment for consumers regarding grocery items.
Innovation in Fulfillment
As an eCommerce retailer/grocer, you need to remember that many consumers purchase online for convenience, hygiene, and protection. So, you need to step up and innovate your fulfillment services to beat the competition. The ideal step to upgrade your infrastructural facilities is to hire a Third-Party Logistics provider and build in-house capabilities. When your in-house team works in harmony with your 3PL partner, it empowers you with the correct setup to deliver on customer promise while being cost-effective and agile.
How an Efficient 3PL Partner can Help
An experienced 3PL is usually equipped to provide fulfillment services to grocery retailers. After all, not all 3PLs can handle the unique storage and fulfillment procedures required for food and grocery products.
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Here are certain factors you need to evaluate carefully to get into a strategic partnership with a 3PL for grocery fulfillment:
- Cold Storage Facility. One of the significant challenges for grocery fulfillment is a cold storage facility. With the rise of online orders, you require a blend of retail and industrial space with a more critical requirement for infill temperature-controlled facilities in proximity to consumers. So, ensure that your 3PL partner can provide cold storage space for quick delivery. If you are reaching multiple markets, then check with your 3PL if they have facilities in all those areas. Also, the most essential factor for evaluation is whether the cold storage space meets the specific temperature storage requirements of your products.
- Regulatory Compliance. All logistics providers handling food or food-related groceries must comply with stringent U.S. Department of Agriculture (USDA) and U.S. Food and Drug Administration (FDA) regulations. Before selecting your 3PL partner, ensure that their food warehouses are inspected by FDA and follow the guidelines laid down in the Food Safety Modernization act within the last three years. Following the FDA or USDA regulations are crucial else it might lead to damage to your business.While you are in the evaluation process, check for the Good Manufacturing Practices (GMP) certification for food-grade warehouses. This is required to ensure that your 3PL partner operates at a level higher than the government’s regulatory baseline.
- Technology. The most important element of online grocery sales is that it requires fast and accurate picking to ensure your consumers receive all the goods they ordered. This is crucial for you to stay ahead in the current competitive market where more retail players seek market share in the grocery eCommerce space. To ensure success in this space, it is critical to be equipped with advanced technologies for regular updates and accurate analysis.Nowadays, any modern food-grade warehouse relies heavily on an advanced and sophisticated warehouse management system (WMS) to process online orders through picking, packing, and shipping. A professional food 3PL has an efficient WMS to manage all activities such as returns, recalls, and batch and lot tracking without any major hiccups.
With online grocery shopping surging to record levels in the U.S. from 2020 onwards, it will be crucial to note how well online grocers meet consumer demand, and that will play a significant role in determining the top online grocers going forward. Many grocers choose to go into a partnership with the industry giants such as Amazon and Instacart to reach out to the online market. Such partnerships bring them to scale, infrastructure, and capabilities that would otherwise require a lot of time for them to build. For others, however, there is always the option to partner with an expert 3PL proficient in food and grocery delivery and ensures scale, infrastructure, capabilities, and technological acumen with more freedom of operations. Choose your option as per your business requirement.
XPDEL is a leading hi-tech provider of fulfillment and logistics services, on a mission to enable growth for eCommerce companies. We are futuristics in our vision and constantly work on creating technology that helps us meet customer expectations for today and tomorrow. We have a widespread network of fulfilment centers that enables us to efficiently handle nationwide delivery in the US – same day, next day, 2-day delivery. Being closer to the end consumer, we deliver much faster than others.