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.
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 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.
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.
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.
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 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.
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