News

Digital grocery sales on healthy growth path

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October 1, 2019

Digital grocery order sales is predicted to double by 2021, hitting $150 billion by 2025, as the number of grocers offering click and collect and third-party delivery will grow 150% in the next two years.Digital grocery sales will account for 14% of overall grocery sales.

Those are top findings from a research report, "Online Ordering in Grocery: State of the Industry Benchmark," from research firm Incisiv.

Additional, findings, according to a press release, include:

• Most of the growth is net-new revenue, as 82% of retailers reported digital sales did not cannibalize in-store sales.
• Online grocery ordering today is largely unprofitable. Other than shipping from distribution centers or drop-shipping by vendors, all other forms of online order fulfillment (third-party delivery, click & collect and curbside) negatively impact profit margins.
• Lack of real-time inventory visibility and increased store operations complexity reduce digital profitability. The grocery industry loses $2.5 billion in revenue and $800 million in profit each year due to inaccurate inventory visibility and inefficient fulfillment processes.

"Online ordering is driving unprecedented changes in grocery retailing at a very high rate of speed, and grocers are scrambling to find the right model for their business," said Gaurav Pant, co-founder and chief strategy officer, Incisiv, in the release. “As we've seen, online ordering can be a double-edged sword that increases revenue but also puts pressure on grocers' already thin profit margins. Grocers must turn one-time online shoppers into loyal customers while reducing the cost of operations. This report offers pragmatic advice on how to best navigate the online ordering and delivery requirements facing the industry."