TREND TRUTH
Online Grocery-Shopping Expands Among Select Demographics
Who are these shoppers, and what do their choices reveal about the grocery industry overall?
When you hear the words “online shopping,” you typically think of consumers buying items like books, clothing and electronics. “Groceries” probably does not appear on that list, but survey data from FGI Research suggests that perhaps it should. A number of consumers are buying their milk and bananas online, whether they get their order shipped to them or pick it up in-store.
This reflects a broader trend in retail: the growth of online shopping, which has revolutionized the industry and the way people shop. In 2007, the U.S. Census Bureau reported that e-commerce represented 44.6% of all retail sales, bringing in approximately $89 million. The stage is set for growth in Internet retail, and consumers are making a habit of buying goods online. As the options for buying groceries expand, it follows that more consumers will make that purchase online too. But there are still some obstacles to adoption. Just who uses online ordering, and why, is one question that FGI’s study explored in depth.
CBS News Reports on Online Grocery Shopping
Big Spenders Likelier to Buy Online
While most consumers still do their shopping in a brick-and-mortar grocery store, online grocery services are attracting the most valuable customers in the market. Among the online shoppers who spend $500 or more per month on groceries, approximately one third buy all of their groceries online. Although there are just a handful of them, the online grocery shoppers who buy 100% of their groceries online are those who spend $1,000 or more on groceries every month. In other words, the most loyal online grocery shoppers are those with the highest grocery expenditures.
Even as online ordering catches on among customers who spend the most on groceries, those customers represent a small fraction of all shoppers. Most shoppers surveyed do not spend quite as much on groceries, especially online. 54% of respondents who order groceries online spend $200 or less per month on such services. These results imply that online grocery-shopping is less a regular habit than an occasional indulgence, except among a small selection of shoppers. To make sense of this insight, FGI Research asked consumers to explain why they chose (or didn’t choose) to shop online for groceries.
Shoppers Motivated by Time, Convenience
Among those who bought groceries online with home delivery, most did so as a matter of convenience (65%) or to save time (58%). A surprising number (36%) said they did it to save gas. Interestingly, men most often cited convenience as their motivation, whereas women cited saving time. One inference that this could support is that men simply don’t like going to the grocery store, while women don’t have the time.
As for shoppers who ordered online with in-store pickup, about half (49%) said they wanted to save time, and 2 out of 5 appreciated the convenience. Meanwhile, 29% said that they wanted to ensure they purchased only what they needed –perhaps indicating that these customers felt the physical act of browsing the aisles encouraged them to make more impulse purchases.
“Why do you use online grocery shopping with home delivery?”
“Why do you use online grocery shopping with in-store pickup?”
Online Options Still Have Downsides
Notwithstanding the benefits of convenience and saving time, many cited cost as discouraging them from buying groceries online. Customers who had used online ordering with home delivery were most irritated by having to pay an extra fee for the services (61%). They were also annoyed by mix-ups (31%), such as items that were missing or incorrect in the final delivery, and when stores did not offer desired items or have them in stock (29%). Despite these downsides, most online shoppers (77%) had used the home delivery option at some point.
Fewer shoppers (46%) had used the in-store pickup option, but those who had expressed frustration about the extra fee as well: 4 in 10 said it was a downside of the service. Furthermore, 35% were frustrated by the fact that they “still [had] to drive to the grocery store,” which might render moot the convenience of having their order picked out and bagged when they got there. A quarter of those who used the service were irritated about the protracted process of getting into the store, sorting out their orders, and getting out. 1 in 4 also said mix-ups were a problem.
Why Not?
FGI Research asked non-online-grocery-shoppers why they chose not to use the service. The top reason, which 36% identified, was the desire not to lose the experience of going to the grocery store and browsing the aisles. Some customers (35%) said their grocery store did not offer online ordering, and they did not want to have to switch stores in order to get the service. Finally, 1 in 3 said the extra fee was too high.
With all of these factors to discourage them, as many as a third of those who never shopped online for groceries said that, no matter what, nothing could make them start. The other two-thirds indicated that they might be likelier to try the service for a lower fee (36%), if they received tangible incentives such as freebies and discounts (34%), or if their grocery store started to offer the service (33%).
“What would it take to make you start using online grocery shopping services?”
Actionable Insights
The results of this study indicate that some consumers are starting to use online grocery shopping services, and that those who do not might be willing to try if certain circumstances changed. Namely, if more grocery stores offered online services, and if the fee for the services decreased, more customers would be likely to use them. As of this study, those who spend the most on groceries are likeliest to use online ordering. More research would lend insight into how to target non-users, including those with a modest grocery budget, and make the service more appealing to them. Some steps that grocers could take to capitalize on the online trend include:
- For stores that do not offer online ordering, fielding a concept test to see how customers would respond to such an offering.
- For stores that do offer the service but seek to expand or alter it, using an awareness/usage study to find out whether customers are aware of – and if they are, whether they use – online grocery-ordering.
- For stores that offer online ordering but have identified concerns about mix-ups, long waits, high fees, or other shortcomings, implementing a study on customer satisfaction to find ways of improving their performance. A focus group, whether online or in-person, would offer more detailed insight into what the service’s strengths and weaknesses are, and how the company could alter its offering to better meet customer needs.
Next Steps You Can Take
- Learn more about the results of this study: complimentary access to the data in this report, including cross-tabulated results, is available upon request from FGI Research.
- Contact FGI Research: click here or call us at (919) 929-7759
- Explore FGI Research’s market research solutions, including custom panels, full service research, and our online sample (SmartPanel).
- Join FGI Research’s online panel to participate in future studies.
Survey Methods
Respondents: 203
Date of Survey: June 21-30, 2010
Sample Source: FGI SmartPanel