Dollar sales, consumer base increases for eCommerce
Fresh, frozen food purchases remain niche for online channel
When eCommerce first emerged in the late 20th century, many of its early innovators likely were the choice few who expected it would shake up the retail landscape. As the market evolved, eCommerce has moved beyond digital only providers. Instead, the channel has seen traditional retailers find a way for them to compete in further driving the market.
According to Information Resources Inc. (IRI), total eCommerce sales for the 52 weeks ending Dec. 30, 2018, were $58.9 billion, which marks a 35.6 percent increase from the previous year. In fact, the channel accounted for 64 percent of total omnichannel growth. Despite these strong growth numbers, eCommerce still makes up just 11 percent of total consumer packaged goods (CPG) sales, IRI reports.
Despite its smaller share, indications point to eCommerce’s growing reach, particularly with retail chains.
“Pure-play retailers garner more than half of all online CPG purchases, but traditional brick-and-mortar retailers continue to invest and win share of the eCommerce pie,” said Sam Gagliardi, head of eCommerce for IRI, in a statement. “It is incumbent upon the future success of these traditional retailers to invest in the shopper experience both in-store and online.”
Smaller pieces of the eCommerce pie are fresh and frozen food purchases. According to Statista, food and beverage sales from the eCommerce channel amounted to $16.2 billion in 2018.
Even though online sale of fresh food is small, the channel continues to grow. According to an August 2018 Insights titled “In today’s hyperconnected world, convenience is the ultimate currency,” Nielsen reports that a Global E-Commerce Study found that 26 percent of consumers have purchased fresh groceries through online platforms. This is up from 15 percent in 2016, the market research firm adds.
IRI foresees more growth on the horizon as more retailers ramp up click-and-collect platforms and positioning the online model shoppers as a way to stick to their shopping budgets.
The market research firm reports that although millennials and Generation X consumers are the most likely to find value in online grocery shopping, the two demographics report having difficulty affording needed groceries with 34 percent of millennials and 36 percent of Generation Xers expressing this concern. More than half of millennial and Generation X consumers also are less likely to make impulse purchases through the eCommerce model, IRI reports.
“With this in mind, eCommerce should be touted as a tool for helping shoppers stick to their budget,” IRI states in a February press release. “Overall, 50 percent of total respondents report they are less likely to make impulse purchases online, including 49 percent of [baby] boomers and 44 percent of seniors.”
As market research continues to track the eCommerce effect on food and beverage purchases, it will be exciting to watch this channel mature and see how much of the retail channel pie that online will ultimately capture.