July e-grocery sales up 9% from a year ago

The total U.S. online grocery market ended July 2024 with $7.9 billion in monthly sales, a 9.2% increase over last year, according to a Brick Meets Click/Mercatus Grocery Shopper Survey.

Delivery sales surged 22% in July, aided by continued promotional efforts, according to a news release. Ship-to-home also posted strong results, climbing 6%, and pickup held steady year-over-year.

Delivery’s dramatic gains in July benefited from ongoing efforts by key players to grow their delivery businesses over the last several months, survey results show. Walmart promoted a 50% discount on its Walmart+ membership in mid-July that lowered the annual fee from $98 to $49 after offering the same deal in May. Meanwhile, Instacart promoted an 80% discount on its annual membership. Both offers are contributing to growth in delivery users and order frequency.

“Walmart and Instacart aren’t the only players using deep discounts to boost delivery demand,” said David Bishop, partner at Brick Meets Click. “Amazon, for example, in July offered a 90-day free Prime membership trial instead of the usual 30 days, along with unlimited grocery delivery. Similarly, DoorDash and Uber Eats are maintaining low or no delivery fees to increase their market share.”

Looking at trends in monthly active users by format and receiving method shows how the market is shifting. Both supermarkets and mass saw year-over-year increases in their monthly-active-user bases in July. Supermarkets base grew twice as fast as last year, up about 7%, and mass posted a nearly 8% increase, according to the release. Trends across the three receiving methods were mixed. Delivery’s monthly-active-user base expanded by more than 10% versus last year, ship-to-homes expanded by almost 4% and pickups contracted slightly, down by less than 2%.

Overall e-grocery order volume for July 2024 rose approximately 5% compared to the prior year. Delivery orders surged nearly 20% in the month, due to both more users and more frequent ordering by those users. Meanwhile, pickup order volume fell 3% versus July 2023 due to lower order frequency among a contracting monthly-active-user base. Growth in ship-to-home user base offset a dip in order frequency, resulting in a 2% gain in order volume during the month.

Composite spending per order across all three methods (delivery, pickup and ship-to-home) increased almost 4% in July 2024 compared to a year ago. Average order values for ship-to-home climbed the most, growing 4% year-over-year, while pickup and delivery trailed, increasing by 3% and 2% respectively. Average order values for the mass format finished up over 3%, while supermarkets were flat versus year ago.

Analysis of the monthly results also found that households with annual incomes under $50,000 reported declines across the three key metrics — monthly-active-user base, order frequency and average order values — bucking the broader e-grocery growth trends and illustrating how financial pressures are affecting online buying behaviors, the release said.

“Intense competition in grocery delivery promotions is eroding regional grocers' control over customer interactions. While third-party marketplaces may boost short-term order volume gains, they also make it harder for grocery retailers to achieve the economies of scale needed to reduce operating costs,” said Mercatus Chief Growth Officer Mark Fairhurst. “I’m not sure many grocers would jump at the opportunity to put a farmers market in their store parking lot, yet many are willing to do something similar when it comes to relying on marketplaces for their online business.”

Cross-shopping rates for July 2024 remain elevated as nearly 1 in 3 customers continued to buy online from both grocery and mass formats during the past month, the release said. The share of grocery customers (which includes both supermarkets and hard discounters) that also received an online grocery order from a mass retailer finished at 32.1% in July.

The share of grocery customers who received online orders from Walmart reached nearly 22.5%, up 430 basis points versus last year, the highest level seen so far in 2024. For Target, the share climbed 100 bps, reaching 14.9%, the highest level reached for that retailer during the last two years, the release said.

The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by the team at Brick Meets Click and sponsored by Mercatus. Brick Meets Click conducted the most recent survey on July 30-31, 2024, according to the release.

More information about July 2024 results is available at the latest Brick Meets Click e-grocery dashboard.