Lockdowns put e-commerce on steroids finds report
Lockdown pushes US consumers online to buy their groceries at a far faster rate than previous projections
Ecommerce’s share of the US grocery marketing will head over 10% of according to a projection by Fabric based off a consumer survey. This would be a dramatic upswing from the pre-crisis share of around 5% to 6% of the market and will place major pressure on supply chains to speed up and create efficiencies that can stop deliveries cutting into already slim margins.
According to a Deutsche Bank projection, US groceries were overwhelmingly bought online pre-crisis. They estimate that in 2019 4.6% of purchases were made online and that would rise to 5.7% in 2020.
However, a survey of US consumers suggests a massive growth in the number of purchases made online and their value that will sustain itself post-crisis. The growth represents such an acceleration that the market has almost doubled and a share of 10% of purchases will be reached four years earlier than the pre-crisis projection.
According to Fabric’s survey of US consumers, 52% have shopped for groceries online recently because of the Covid-19 pandemic and, critically, 20% are first-time shoppers.
Amongst this segment of never-before online grocery shoppers, 51% plan to do so in the near future because of Covid-19. In total, 70% of consumers said they’re more likely to continue shopping online for groceries because of Covid-19, suggesting that this elevated rate of online purchase will continue
Furthermore, looking at value, consumers reported increasing the proportion of their online grocery shopping by 95% during the Covid-19 crisis, nearly doubling their online spend.
Extrapolating out prior projections with these reported increases in volumes and purchase rates, Fabric estimates that online grocery sales penetration in the U.S. is currently around 9%.
According to their report they noted that “We expect the shift towards online grocery to further accelerate & believe online spend could triple or even quadruple…. As grocery sales increasingly shift online, we believe online penetration could easily be 12% or higher by the end of the year.”
This will place enormous pressure on supermarkets throughout the US, which are already struggling to cope with some of the disruptions to many areas of their supply chains, such as to meat processing and dairy.
Furthermore, e-commerce comes with significant additional expenditures, with the cost of picking and transport shifted from the consumer and back onto the supermarket chains.
This will mean that innovation and automation will be required on the part of grocers throughout their supply chains, with more investment into warehouse management and robotics and growth in areas such as pick-up and curbside delivery.