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Online Food Shopping and Grocery Delivery in the U.S.: Future of Food Retailing

  • October 2014
  • -
  • Packaged Facts
  • -
  • 104 pages

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Meeting at the crossroads of technology and service, online grocery shopping is one of the smallest retail segments for food and beverage, representing less than 4% of total online and offline retail sales. Yet it offers the grocery industry’s most exciting potential as the fastest- growing channel, with annual growth rates in the double digits forecast to bring the market to nearly $100 Billion in 2019. Grocers who fail to follow shoppers online do so at their own peril, as U.S. consumers become increasingly comfortable with shopping for groceries via Internet and reliant upon home delivery and/or easy pickup of pre-placed orders.

Of course, the online grocery business is not without challenges. These include how and by whom the orders are picked and assembled, how to deliver the orders to consumers on a timely basis while keeping delivery costs low (all the while, making sure that the proper temperatures are maintained until the groceries reach the consumer), and convincing consumers that buying groceries online is as good as—or even better than—shopping in person. For more than a decade, the notorious failure of Webvan scared many potential entrants away from the online grocery business. Now, despite the challenges, the field is swiftly becoming crowded with trials by competitors, although it is not yet clear which models are financially viable.

Packaged Facts’ new report, Online Food Shopping and Grocery Delivery in the U.S.: Future of Food Retailing, examines the potentials and pitfalls of this burgeoning retail sector. The first chapter presents an up-to-the-minute overview of the business, examining business models and consumer reception, among other factors, while reviewing historical sales and projecting market growth through 2019. The second chapter profiles more than 20 companies vying for a share of this business in the United States, from long-established services like Peapod and FreshDirect, to huge general merchandise marketplaces like Amazon.com (currently in a trial with the U.S. Postal Service to provide delivery of fresh groceries to consumers’ doorsteps), to brash startups like Instacart and Uber. The final chapter profiles the state of the online grocery industry in other countries while exploring possible ramifications in the U.S., specifically, the United Kingdom, France, China, Japan, and Australia.

Sources of information include primary research examining the websites of individual service. Secondary research involved evaluating and comparing data from more than 200 articles and reports found in financial, marketing and industry publications, as well as annual reports, 10Ks, transcripts of earnings calls, and literature from individual companies; government data from the U.S. Department of Agriculture’s Economic Research Service; and other Packaged Facts reports.

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