Food and Grocery e-commerce booms and growth is driven by digital-savvy consumers’ necessities rather than desires
Food and Groceries is the rising star within e-commerce. But what do recent developments look like? Which consumers are more prone to buying Food and Groceries online? And what are their motivations for doing so? Which dimensions do Food and Grocery merchants need to focus on to keep online momentum going? AfterPay Insights decided to find out.
Looking at the full landscape of online product categories, Food and Groceries leads the way in terms of growth. Directly following the corona outbreak, online Food and Grocery purchases boomed like no other category. Since then, online Food and Groceries purchases have stayed at a fairly stable level still leading ‘the growth league’ in the second half of May.
Significant for consumers who have started buying Food and groceries online is that they are quite online-savvy and experienced e-commerce users. The more frequently you purchase online in general, the more likely it is that you buy Food and Groceries online, too. This is evident as Weekly Food and Grocery Shoppers only comprise 4% of online shoppers, but they stand for 73% of all online Food and Grocery purchases, according to AfterPay Insights’ recent research.
Compared to other categories, the key motivations to buy Food and Groceries online are very rational; avoiding meeting people in stores is the most important driver for increased online Food and Grocery purchases. In this light, we can conclude that consumers have been pushed towards making more online Food and Grocery purchases more than that they were attracted to doing so.
Food and Grocery Shoppers also put specific demands on grocery merchants when it comes to reliable delivery and merchants having a wide range of products. But how do grocery merchants perform on these demands? Our analytics reveal that grocery merchants are underperforming on product availability, as well as offering the lowest price. And since online purchases in Food and Groceries are driven by these very rational reasons, merchants need to focus on improving the perception of these aspects.
In addition, Food and Grocery merchants need to add emotional values to their online experience in order to replicate the psychology of traditional grocery shopping - which for a large part exists of browsing and impulse buying - or deliver superior digital advantages that a physical store cannot offer.
Food and Groceries continues to lead the way in e-commerce growth
Even though the growth numbers for Food and Groceries show some variations over time, it can be interpreted as fairly stable. And by the second half of May, Food and Groceries is still the category with the highest growth numbers compared to all other categories (with the exception of Gardening tools where growth undoubtedly has been infused by a seasonality effect).
Buying Food and Groceries online requires online savviness
Looking at the general online shopping frequency across all categories, analytics also reveal that you must be a quite mature online shopper to start shifting Food and Grocery purchases from brick-and-mortar stores to online.
The more purchases you make online, the larger your share of purchases is within Food and Groceries.
Among Light Shoppers (making one online purchase over a two-week period), the share of purchases in Food and Groceries is only 4-5% across countries. And Heavy Shoppers, making 5 or more online purchases during a two-week period, place 11-13% of their online purchases in the Food and Groceries category.
The effect of this is that Heavy Shoppers stand for the majority of Food and Grocery purchases. In Germany, Heavy Shoppers make out 18% of online consumers, but they account for 61% of all Food and Grocery purchases. In The Netherlands, the Heavy Shoppers’ share is 15% and they stand for 54% of all Food and Grocery purchases, and in Norway the same numbers are 8% of shoppers making 47% of purchases.
‘Food and Grocery’ shopper groups based on purchase frequency
Weekly Food and Grocery Shoppers (one or more online Food and Grocery purchases per week) are over-represented among 35-44 year olds, families with kids living at home, living in urbanized areas, holding a full-time job with a high disposable income. They are evenly split on gender.
The persona above can be compared to that of the general (online) Heavy Shopper which is more female dominant, but otherwise share the same basic same characteristics.
Bi-Weekly Food and Grocery Shoppers (one online Food and Grocery purchase per two weeks) are from a socio-demographic perspective very similar to Weekly Food and Grocery Shoppers, with the exception that they are slightly younger.
Non-Food and Grocery Shoppers (no online Food and Grocery purchases per two weeks) are over-represented among older consumers, post family life stage, living in rural areas or small towns and having a low disposable income.
Weekly Food and Grocery Shoppers is an important segment, seen across the three countries they only comprise 4% of all online shoppers, but they stand for 73% of all online Food and Grocery purchases.
Food and Grocery shoppers increase purchases in other categories
Drivers for increasing Food and Groceries e-commerce purchases
Reliable delivery and wide assortment are key demands of online grocery merchants
In Norway, Food and Grocery shoppers do not only demand a wide assortment and reliable delivery, they also express a significantly higher demand regarding flexible delivery options and to some extent also a clearer display of in stock information.
How successful are Food and Grocery merchants in satisfying shoppers’ demands?
Compared to the average online shopper, Food and Grocery Shoppers are significantly less satisfied with Grocery merchants’ pricing strategies and availability of wanted products. The reason for online grocery prices being perceived as expensive is that consumers buy groceries online based on very rational reasons (merchants have not succeeded in the inspirational part of the purchase journey).
Dutch Food and Grocery Shoppers show a lower level of satisfaction with Grocery merchants’ prices and products in stock. And even though Dutch Food and Grocery shoppers express higher demands than the market average on merchants having a wide range of products, they are very satisfied with this aspect.
German Food and Grocery Shoppers rate the satisfaction with their Grocery purchases in the basic same way as Dutch shoppers, i.e. a heavy dissatisfaction with Grocery merchants’ prices and a lower than average satisfaction with having products in stock. And in line with The Netherlands, German Food and Grocery shoppers are satisfied with the wide range of products available, even though this is also a critical demand German shoppers place on Grocery merchants.
What stands out for Norwegian Food and Grocery Shoppers, compared to the other countries, is that they are relatively less satisfied with the range of products offered by Grocery merchants. As Norwegian Food and Grocery Shoppers also place a higher than average demand on this aspect, it is a critical aspect to focus in order for Norwegian online Grocery merchants to gain and retain consumers. What is also notable is that the satisfaction with having products in stock is zero, this is off course also related to what products that are offered.
How will Food and Groceries develop?
Without a doubt, we can say that crises like the COVID-19 pandemic has impacted Food and Grocery shopping. Will growth persist? Will consumers’ shopping behavior ‘go back to normal’, post-corona?
There are different forces at play here. When lockdowns were strict, consumers may have ordered Food and Groceries online out of bare necessity to do so. But as restrictions gradually ease and worries reduce, some consumers might take the opportunity to change up their ‘working from home’ routine with visits to physical stores. Others may have realised the convenience of online Food and Grocery shopping, with a lasting shift in behavior as a result. How this – in the end – impacts the e-commerce share in Food and Groceries is hard to predict.
Regardless, consumers’ recent reasons to buy Food and Groceries online are very rational, more or less forced upon them, and less sustainable. Here likely lies a growth opportunity for online Food and Grocery merchants: by attaching more inspirational and emotional values to the shopping experience, they can attract new consumers, and can keep them coming back.
What is next?
Coming up over the next few weeks are deep dives into the online categories Media & Entertainment and Electronics & Telecom. Stay tuned.