Amazon's a Grocery Favorite, but There's Room for Competition

Most US consumers still haven't taken the digital plunge

Author: Krista Garcia

March 20, 2018

More and more retailers are offering consumers the ability to purchase their groceries online, hoping to gain a competitive edge in this next digital frontier.

There's Walmart, which announced plans for same-day grocery delivery last week; Amazon, which launched 2-hour delivery of Whole Foods groceries to its Prime members in select cities last month; and Target's acquisition of Shipt, a grocery delivery service, in December.

Still, many consumers have yet to buy any groceries—from dried goods to fresh meat—digitally. According to a February 2018 RichRelevance survey of US consumers, more than half (55.5%) said they had never purchased groceries online. And of the group that had, 60.0% said they rarely did so. 

That's likely because grocery retailers are not doing enough to entice consumers to change their shopping behavior. But maybe Amazon will change that. 

Not surprisingly, the ecommerce giant is the favored source for online grocery shopping among consumers who do so digitally. Nearly six in 10 respondents who said they shop for groceries digitally said they use Amazon or Amazon Fresh. Traditional supermarkets like Kroger and Safeway, as well as big-box retailers like Target and Walmart, were a distant second and third.

Interestingly, over one-third said they shopped at more than one online grocery store, which would indicate there is room for competition from Costco, Target, Kroger and others.

Meanwhile, nearly two-thirds of respondents (64.2%) said they would be willing to try a new grocer if they started to buy food online, which is good news for retailers fearing Amazon’s growing dominance. The top online features that would motivate digital grocery buyers to shop more or push those who haven't to take the plunge included a list of frequently bought items, cited by 56.3% of respondents, as well as a list of previously purchased items or favorites (55.8%). 

According to RichRelevance, the reasons why many choose to buy groceries online is pretty straightforward—it's convenient and saves time. The leading frustrations and barriers of shopping this way, however, are more illuminating. 

The top hindrance was not trusting others to pick out the freshest items, cited by 53.7% of respondents, which speaks to the touching and feeling aspect of several retail categories—apparel and furniture, for instance—that push many to prefer buying in-store. Nearly half (47.6%) said a limited choice of items was a frustrating aspect of shopping online.