The primary competitive threat traditional grocers face isn't coming from established competitors like Peapod, but instead from Amazon and other “basket bandit” sites that siphon off sales and generate a steady stream of sales leakage, according to a new report from industry consultancy Brick Meets Click.
The Chicago-based firm's new report, "Supermarket Guide to Online Grocery Competition," provides a snapshot of the competitive landscape for online grocery to help supermarket management successfully navigate the opportunities and challenges that confront them in this emerging channel.
“Consumers have been spreading their online grocery shopping across more sites, and the increased availability of options is dramatically accelerating this trend,” said Bill Bishop, chief architect of Brick Meets Click and primary author of the report.
He added that Basket Bandits dominate the landscape today. This group consists of Amazon; several other online-only retailers such as Blue Apron, Thrive.com, Drugstore.com and Chewy.com; and the online “stores” of mass and club retailers.
According to the report:
- Basket Bandits capture 84 percent of online grocery trips, and take in 59 percent of all online grocery spending.
- Even with Amazon Fresh in limited rollout, Amazon captures nearly half of all online grocery trips (48 percent), compared with 15 percent for mass and club retailer sites, and 21 percent for non-Amazon sites.
- Since 2013, the percentage of shoppers who have bought groceries from Amazon in the past 30 days has increased 25 percent.
“We also found an Amazon multiplier effect,” said Bishop, “As online grocery trips per month increase, so does Amazon’s share of trips. They are continually working on making buying easier, and supermarkets need to respond.”
The Good News for Grocers
One-stop shopping clearly has a role to play in the online grocery landscape. The study found that multichannel supermarkets win a significant share of the online business once they get established in a market, and the same is true for direct competitors.
Eric Healy, president of Winooski, Vt.-based MyWebGrocer (MWG), which supported the research report, says that this important aspect "confirms that not only is the advent of digital grocery influencing consumer behavior in ways that impact share of wallet, but also suggests that brick-and-mortar grocers can still maintain the upper hand when capable of embracing a sound multichannel strategy."
By comparing shopper satisfaction scores, the report also identified where multichannel supermarkets are currently vulnerable, pointing to three important areas where supermarkets have an opportunity to improve:
- The ease of reviewing product information.
- The experience of receiving all of the items ordered.
- The consistent notification of substitutions
Download a free copy of the "The Supermarket Guide to Online GroceryCompetition" here.