US ONLINE GROCERY SHOPPING
A Fresh Look at a High-Growth Channel
August 2013
1
A
Service
KELLY TACKETT
Research Director
Contents
1. Introduction
2. Grocery e-commerce shopper assessment
3. Competitive landscape
4. Outlook and implications
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1. Introduction
1. Introduction
Currently, only a tiny portion of US consumer spending on grocery is
occurring online. Planet Retail estimates online grocery spending totals
USD25.86 billion, or roughly 1.3% of total category spend.
Additionally, health & beauty represents more than two-thirds (67.9%) of current
online grocery spending.
 While health & beauty specialists
and drugstores bolstered their online
presence during the past decade, traditional total online grocery spend
supermarkets largely ignored the channel
and pure-play e-tailers focused on the fresh
component of the grocery offer worked to fine-tune
the business model – characterized by high
operating costs, low margins and high shrink rates so as to avoid replicating the colossal failure of
channel pioneer Webvan during the dot-com bust.
health & beauty
$25.86bn
67.9%
 On the demand side, shoppers’ accessibility to the
grocery category offline has only increased during
the past decade, with the proliferation of retailers
selling food (e.g. dollar stores, drugstores,
warehouse clubs) as a traffic driver.
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1. Introduction
Changing forces in both supply and demand, however, suggest strong
growth potential for online grocery retailing.
Key drivers of supply:
 An increasing variety of e-commerce
grocery operating models that are
lowering the cost of entry.
 An increase in interest in e-commerce
by expansion-minded mainstream
supermarket retailers that have little
domestic runway left for their
traditional formats.
Peapod, the Ahold-owned online grocery retailer,
opened a click & collect format in partnership
with Ahold’s Stop & Shop banner in August 2012.
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The Peapod Pick-Up
program picks items
from a Peapod
stockroom and
delivers them to a
storage locker at the
side of the store.
Amazon quietly
launched its
Amazon Fresh
grocery delivery
service to California
in late June 2013.
© amazon.com
 The entrance of e-commerce giant
Amazon.com and mass retailing
behemoth Walmart into the channel.