Online Grocery Is Growing. Here Are the Trends on Amazon, Walmart

Cassandra Shaffer

March 5, 2020

In a world where convenience is king and you can buy pretty much anything from the comfort of your couch—new clothes and shoes for growing children, a new shower caddy for your bathroom, any kind of food you want—it’s logical that the next step in ecommerce is grocery shopping. 

Online grocery a growing trend

According to Brick Meets Click, online grocery sales accounted for 6.3% of all grocery shopping done by United States households in 2019. Brick Meets Click predicts that percentage will rise to 7% this year.

While it’s a small percentage at face value, it represents a growing trend: while overall grocery sales remained stagnant, Brick Meets Click reported, online sales grew 15% on a year-over-year basis.

“This is a growing trend because of convenience to the customer, overall shifts to online spending, etc.,” said Clark Kleinman, Senior Brand Manager at Pattern. “Stores and retailers need to be on top of it or risk falling behind.”

Currently, Walmart is at the head of the pack when it comes to selling groceries online. As of November 2019, Walmart offered online grocery delivery from about 1,400 stores and increased the number of pickup points for online orders to 3,100, an increase of 47.6%.

Amazon No. 2 for online grocery, but No. 1 in customer satisfaction

The Retail Feedback Group found in a survey of online shoppers that Amazon comes in at No. 2 for online grocery shopping. In terms of customer satisfaction, however, the survey found Amazon comes in at No. 1.

Amazon Fresh and Prime merged early 2018, and in October 2019 the company announced “ultrafast grocery delivery” service from Amazon Fresh and Whole Foods Market would be free with a Prime membership. Without a Prime membership, grocery delivery costs $14.99 a month.

online grocery trends on Amazon, Walmart

Challenges for Amazon grocery

The thing that’s really holding back Amazon from overtaking Walmart is Amazon doesn’t have the same kind of large store footprint that allows grocery delivery and pickup to be an option in multiple locations. Amazon is taking steps in this direction as well, though, announcing in October 2019 that it now offers fresh grocery delivery in more than 2,000 U.S. cities and towns, with plans to continue to expand the service. 

One of the major challenges facing Amazon when it comes to online grocery delivery is simple: fresh products can’t be stored in warehouses for a long time and there are other logistics to consider when delivering food items that might expire in the heat. 

The second challenge is the fact that other grocery chains, notably Kroger and Albertsons in addition to Walmart, have already begun to add grocery pickup and delivery to their business. Other, smaller chains will likely enter the ecommerce grocery space as well in 2020. 

“Any grocery brand that is not participating in ecommerce grocery programs is leaving revenue on the table,” Kleinman said. 

How brands can take advantage of online grocery

As for individual grocery brands looking to increase profitability online, Kleinman noted a few factors to focus on. 

First, because of the low price point of many grocery items, it may be necessary to bundle items to achieve profitability on Amazon, for example. Brands like Yogi Tea have found success by focusing on 6-pack cases, or other case sizes that are offered at the same per-product price as their in-store counterparts. 

Second, it’s important that brands are aware of and involved in content creation and management across all ecommerce marketplaces. Especially as ecommerce continues to grow, individual brands will ultimately be responsible for ensuring images of products are high resolution and adequately portray brand voice. These two things are essential for preserving the brand image and growing ecommerce sales.

It’s a thrilling time for ecommerce as grocery stores begin to build fulfillment centers, testing new programs and even turn to robotics in order to stay competitive and please customers.

To learn more about major players leading the way, like Amazon and Walmart, contact Pattern’s ecommerce grocery experts below.

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Global Ecommerce: Weekly News (6th September 2022)
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Global Ecommerce Weekly News: 6th September 2022

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Global Ecommerce: Weekly News (30th August 2022)
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Global Ecommerce Weekly News: 30th August 2022

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Global Ecommerce: Weekly News (23rd August 2022)
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Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)