Online Grocery Shopping Popularity Grows

Online grocery sales have more than tripled over the past five years, and they are expected to quadruple over the next five.

Those statistics are from the market research firm Packaged Facts, detailed in their new report, Online Grocery Shopping in the U.S., 2nd Edition. While online grocery shopping accounts for only 2% of sales in 2018, the clear trend is for that category to grow substantially.

"Three key factors have created a perfect environment for growth of the online grocery market in the U.S. over the last five years," says David Sprinkle, research director for Packaged Facts. "There's been increased use of mobile phones and smartphones, interfaces for websites and mobile apps have improved, and there's been a notable expansion of crowd-sourced business models to shopping and delivery."

Not surprisingly, Amazon and Walmart are the market leaders, together accounting for nearly 28% of online grocery sales. Packaged Facts forecast for quadruple growth is based on online options becoming more available and consumers becoming more comfortable with online shopping.

Instacart, Kroger, FreshDirect, and Peapod represent other large providers in the online grocery market, with Instacart being the largest third-party pack-and-deliver company.

Instacart – which raised $600 million in financing this week – operates as grocery delivery service, where customers use a smartphone app to select groceries that are delivered by a personal shopper.

Packaged Facts, however, anticipates Walmart's dominance as a grocer, nationwide presence, and large number of rural stores give it a competitive advantage in expanding online grocery shopping to much of the U.S. population.

Most of the market's growth has occurred since 2016 as e-commerce platforms and conventional grocery stores increased both their participation and their geographic footprint with expanded service areas.