Food and Drink E-Commerce in the US

2021 DEVELOPMENTS

As growth in US food and drink e-commerce sales comes back down to earth, curbside pickup gains a clear edge over delivery

In 2020, the COVID-19 pandemic boosted US food and drink e-commerce to previously unimaginable heights – with sales posting year-on-year growth in the triple digits – as consumers concerned for their health and safety sought ways to shop for groceries that allowed them to avoid having to enter bricks-and-mortar stores. Over the course of the year, two omnichannel fulfilment options in particular drove most of the sales gains.

DoorDash looks to take on Instacart

In 2020, perhaps no US company benefited as much from the unprecedented surge in food and drink e-commerce sales as Instacart. Instacart – a hyperlocal delivery service that had long specialised in partnering with grocery retailers to provide home delivery service from their stores – was something of a niche brand prior to the pandemic, catering largely to affluent consumers who could afford to pay delivery fees on groceries.

Gopuff builds on its position as an early pioneer of ultrafast delivery

Founded in 2013, US-based Gopuff – one of the earliest movers in the ultrafast grocery delivery space – continued to expand its reach in its home market in 2021. Gopuff’s business model is based on offering rapid delivery of snacks, household essentials and other convenience store fare in US cities.

PROSPECTS AND OPPORTUNITIES

Even as the pandemic era draws to a close, food and drink e-commerce sales will continue to grow

Over the last two years, the societal shifts engendered by the COVID-19 pandemic have led to an explosion in US food and drink e-commerce sales, with consumers embracing omnichannel fulfilment methods – such as curbside pickup and hyperlocal delivery – that have allowed them to purchase and obtain groceries without ever having to set foot in stores or other public places that might leave them at greater risk of contracting the virus or transmitting it to others. Even in 2021, as food and drink e-commerce sales growth decelerated sharply on a year-on-year basis – thanks largely to COVID-19-weary consumers in the US returning to pre-pandemic shopping habits with gusto – online sales in the sector continued to rack up impressive gains in absolute terms, with the growing popularity of the curbside pickup model proving to be an especially important sales driver.

Ultrafast delivery services emerge as a threat to corner stores and other traditional grocery retailers

One of the biggest stories in the US food and drink e-commerce space in 2021 has been the rapid advancement of ultrafast delivery services. Startups in the space, such as Gopuff, Buyk and Gorillas – which are overwhelmingly backed by venture capital – have proliferated across the US, offering customers delivery of snacks, toiletries and other typical convenience store fare in as little as 10-to-30 minutes.

Questions linger about Kroger’s Ocado strategy

As the share of food and drink sales taking place online continues to rise, US grocery retailers are being forced to reconsider the most effective methods they should use to fulfil omnichannel orders, with many now looking to move beyond partnerships entered into with third party services (such as Instacart) at the height of the COVID-19 pandemic in order to offer hyperlocal delivery from their stores. As the leading player in the supermarkets channel, Kroger is one of the few US grocery retailers that has the resources necessary to develop its own proprietary delivery infrastructure.