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5 Global Trends in Online Grocery and What They Mean for Today’s Retailer

June 17, 2015
Cynthia Stephens
Written By
Cynthia Stephens

From the meteoric rise of mobile grocery shopping to the proliferation of national and local full-basket models, online grocery is experiencing rapid change that is transforming the industry. Here are 5 trends to watch, as discussed at the recent Retail Council of Canada (RCC) Store 2015 Conference.

My colleague, Keith Anderson was recently asked to speak at the recent Retail Council of Canada (RCC) Store 2015 Conference, and we took the opportunity to provide a global and local outlook for where the online grocery market is headed.

Basically, we focused on the 5 key trends that are currently driving the industry worldwide. Each of these trends is a game-changer in its own right. Taken together, they represent what will become a fundamental shift in the way millions of shoppers buy and receive their groceries. These trends are:

1. Mobile is set to leapfrog traditional online shopping

source: ComScore 2015, Branding Brand 2015

Just check out the charts. As you can see, from 38% (Amazon) to 53% (Target) of online shoppers use smartphones or tablets only. This mirrors the rise of mobile in other eCommerce categories.

One point to note is that mobile browsing is outpacing mobile buying. The percentage of people who are using their devices to research products and assess what to buy is growing more quickly than the percentage of people who are actually buying on their phone.

Still, mobile is quite literally everywhere. And it’s spurring industry players to make investments in mobile-first or mobile-optimized interfaces that accommodate the more limited screen space. A good example is the recently-announced Google Buy Button, which will make it easier for people who are searching for products on their phone to buy them straightaway.

There’s also the movement toward Screenless Commerce, such as with Amazon Echo, which is essentially Amazon’s version of Siri. It’s embedded into its own living room speaker and besides telling it to play music or answer trivia, you can also say, “I need paper towels.” It will then use its algorithm to place an order based on its best guess of what type of paper towel you mean. It may match your most recent order or it may pick a best seller—but in either case, you can see the type of ordering that will soon be an outgrowth of mobile.

2. Local full-basket grocery models are proliferating

Many people think about eCommerce as an item-by-item process, where you pick what you want and it’ll be delivered to anywhere in the country from a central distribution center. This is the national model, and you can contrast it to the local grocery models, which may require shoppers to pick the order up at the store, or in other cases, allow for delivery of a full basket to the shopper’s home. The local model allows for temperature sensitive products to be included, such as cold beverages, perishables, meat, produce, frozen foods, and so on—all of which opens things up for delivery of complete baskets.

This is important, because it completely changes the type of shopping trip that is being replaced by online grocery. When it’s only an item-by-item, national shipping eCommerce model, you’re looking at much more of a special occasion or fill-in situation. But now, as these local full-basket models proliferate, eCommerce is becoming a buy-able option for the stock-up trip.

In other words, the $100 to $200 I spend every week when I hop in my car and drive a mile to the grocery store for 30 or 35 items—it’s now being substituted for by Amazon Fresh or Instacart or any of the other local full-basket models.

To learn more about three markets where online grocery is maturing—the U.K., China and the U.S.—view the joint webinar recently presented by Profitero and IRI: Winning Strategies for Online Grocery

3. Membership and retention models are expanding

There’s a lot of history with offline membership models like Costco or Sam’s Club, where you pay an annual fee, which sometimes accounts for 100% of that retailer’s profitability. In the case of Costco, for example they don’t make any margin on the merchandise they sell you. Rather, they make all the profit when you give them that hundred bucks at the beginning of the year. And in the world of eCommerce, Amazon Prime was the first example of a really similar type of membership model. Today, you’ve got a flood of other membership options that are now on the scene, such as, or with the Walmart ShippingPass that’s receiving coverage in the media. (See Keith’s recent blog with observations on the beta introduction of

This type of membership program is actually more popular in the U.K. than the U.S. right now, thanks to U.K. online grocers such as ASDA, Ocado and Tesco. But no matter which market you’re talking about, the fact is, membership programs greatly raise the stakes for loyalty and retention. That’s because a lot of decisions that were historically made on a frequent basis—such as which store to shop at, and what brand to buy—are now starting to be made less frequently. I’m effectively committing to one retailer when I sign up for membership. And with subscription programs like Amazon’s Subscribe & Save, which are now being emulated by other retailers, I’m even committing at a brand level to buy a specific brand or product in exchange for some kind of value.

4. Marketplaces are increasingly linking buyers and sellers

This one is closely related to number three. You don’t always see membership models with a marketplace attached, but increasingly they’re coming together. The marketplaces are basically a way for the retailer, or rather the marketplace operator, to expand selection without risk or capital investment.

The beauty of these marketplaces for the marketplace operators is the operator can instantly expand their selection without having to take ownership of any of the inventory they’re featuring. If they sign up a merchant that has 10,000 products that weren’t already carried on the site, they’ve just increased their selection by 10,000 overnight, without buying any inventory, filling up any warehouse, or taking any risk that the merchandise won’t sell.

It’s a really compelling model if you can get shoppers to adopt it. And shoppers do have a tendency to like a marketplace, because it helps standardize the experience of buying. You get to know each marketplace’s interface. There are standard policies around pricing, delivery, fees, returns, and all those typical retail policies—all of which add to the familiarity.

It’s interesting. In some cases, the marketplace is sitting between the retailer and the shopper, as in the case of Google Shopping. But in other cases, the retailer is becoming the marketplace operator, as in the case of Walmart and their marketplace, or Amazon and their marketplace.

5. Online grocery and CPG logistics models are maturing

It’s not like there’s only a single way to ship only shelf-stable products, and you’ve got to do it item by item. Now we’ve got examples like Prime Pantry, which is the Amazon program that tries to make it economically sustainable to sell inexpensive products individually. Typically, before the introduction of Prime Pantry, you’d be forced to buy bundles of 6 or 8 or 12 tubes of toothpaste on After all, if it costs $5.00 to ship a single tube of toothpaste, Amazon can’t really sell it for $4.00 or $8.00 and make any money. So they’d force you to buy multiples to cover the cost of shipping.

But with Prime Pantry, which they launched in April of last year, they charge you a set fee for shipping—and for that, you get to fill up a box up to 45 pounds, or 4 cubic feet of space, and essentially build a basket. You say, “All right, I want that tube of toothpaste for $4.00, but I’m going to pay $5.99 in shipping to get it. Now that I’ve agreed to pay that $5.99, I can order up to 45 pounds of other stuff.” It’s not a local full-basket model; it’s a national one.

And there are also companies like Instacart that take the market beyond the model of local operations that are fully owned and operated by the retailers. Instacart is yet another marketplace operator that sits atop existing retailers and lets them participate in eCommerce and local grocery without having to build their own ordering system and manage their own delivery fleet.


These 5 trends promise to be transformational. But they haven’t appeared out of nowhere. At Profitero, we’ve seen in markets around the world that eCommerce in general and online grocery in particular incrementally pick up steam, then reach critical mass and suddenly take off. In order to capture the opportunity in this type of environment, retailers need to have three indispensable assets in their arsenal: the right strategy, the right tools, and the right team. To learn more about how to ensure you have all three assets at your disposal, contact Profitero today.

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