Brick Meets Click: Half of U.S. Online Grocery Trips Go to Amazon

The supermarket/CPG marketing channel is being outflanked by a broad range of online retail options—but it’s hard to fight back until you understand who and what the competition is. Now that Brick Meets Click is releasing an evidence-based report on the competitive landscape for online grocery, the picture is a lot clearer. 

The Supermarket Guide to Online Grocery Competition reveals that the primary competitive threat supermarkets face online doesn’t come from the direct competitors like Peapod who are trying to win the customer away, but rather from the “Basket Bandit” sites that siphon off sales, generating a steady stream of sales leakage—and the biggest of these by far is Amazon.

“Consumers have been spreading their online grocery shopping across more sites, and the increased availability of options is dramatically accelerating this trend,” says Bill Bishop, Chief Architect of Brick Meets Click and primary author of the report.

Basket Bandits dominate the landscape.

This group is made up of Amazon, a host of other online-only retailers such as Blue Apron, Thrive.com, Drugstore.com, Chewy.com, etc., and the online “stores” of mass and club retailers. The Basket Bandits:

capture 84% of online grocery trips

take in 59% of all online grocery spending

Amazon dominates the Basket Bandits.

Even with AmazonFresh in limited rollout, Amazon captures nearly half of all online grocery trips (48%), compared to 15% for mass and club retailer sites and 21% for non-Amazon sites. Since 2013, the percentage of shoppers that have bought groceries from Amazon in the past 30 days has increased 25%. “We also found an Amazon multiplier effect,” says 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,” says Bishop.

There’s good news for supermarkets.

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 MWG (MyWebGrocer), which supported the publication of this report, says “This important research 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, multi-channel strategy. The complexity of building and sustaining a commerce-centric, digital ecosystem for today's consumers is, however, complex, and far more so than in other industries. We believe the vertical specialization of grocery, need for operational efficiencies as part of concerted 'Click & Collect' programs, and the ability to provide both highly personalized yet profitable ecommerce experiences for consumers will increasingly rely on third-party technology partners like MWG."

By comparing shopper satisfaction scores, the report also identifies where multi-channel supermarkets are currently vulnerable, and it points to three important areas where supermarkets have an opportunity to improve:

The ease of reviewing product information.

The experience of receiving all the items ordered.

The consistent notification of substitutions.