Increased delivery, pickup use hoists U.S. online grocery sales

Fueled by a surge in delivery and pickup purchases, U.S. online grocery sales shot back up in January after declining from an early summer peak, according to the Brick Meets Click/Mercatus Grocery Shopping Survey.

Online grocery sales totaled $9.3 billion in January, up 15% from $8.1 billion in the previous survey in November, Brick Meets Click said Monday. Delivery and pickup orders accounted for $7.1 billion, or 77%, of online grocery spending in January, up 16% from $5.9 billion, or 73%, in November. Ship-to-home sales held at $2.2 billion from November to January.

The January gain stems mainly from 16% growth in the number of households buying online, Brick Meets Click said. Overall during the month, 69.7 million U.S. households placed an average of 2.8 orders via delivery, pickup and ship-to-home services.

Last March — when the United States declared COVID-19 a national emergency — online grocery delivery and pickup sales had doubled to $4 billion ($6.5 billion including ship-to-home purchases) and then reached an apex of $7.2 billion ($8.8 billion including ship-to-home) in June, reported Brick Meets Click, a Barrington, Ill.-based strategic advisory firm that analyzes digital technology’s impact on food sales and marketing.

In the January poll, Brick Meets Click and grocery e-commerce specialist Mercatus surveyed 1,776 U.S. adults from Jan. 28 to 31 who participated in their household’s grocery shopping and made an online grocery purchase in the previous 30 days. The study included retailer, third-party and pure-play online grocers for delivery transactions; in-store, curbside, drive-up and locker options for pickup orders; and parcel couriers such as Federal Express, UPS and the U.S. Postal Service for ship-to-home service.

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Among total household monthly active users in January, 78% used a delivery or pickup service, up from 64% in November, while ship-to-home usage fell to 46% from 56%. Still, overall online grocery use in January fell well short of the record 76.7 million households who shopped online in April 2020. when much of the nation was living under stay-at-home orders, Brick Meets Click noted.

“Even though many grocers remain capacity-constrained, especially with pickup, others are growing market share as they staff up or expand pickup to a larger store base,” Brick Meets Click partner David Bishop said in a statement.

Delivery and pickup accounted for 66% of all online orders in January and gained almost six percentage points of order share, the Brick Meets Click/Mercatus survey found.

Delivery and pickup gained almost six percentage points of order share in January, representing 66% of all online orders in the month, although the average number of online grocery orders by monthly active users remained at 2.8, essentially flat versus November. At the same time, average order value declined nearly 11% in January from November, based on aggregated spend rates across the delivery, pickup and ship-to-home segments. 

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“While throwing more labor at the issue isn’t ideal, this — along with improving assembling productivities via enhanced pick-and-pack practices — is vital to remaining competitive in the near term and not inadvertently giving your customer a reason to shop elsewhere,” Bishop explained.

Indeed, sharp declines in the study metric “likelihood to use a specific service again” tempered strong gains in the number of households using online grocery shopping in January, Brick Meets Click pointed out. The indicator — measuring the share of customers “extremely or very likely” to place another online order with the same provider within the next month — sank over 32 percentage points to 56% in January following a record-high level in November. Pickup saw the biggest drop in the “likelihood to use again” metric, falling 35 percentage points from November to January.

“It’s clear from the data that retailers will face a challenge in holding onto a lot of online shoppers, as experience is not meeting expectations,” according to Mercatus President and CEO Sylvain Perrier.

Retail conditions, as well as shifts in the customer mix, account for some of the decrease in online grocery shopping repeat intent scores, the Brick Meets Click/Mercatus survey revealed. 

In January, the share of first-time customers — who have consistently reported lower intent rates in past surveys — rose three percentage points overall and more than six points for pickup from November. Meanwhile, the intent-to-repeat rate for experienced shoppers dropped nearly 18 points in January from November, with retail conditions causing lower customer satisfaction, Brick Meets Click said. First-timers are defined as shoppers who place their first order with a specific service within the last three months, and experienced customers are those who made at least four orders with a service over the previous three months.

“To remain competitive with mass merchandisers, regional grocers need to enhance the digital shopping experience so as not to give their customers a reason to spend their money elsewhere,” Perrier added. “Grocers have to look at where they can improve operationally, how they can efficiently scale to meet online demand, and which services will be most effective at revenue protection going forward.”