Ship-to-home U.S. grocery sales drove most of the 8% drop in total online grocery sales, while delivery also diminished.
The drop in overall online sales shows changing consumer behavior during the latest COVID-19 pandemic outbreak, according to a news release about the Brick Meets Click/Mercatus Grocery Shopping Survey fielded Jan. 29 and 30.
The survey was conducted on 1,793 adults who participate in household shopping. Brick Meets click is a grocery analytics and strategic insight firm, and Mercatus is a grocery e-commerce digital platform for retailers.
The U.S. online grocery market generated $8.5 billion in sales, accounting for almost 12% of total grocery spending in January, the report showed.
Across the three receiving methods — pickup, delivery and ship-to-home — for online grocery shopping, total January sales were down 8% compared to January 2021. Only pickup made sales gains, growing almost 2% to $4 billion. Delivery dropped 7% to $3.0 billion, and ship-to-home sales plummeted 30% to $1.5 billion, driving nearly two-thirds of the total year-over-year sales decline.
COVID-19 effect
“These sales results show that circumstances connected to COVID continue to disrupt the way people shop, but in different ways than earlier in the pandemic,” Brick Meets Click Partner David Bishop said in the release.
“Increases in COVID case rates no longer have the same effect on buying patterns due in part to progress with vaccinations. The loss of financial assistance is another factor since the economic impact payments and child tax credits that many households received in 2021 have ceased,” Bishop said. “And, if that’s not enough, many retailers altered store operations in January to address the labor shortages associated with COVID-related absences and a tighter labor market.”
The three receiving methods for online grocery orders can be explained this way:
- Delivery means orders received from a first- or third-party provider such as Instacart, Shipt or the retailer's own employees;
- Pickup, aka curbside, includes orders received by customers either inside or outside a store or at a designated location/locker; and
- Ship-to-home includes orders received through common or contract carriers such as FedEx, UPS and the U.S. Postal Service.
As far as market share for January 2022 versus a year ago, pickup’s share of online grocery sales grew nearly five percentage points to 47% because of gains in its monthly active user, or MAU, base and order frequency. Delivery’s share grew just under one point to 35% because of more order frequency and spending per transaction.
But ship-to-home’s share of online sales fell more than five points from January 2021 to 18%, setting a record low that is more than 20 points lower than pre-COVID levels (August 2019).
Last month's report: Supermarket online sales down in 2021 from 2020
The number of U.S. households that bought groceries online during the month remained relatively steady at 69 million, dipping just 1% versus last year.
Even so, the way in which households receive online grocery orders continues to evolve. For instance, the number of MAUs receiving an online grocery order via pickup grew 6%, while delivery decreased by 2% and ship-to-home fell by 8% year over year at the national level.
January finished with an average of 2.7 orders per month placed by MAUs, 5% fewer than January 2021 but still 33% higher than pre-COVID levels (August 2019). The year-over-year drop was entirely because of a pull-back in ship-to-home’s order frequency, which contracted by 36% while pickup and delivery expanded by 26% and 10%, respectively.
The weighted average order value, or AOV, across all three receiving methods in January 2022 remained essentially flat, declining less than 0.5% versus one year ago, but the results for each receiving method varied. Spending on ship-to-home orders shrank the fastest during the period, with an AOV drop of almost 11% compared to a 3% reduction for pickup and a 2% gain for delivery.
Cross-channel shopping
For cross-channel shopping, the share of grocery’s MAU base that also shopped online with mass retailers (such as Target and Walmart) during the month pulled back two percentage points from a year ago and finished at more than 26% for January.
The likelihood for an online grocery shopper to use the same service again within the next month jumped almost four percentage points on a year-over-year basis, coming in at 61% for January 2022. While that’s a positive trend, grocery trailed mass retail by seven points, giving up most of the gains it experienced in December as its repeat intent rate dipped back down to 58%.
“Grocers have a clear opportunity to drive stronger repeat purchase behavior,” Mercatus President and CEO Sylvain Perrier said in the release. “In addition to providing a great customer experience, they also need to understand which loyalty drivers are unique to their customers and brand. When it comes to online grocery shopping, consider adding perks that cater to behavioral and emotional triggers, like offering a wider range of preferred pickup times or more frequent pickup time slots.”