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Buying Fresh Food on Online Grocery Store

A new Alpha Wise survey from Morgan Stanley Research reveals a third of online shoppers are expected to engage in online grocery shopping – 34% in 2016 vs 21% in 2015. As technology innovates and deepens inroads in the e-retail market, online grocery industry is touted to be the biggest winner in 2016.

With technology coming of an age and changing the way consumers shop, the futile attempt to launch online food segment in the late 1990’s seems to be a distant memory. The online food store industry not only offers many direct benefits to the consumers (doorstep grocery delivery service, convenience and time saving) but also presents an opportunity for brands and retail players to achieve incremental growth by eliminating wholesale costs, overcome logistical and consumer-behavioral barriers and most importantly cut through the clutter to reach the desired target audience.

Owing to the huge potential this segment presents many brick and mortar retailers have jumped on the bandwagon, including H-E-B food store, Walmart, Kroger, Wholefoods and Central Market. The giant retailers have either successfully launched their very own online food stores (example : H-E-B grocery delivery, Walmart grocery delivery, Kroger online food store) or collaborated with new age online grocery delivery apps (Burpy.com {a young entrepreneurial venture that delivers groceries in Austin, Houston, Dallas and San Antonio}, etc.) to provide same day doorstep grocery delivery to its consumers

A close look at the early adopters of online grocery uncovers several growth drivers for this market – mobile generation of consumers, the growth of online food store delivery services that offer same delivery with the luxury of personal shoppers, consumers who are willing to let go of traditional methods of grocery shopping to adopt this new medium of food shopping. Although a minority of grocery industry, online grocery sales are expected to increase 9.5 % annually to become a $9.4 billion industry in 2017, according to data from IBIS world.

The online grocery industry is growing worldwide including India, Germany, U.K, France, etc.; however, USA is expected to lead this industry and is projected to witness a steep growth curve. Morgan Stanley estimates that the total US online grocery market could grow to more than $42 billion in 2016 , the adoption rate would increase to 26% in 2016 v/s 8 % last year.

Like any developing segment online groceries also faces many consumer challenges. Some of the top reasons cited by consumers to still prefer in-store grocery shopping – the fact that they like the whole experience of grocery shopping, uncertainty regarding the quality due to the perishable nature of the goods.

Given the current scenario of this dynamic segment, it will be right to say that the future of the online food industry is visibly bright and we do not see the growth slowing down for the next five years. Retailers will continue to scale their online grocery delivery capabilities, integrate and modernize their mobile potential along with a huge influx of more and more online grocery delivery apps world over.