The "click and have it now" inferno that has sparked an online grocery revolution

The “Click and Have it Now” Inferno That Has Sparked an Online Grocery Revolution 

Before Roger Bannister broke the four-minute-mile mark in 1954, it was assumed that humans simply couldn’t run that fast. But now, running a mile in less than four minutes has essentially become the norm among top runners, with 22 people in the U.S. alone breaking that mark in 2019.

While the time it takes to run a mile isn’t going to be the same as delivering groceries, a similar paradigm shift of what’s possible is happening in the grocery industry. The click-and-have-it-now inferno fueled by Amazon, with the flames being fanned by Walmart, Target and others, has made its way to grocery, and, in a sense, leapfrogged the expectations of other types of deliveries.  

Same-Day Pickup or Delivery Has Become a Non-Negotiable for Consumers 

After years of the online share of grocery sales in the U.S. stubbornly hovering at around 2%, online sales penetration roughly doubled to 4.5% in 2019, according to Deutsche Bank estimates, as analyzed in a new report we published at Fabric. More notably, Deutsche Bank projects this share will reach 12% in five years, and Evercore ISI foresees online grocery having a 20% market share by 2030.

This growth has been fueled largely by more grocers rolling out delivery or curbside pickup options, supplying consumers with an option they’ve been longing for in this space. A few years ago, many grocers we spoke to were skeptical about the importance of speed of fulfillment, let alone believing that online grocery would ever meaningfully pick up in the U.S. at all.

Yet Amazon’s acquisition of Whole Foods in August 2017 sparked an industry-wide shift toward e-commerce in markets across the country. According to our analysis, the offering of same-day delivery by major retailers increased by an incredible 400% in 2018, driven largely by Instacart partnering with grocers like Albertsons and Kroger. With a higher baseline, growth continued at a more measured but still notable clip of 48% in 2019.

That shift has fueled the growing consumer demand for same-day grocery. According to a consumer survey we conducted, 92% of online grocery shoppers prefer same-day fulfillment over next-day or longer options and 65% of consumers would even consider switching grocers if their normal store didn’t offer a same-day window for pickup or delivery—a reasonable demand, considering that a shopper with an empty fridge isn’t going to want to wait very long to stock up on what they need, especially if they require ingredients for a meal that same day.

 A New Pace is Set for Even Faster Delivery Windows

Just like the four-minute mile became the new standard for runners, we’re seeing the pace pick up for online grocery fulfillment. Pickup or delivery for the same day is now a given, and consumers have set a new benchmark of wanting their orders within a few hours.  In 2019, over a quarter of online grocery consumers received their deliveries within two hours in 2019, nearly double the amount in 2018, according to Evercore ISI. Similarly, our own survey found that 33% of consumers want their online grocery orders fulfilled within two hours.

While on-demand grocery fulfillment is notoriously difficult and expensive, automated micro-fulfillment solutions like ours will enable more grocers to break this mark profitably and satisfy consumer preferences that generally only trend toward faster speeds. 

Do you agree that speed of fulfillment is non-negotiable for online grocery shoppers? Download the report and please let me know what you think.