The Global State of Online Grocery in 2020

June 2020

In 2020, a momentous shift in consumer spending towards online grocery is underway. For legacy grocers to survive the unprecedented onslaught from retail giants such as Alibaba, Amazon, Carrefour, JD.com and Walmart, they must either develop their own omnichannel capabilities or cede their relationships with their customers to hyperlocal delivery partners. Grocery-focused brands must also adapt to the accelerated penetration of online grocery to position themselves for success.

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Key Findings

Online grocery stands on the verge of mass consumer adoption

The penetration of e-commerce into the grocery space has lagged most other retail sectors, but online grocery sales growth is now accelerating markedly as barriers to consumer uptake are rapidly tumbling around the world.

Asia Pacific is the largest and most dynamic regional online grocery market

Asia Pacific is by far the most important region of the globe in terms of the online grocery space. Not only does it account for the majority of worldwide sales, it also serves as an innovation hub, pointing the way forward for other regions.

Different service models and fulfilment models are proliferating in the space

There is not a single defined path to success for online grocery companies. Instead, there are multiple paths for these companies to follow. Online grocery players would do well to embrace multiple business models, as those that can reach the greatest number of consumers are best positioned for the future.

Cost, user experience, and scale remain the biggest impediments to online grocery sales growth

Despite the rapid recent online grocery sales growth, there are still a number of obstacles that are holding back e-commerce penetration in the grocery space. The three most glaring challenges that online grocery companies currently face are high costs, insufficient scale and negative user experiences.

Online grocery sales are now expanding rapidly in most emerging markets

Thanks to the rising availability of internet access, the growing ubiquity of smartphones and the efforts made by online grocery players to streamline their supply chains - which helps to reduce costs - online grocery sales are increasing in emerging markets around the world (albeit from a low base in many countries).

The COVID-19 pandemic will significantly accelerate online grocery sales growth

The COVID-19 pandemic has led to an unprecedented surge in online grocery sales around the world. Although some of the shift in consumer spending towards online grocery may prove ephemeral, a significant portion will be permanent.

Introduction

Scope
Key findings
About this briefing

The Basics of Online Grocery

Online grocery is rapidly moving into the mainstream
Online grocery shoppers across the globe tend to display similar traits (1)
Online grocery shoppers across the globe tend to display similar traits (2)
Asia Pacific leads the way in online grocery

Prevailing Business Models

Not all online grocery business models are the same
Three different types of companies operate in the online grocery space
Brands can benefit from working with all online grocery company types
Delivery and click-and-collect offer different models of convenience
Delivery extends the grocery store to customers’ doorsteps
Click-and-collect lets grocers use existing outlets to support online sales
Online grocery service models pose a test for brands that rely on impulse
Competing fulfilment models take shape in the online grocery space
Spotlight: Amazon takes a dual-pronged approach to perishables delivery
Grocery brands bypass the middlemen with direct-to-consumer offerings

Key Challenges and Opportunities

The complexity of the online grocery retail environment is increasing
Cost: online grocery’s single biggest problem
User experience: ensuring the quality of customer service
User experience: accurate product info drives repeat purchases
Scale: size matters, but smaller players can still succeed
Scale: e-commerce giants have gigantic grocery ambitions
Scale: hyperlocal delivery services exploit retailers’ deficiencies
Omnichannel relevance: making it part of everyday life
Omnichannel relevance: s uper apps power Asian grocery sales
Supply chain optimisation: the key to online grocery success
Supply chain optimisation: micro-fulfilment takes off
Sustainability: how is it manifesting in online grocery?
Sustainability: circular packaging goes mainstream
Market conditions should shape grocers’ primary online strategies

Regional Insights

Asia Pacific: regional overview
Asia Pacific: key countries
Asia Pacific: key companies
Spotlight: online grocery super apps are proliferating across Asia Pacific
Western Europe: regional overview
Western Europe: key countries
Western Europe: key companies
Spotlight: W estern European grocers move into consumer foodservice
North America: regional overview
North America: key countries
North America: key companies
Spotlight: curbside pick-up boosts online grocery sales in North America
Australasia: regional overview
Australasia: key countries
Australasia: key companies
Eastern Europe: regional overview
Eastern Europe: key countries
Eastern Europe: key companies
Latin America: regional overview
Latin America: key countries
Latin America: key companies
Spotlight: Wabi helps small grocery retailers in Latin America go digital
Middle East and Africa: regional overview
Middle East and Africa: key countries
Middle East and Africa: key companies
Spotlight: hyperlocal delivery attracts grocery partners in the Middle East

Impact of COVID-19

The COVID-19 pandemic is a watershed moment for online grocery
The example of MERS suggests a permanent shift towards online grocery
COVID-19 has had an immediate impact on the online grocery space
COVID-19 will have a lasting impact on the online grocery landscape
China points the way forward
Grocery retailers around the world have seen their online sales skyrocket
Many retailers have failed to keep pace with online grocery demand
As hyperlocal delivery sales surge, other delivery players take notice
COVID-19 forces more grocers to think seriously about dark stores
COVID-19 highlights the importance of direct-to-consumer initiatives

Conclusion

The future of grocery is online
Examining the top six trends shaping online grocery moving forward
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