eGrocery, he who hesitates is lost

eGrocery
Michele Caprini
24 Sep 2019

eGrocery by value? From 13 to 117 billion dollars in seven years (2017-2023), according to Business Insider analysts. Used to the low incidence of selling food online on the Italian market, this figure is striking. It can’t be surprising, though.

For years, the operations of the two American giants Walmart and Amazon are aimed at assuming the leadership in the sector. Although being secondary to other commodities, according to eMarketer, online sales of food in the United States reached 24 billion dollars in 2018. In China and Japan, respectively, 51 and 32 billion dollars.

Walmart

Walmart, world’s first retailer and absolute leader of the physical distribution (11.400 stores worldwide), has, by now, a leading role also on online commerce.

In 2016 it has acquired the online commerce platform Jet.com. In 2018 obtained control of Flipkart, leader of Indian e-commerce: the biggest acquisition of the last twenty years of its history.

Today, Walmart is the leader of eGrocery.

The territorial network

Territorial distribution is the strength of Walmart. Overall sales amount, for this year, are estimated in 550 billion dollars, more than the other three main competitors, considered as a single entity. We are talking about the compatriots Costco and Kroger, along with the Japanese Seven & I Holdings (7-Eleven).

The presence of many collection point for goods ordered online is, as a matter of fact, extremely important for eGrocery. It is demonstrated by the recent surpass, in the number of customers, on Instacart, until recently leader in the United States and Canada of the delivery and collection of food in the same day.

To give an idea of the achievement, just think that Instacart acts on a network of more than 20.000 food stores in more than 5.000 cities.

Amazon

Amazon followed the opposite path of Walmart: it started from online distribution and now is trying to carve out a leading role also on the physical one. The takeover of WholeFoods supermarkets franchise, in 2017, was a fundamental milestone. In 2018, according to a Brick Meets Click survey, Amazon had reached a 30% share of the food online commerce.

Strong of the complementary offer of delivery services Prime now and Amazon Fresh, it will continue to compete for the leadership of eGrocery with Walmart. In Edge by Ascential projections, in 2024 Amazon could even surpass the rival with a revenue of 15 billion dollars against 14.

Forecast

According to the same source, in the next five years most of the food products global online sales will be given from omnichannel sale formats. This, as stated, thanks to the possibility to put click and collect delivery services on physical stores.

Online food sales will record a Compound Annual Growth Rate of 13%, reaching 162 billion dollars within the end of the period. Actually, only the 3% of sales is generated in the sector of eGrocery.