Online grocery has been of interest to many retailers and food brands for a long time, but it is an industry that is just starting to get hot. With legitimate concerns over the cost and consumer trust, it is worth looking at just how developed the service is now. After broadly outlining the basics of how online grocery works and who it is for worldwide, this report will dive deeper into each region, outlining the current state of the industry along with its most active markets and companies.
The last-mile problem has yet to be really solved for food. Grocers in this space mostly bake those costs into the model and eventually, the price. Therefore, online grocery so far is largely for people that put a premium on convenience. This includes affluent families that shop for larger baskets and time-pressed urbanites that need items immediately but can’t be bothered going to the store.
For many, online grocery it is still too pricey, which means that figuring out how to keep the price down is a top priority. This is partly why click-&-collect holds the most promise. However, it is also a category which people just are not used to buying online yet. Building up the trust needed so customers rely on someone else to shop for their own fresh food will take time and effort.
Volume is the most important metric in this business because it engenders efficiency and drives down costs for everyone. The more methods of delivery and pick-up people have access to, the more likely the service will appeal to more people. Smart players will focus on increasing access as part of a larger platform.
Some of the smartest companies that are trying to solve the high-cost issues of online grocery are those that are spreading the pain around. Forging partnerships to split the cost of delivery and investment has proven to be a good strategy. This allows costs to be spread across online and offline channels. The less these partners make shoppers pay, the better.
It has taken companies years to build the infrastructure and goodwill needed to run online grocery profitably. It took the leading pure player in London 15 years to do so. This means that the window is closing on becoming a leader in this space. Thankfully, technology can fast-track go-to-market strategies these days.
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