Online grocery shopping is already gaining momentum around the world, with a new survey suggesting that consumers are happy to use such services at least once a month.
According to research from The Boston Consulting Group (BCG) that I came across recently, online grocery shopping is expected to shoot up to $100 billion (£62.6 billion) by 2018, from $36 billion (£22.4 billion) at present. This translates into a compound annual growth rate (CAGR) of 23%. The growth will be primarily driven by young families and more affluent customers, who are grocers’ most valuable clients.
BCG polled 4,325 consumers across eight countries, including the UK. The study established that the global average number of transactions a year is 13.5, yet the rate varied greatly across regions. According to the researcher, the difference in penetration rates among countries had more to do with supply than demand. In markets where only two or three online grocers operate, penetration is increasingly stronger as they invest heavily in building and marketing their offers. Meanwhile, there are too many grocers embracing a wait-and-see approach instead of being first movers, which may have gained them an advantage and a competitive edge over rivals that enter the market later.
According to BCG, one of the major components of building a successful online grocery business is the need to act now and lock in customers, beginning with click and collect before transitioning to home delivery after achieving significant local scale. It’s also imperative for online grocers to ensure affordable differentiation by investing in the drivers of customer satisfaction, and to constantly adjust their models according to changes in the market and customer behaviour.