Discounted loyalty programs continue to drive online salesDiscounted loyalty programs continue to drive online sales

Online grocery sales continued its meteoric rise in January, jumping 16.6% year over year to $10 billion, marking the sixth month in a row that sales topped $9.5 billion, according to the Brick Meets Click Grocery Shopper Survey, sponsored by Mercatus, released on Tuesday.

The positive numbers were largely driven by heavy discounts on memberships and subscriptions to loyalty programs. All three fulfillment methods—delivery, pickup, and ship-to-home—experienced year-over-year growth, according to the report. 

Delivery surged 37% in January to $4.1 billion, fueled by expansion of its active monthly user base (MAUs), rising order frequency, and a slight increase in average order value (AOV). 

David Bishop, a partner at Brick Meets Click, said mass merchandise stores, particularly Walmart, drove much of the growth in delivery for the month. 

“The ongoing waves of promotional tactics are having the intended positive impact on frequency and spend, and they are also increasing retention and share of wallet, which will make growth for their rivals more challenging going forward.”

Pickup experienced more modest growth at 4% to $4.2 billion. MAUs and order frequency declined for the month, but average order value picked up the slack, according to the report. 

Brick Meets Click said the dropoff in pickup was connected to the surge in promotional offers driving more delivery. Pickup dropped 500 basis points to end the month with 42% in online grocery sales. 

Meanwhile, ship-to-home was up 9% for the month, reaching $1.6 billion year over year. AOV declined year over year, but the MAU base and order frequency were both up, the report noted. 

Mass merchandise stores like Walmart made up half of all MAUs for the month, while supermarkets served a third, and hard discount retailers made up 5% of all MAUs. 

Cross-shopping, or spreading out grocery spend among multiple formats, remained a significant factor in January’s numbers, with a third of grocery shoppers also placing orders with mass merchandise retailers. That rate slipped half a percentage point for the month, however. 

Grocery’s repeat intent rate rose 6% year over year, a trend that was driven by improvements in pickup orders.

“Delivery’s impressive growth has been driven by membership promotions, but shoppers can easily shift platforms depending on which factor matters most to them—price, product, or convenience,” said Mercatus Chief Growth Marketing Officer Mark Fairhurst. “Grocers that prioritize seamless experiences, deliver personalized offers, provide exceptional service, and implement compelling loyalty strategies will be best positioned for sustainable, long-term growth.”