Online Grocery Market

The primary drivers of the growth of the global online grocery market are the increased technological developments, a surge in promotional activities employed by major players, a broader target audience, and increasing per capita disposable incomes. However, the underdeveloped capabilities of online grocery players and product recalls are set to curb the growth of the online grocery industry globally. Nevertheless, the incorporation of newer technologies by key players in the industry is expected to create lucrative opportunities for the players in the global online grocery market.

Several technological developments, such as the rise of automated fulfillment centers and new delivery solutions, facilitate the delivery speed and further help position online stores as quick and convenient solutions. The increasing competition for larger online market shares is expected to result in reduced lowered order sizes for free delivery and innovative solutions for the last-mile network, which is further expected to reduce costs and increase accessibility. A lot of new entrants are setting up their space in this industry by using advanced methods and techniques to lure their customers. For instance, in April 2020, Walmart Inc., in collaboration with Nextdoor, Inc., launched the “Neighbors Helping Neighbors” program to make it easier for neighbors across the country to help one another during the COVID-19 pandemic. With this program, the Nextdoor member can request assistance or offer to help someone with shopping for their essential items at Walmart. Thus, the increasing technological advancements are expected to drive the growth of the global online grocery market during the forecast period.

Technological innovation is one of the crucial factors in measuring the success of online grocery stores. Advancements in freezing technologies and better and faster supply chain solutions have resulted in an increasing demand for fresh and frozen food. Regions with cold climates have been relying on natural food freezing, such as using winter frosts to prepare frozen food. In contrast, in regions with temperate climates where the preservation of ice and snow is difficult, suppliers have adopted artificial cooling methods. Over the last few decades, freezing techniques have improved and have become efficient and more cost-effective. The use of mechanical freezers, cryogenic or flash freezing, and other technologies are developed and used by several key industrial players. Thus, the adoption of advanced technologies is expected to create an opportunity for the players operating in the global online grocery market during the forecast period.

In the online delivery model, various players are pushing for faster and more flexible delivery solutions. To stay competitive in this developing environment, grocery retailers need further to optimize their fulfillment processes, including automated distribution centers. Additionally, innovative solutions for last-mile delivery and third-party delivery are offered by few established players. Owing to the underutilized online capabilities, several players lag in this growing trend of online grocery sales and delivery. Thus, the underutilized online capabilities of the market players are expected to restrict the growth of the global online grocery market during the forecast period.

Although the customer demographics for online grocery remain positive, a significant challenge faced by this industry is the domination of well-established traditional stores, including supermarkets, hypermarkets, convenience stores, and departmental stores. Virtual baskets do not necessarily mirror physical ones. The relationship between the two is often inverse, which, to an extent, decreases the preference rate of customers. Consumers have embraced the idea of buying certain packaged goods online. However, some categories are simply better suited for traditional retail channels. Online grocery has several benefits, but physical stores also have strong key advantages over e-commerce, especially when it comes to fresh foods. Aside from the obvious in-store benefit of fulfilling immediate shopping needs without paying shipping fees, there are compelling sensory experiences that are impossible to replicate online. It is also difficult to match the power of human interaction that physical stores can provide. All these factors are sure to create a challenge for players in the global online grocery market.