CV-19 Insights

How COVID-19 is Supercharging Grocery E-commerce Growth



The Landscape of Grocery E-commerce Before COVID-19



Roughly 6 years ago, Google announced their predictions of when E-commerce would take off for a selection of industries – all of which would follow a similar S-curve. While certain industries like Air Travel and Media were set to peak early and have high penetration rates, Google predicted that Food and Grocery wouldn’t hit their peak until 2025 at which time 50% of business would happen through e-commerce. Prior to COVID-19, the grocery industry was well on their way to hitting that number in the coming 5 years.

Pre-COVID-19, saturation in grocery e-commerce varied widely across the globe. While Brazil, India and Germany were still newer entrants to online shopping, countries like the UK who have had e-commerce implemented for years already had a higher penetration rate. While South Korea may have had the highest adaption of e-commerce, China, the US and the UK historically had the highest value of online spend in the grocery category.

The grocery category was also predicted to be fastest growing channel across regions, particularly in these three high-value countries. The US was expected to see 152% growth, the UK had a predicted 66% and China 196%. E-commerce business has and will continue to be the biggest contributor to top line growth. The onslaught of the COVID-19 Pandemic only accelerated these predictions.

How Has COVID-19 Changed The Game?

China



While China has made it out the other side of the COVID-19 pandemic, it’s worth noting that a major Pure Player saw 3x YonY online growth in February a time in which restrictions were slowly beginning to lift. This is a sign that a traditionally “shop daily” market is morphing into bulk buying online due to COVID-19. While they may continue to buy fresh in store, we’re seeing the trend that consumers will continue to do their ambient purchases at a bi-weekly or monthly cadence online.

Europe

In Europe, online has accelerated since the beginning of lockdown. Since the start of the pandemic, Italy has been up 142%, France is up 74% for pickup and 93% for home delivery, and Spain is seeing a slightly smaller spike at 55%. Traditionally, the elderly population doesn’t shop online, but that has had to change- paving the way for new habits and potentially a continued increase in e-commerce adoption among that demographic.

UK


The UK was hit with 1.2 million online grocery orders in March – a trend that still continues on. This means that 20% of the UK population has transitioned to ordering online. While this caused a variety of issues at the start, retailers have been responding with speed to fix issues and handle the “new normal” of e-commerce demand.

US

Not unlike the UK, the US also saw a massive surge in grocery e-commerce, with 31% of US households shopping online. With a third of the population moving to online, this equates to a volume surge of 193% since August of 2019 – a mere seven months. What might be even more telling for the future of ecommerce in the country – 30% of new online grocery shoppers are likely to convert to solely using online for their weekly food shops.

So – What’s Going to Happen Next?

Looking into the coming months and years, we’ve identified some key trends we’re expecting to see play out:

  • Shopper behavior: There will be an acceleration of online into the everyday mindset as COVID-19 has brought a number of demographics online who hadn’t shopped that way before.
  • Retailer Investment: Retailers are already seeing that omnichannel shoppers are more profitable for them, so we will see an acceleration in investing into pickup and delivery.  
  • Integrated mindset: CPGs have to have the tools, capabilities, and mindset to understand what’s going on and how to plan on winning in this “new normal.” We’l see more suppliers working to shift their business to this mindset in order to stay profitable. 

When it comes to the success of Retail post-COVID-19, we’re betting on:  

  • Pure Players (Amazon, Alibaba, Ocado) who will continue to win given their E-commerce setup
  • Retailers that have omnichannel capabilities who will profit from the shift to online shopping
  • DTC and 3rd party “on Demand” fulfillment who will be seeing massive spikes in business

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