3/14/14

Delivery cost holds back occasional online grocery shoppers, a study finds

53% of online grocery shoppers say less expensive delivery would make them more likely to shop again, says a study by Etailing Solutions.

Bill Briggs , Senior Editor

Delivery cost is the main barrier to getting those who occasionally buy groceries online to shop more often. 53% of 151 shoppers in New York, New Jersey and Connecticut who buy groceries online say they would do so more often if delivery fees were lower. Another 28% say lower grocery prices would do the trick.

The findings are from a December 2013 study of consumer attitudes about online grocery shopping in markets where they have a choice of Peapod.com, FreshDirect.com and Shoprite.com. Peapod and FreshDirect are web-only grocers, while ShopRite is a chain of some 250 supermarkets in the Northeast that also offers online ordering and delivery. E-commerce consulting firm Etailing Solutions conducted an online survey of 151 consumers. To be eligible, respondents needed to have made at least one online grocery purchase in the preceding six months.

Respondents who were undecided about shopping again for groceries online gave the following reasons:

Less expensive delivery: 53%

Lower prices: 28%

More delivery options: 9%

Better product quality: 6%

Better assortment: 3%

At the time of the study, Peapod’s delivery fees were $9.95 for orders under $100, with no minimum order amount; FreshDirect’s delivery fee was $5.99, with a $30 order minimum; Shoprite.com’s delivery fee was $19.95, with a $5.95 fee for orders picked up at a store. Peapod is No. 55 in the 2013 Internet Retailer Top 500 and FreshDirect is No. 75.

Meeting shopper expectations will be critical as the online grocery market grows. Online grocery sales in the U.S. reached $6.5 billion in 2013, up by 8.3% from $6 billion in 2012, according to global research firm IbisWorld. That’s about 1.2% of the $531.40 billion total grocery market in 2013, IbisWorld says.

Online grocery shopping as a percentage of the total market is expected to accelerate, reaching as much as 16.7% by 2024, according to projections by Brick Meets Click, a retail consulting and analysis firm. That aggressive growth scenario assumes that dramatic growth of Amazon’s Fresh grocery program will provoke national and regional grocery chains to step up their online programs, says a January report from Brick Meets Click. AmazonFresh customers pay a $299 annual fee for free delivery of orders of more than $35.

Knowing what web shoppers want will factor heavily into online grocers’ success. The Etailing Solutions survey found that convenience and price were most important to Shoprite.com shoppers, delivery options were key for Peapod, and special offers or personal recommendations were most important to FreshDirect shoppers.

ShopRite is a trademark of Wakefern Food Corp.

Topics:

AmazonFresh, Brick Meets Click, etailing solutions, FreshDirect, IBISWorld Inc., online grocers, online grocery market, Peapod, Shoprite.com, Top 500

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