Online grocers are either grocery stores with physical locations that allow online ordering or a standalone e-commerce service that includes grocery items. Most online grocers charge a delivery fee for the service, with most online ordering being done through e-commerce websites or mobile applications. Online grocery delivery services are often available in urban areas throughout Europe, Asia and North America, with some being provided in suburban communities.
Online grocery is split into two methods: local delivery and in-store pickup. Although both are processed through an online website or application and eliminate the need to physically shop, they differ in the amount of travel required by the customer. Local delivery allows customers to stay at their home or desired location (and usually requires a larger tip), while in-store pickup requires the consumer to travel to a physical location to pick up their groceries.
Delivery options are split up into three categories: delivery-only e-commerce stores, outsourced shopping delivery and traditional grocers that provide delivery.
- Delivery-only retailers (also know as dark supermarkets) usually have warehouses and/or distribution centers distributed to reach the largest area or consumer base. Delivery-only grocers may also utilize national delivery services to transport non-perishable groceries or frozen goods.
- Outsourced shopping and delivery services utilize applications which connect consumers to contracted local individuals, who purchase items from the store and deliver them to your home.
- Traditional grocers that deliver tend to cater to the specific area closest to them, usually designated as a range of miles around the store.
As more and more consumers work from home due to increased web capabilities and the novel coronavirus, consumers have begun opting for online grocery services instead of going to brick-and-mortar stores. E-commerce in the US grew 44% in 2020, with Americans spending over $861 billion USD online. Research and Markets predicts the online grocery delivery services market is due to reach over $663 billion by 2024, progressing at a compound annual growth rate (CAGR) of 25% in that date.
A grocery digital maturity benchmark survey by Incisiv indicates that Instacart is the leading online grocery delivery provider, accounting for 37% of the market share in 2020's third quarter. Behind them, Amazon (23%) and traditional grocers who deliver (23%) were chosen by those surveyed as the primary online grocery choice. Albertsons', the second-largest grocery store conglomerate in America, reported a 1,000% increase in curbside pickup during the second quarter of 2020 from the year before.
While delivery is becoming increasingly popular as the at-risk population avoids crowded areas, not all grocers are capable of providing the service. Instead many traditional grocers provide an in-store or curbside pickup, allowing customers to choose what they want and pay online. In fact, curbside and in-store pickup is quickly becoming consumers preferred option for grocery shopping, with Brick Meets Click survey data showing 54% of sales in June 2019 came from "click-and-collect" services.
Once they submit their order, workers ready the products for pickup and all the consumer has to do is show up and pick up their groceries. This option is usually cheaper than delivery, allows shoppers to choose their preferred grocer and is more widely available in suburban and rural areas.
E-commerce stores offering grocery delivery services offer delivery-only options for consumers, usually shipping their products from warehouses or distribution centers which are strategically located to reach the greater number of people. The goods are more likely to be frozen or non-perishable and less likely to contain fresh produce due to food regulations limiting their delivery times.
Some of these service providers do not sell their own food products, but instead act as marketplaces for consumers needing delivery and individuals who are willing to go to the store and shop for them. These products usually utilize a web application which allows customers to select the items they want purchased, and the ability to communicate with the person buying their goods in real-time to ensure product accuracy or allow substitute as needed.
Often times these services also allow same-day delivery, adding incentive for customers who require cooking ingredients that day but do not want to deal with going to the grocery store.
