Digital grocery sales hit $31B in Q1, but grocers still have work to do

Digital grocery sales were up 5.2% year over year in the first quarter of 2024, reaching $31.4 billion, but nearly nine out of 10 grocers remain dissatisfied with ecommerce profitability, according to Grocery Doppio’s State of Digital Grocery Performance Scorecard. 

Overall grocery sales, 13.7% of which were made through digital portals, were also up, growing 6.7% year over year to $230 billion. 

The average digital grocery basket size climbed to $177.20, up 6.1% compared to a year ago, and the number of items in each basket increased by two. 

Inventory performance also improved with 72% grocers reporting progress over the same time last year. 

Nearly a quarter (23%) of grocers said digital profitability has improved over last year, while 69% said it has remained the same, and 8% said it’s gotten worse year over year. 

The cost of picking groceries and fulfilling the orders was identified by 83% of grocers as the biggest challenge to increasing their profitability. That’s followed by the cost of delivery and logistics at 73%; the volume of orders at 71%; the cost of customer acquisition at 66%; and both third-party marketplace fees and pricing/promotional strategy at 63%.

Most grocers (89%) voiced dissatisfaction with the profitability of their digital business, with picking inefficiencies as the main culprit at 86%. 

Grocers added that reducing third-party dependence (77%) is the second biggest path to improving ecommerce profits, followed by both renegotiating logistics/delivery costs and monetizing retail media at 69%; increasing private label products at 65%; and introducing membership models at 41%.