• by Jack Loechner , Staff Writer @mp_research, October 9, 2018

According to a recent Internet Retailer newsletter, the 2018 Online Food Report, America’s grocery business is a trillion-dollar market, but only a few years ago the online segment was barely visible, and not threatening to food stores. Today, food retailing’s big players are moving in. 

The newsletter goes on to say that online food sales last year exceeded a staggering $31 billion, up 27% from 2016 and double what they were in 2015. Despite the fact that the online food industry still accounts for only 3% of total grocery sales in the U.S., it has become a battleground for big competitors which are lured by its growth, and fearful of repeating mistakes of chains in other markets that paid dearly for ignoring early web competitors, says the report.

Internet Retailer’s just-released 2018 Online Food Report dives into the data behind the web-based food market that’s growing at a rate nearly 10 times faster than the 3.1% growth of the overall grocery industry. That growth disparity is expected to continue as grocery chains adopt omnichannel strategies, says the report, such as adding store pickups for online orders, and online food merchants ramp up availability of same-day delivery programs. 

Even more impactful are the moves major players have made in the last year, says the report: Amazon purchased Whole Foods, Target bought delivery service Shipt to bolster same-day grocery delivery, Kroger acquired online meal-kit retailer Home Chef and Albertsons, the second-largest grocer in the U.S., launched an online marketplace.

The 79-page 2018 Online Food Report provides an in-depth overview of key strategies and data behind the fast-changing online food and grocery market, including: 

And from the Executive Summary of “Room At The Table”

There’s still plenty of room on the web and in consumers’ pocket- books for new online retailers to enter the e-commerce fold and for smaller retailers to grow their sales. Online retail isn’t saturated by any means.

Smaller players who take the time to distinguish themselves and seek out a niche to serve can enjoy access to a growing industry and a wide audience of online shoppers who only plan to spend more on the web.

Nearly two-thirds of shoppers expect to make more online purchases this year than they did in 2017, according to a survey of 4,028 global consumers ages 18 and older who had shopped online within the last year. 63% of those polled shop online at least once a month and 23% shop online at least weekly.

 The numbers back it up. For example, in the fourth quarter and in 2017 as a whole, U.S. online retail grew faster than it has since 2011, according to the U.S. Department of Commerce.

E-commerce represented 13% of total retail sales in 2017, when excluding items like cars and gas rarely purchased online, and 49% of the growth. Consumers spent $453.46 billion on the web for retail purchases in 2017, a 16.0% increase compared with $390.99 billion in 2016. That’s the highest growth rate since 2011, when online sales grew 17.5% over 2010.