October e-grocery sales jump 28% from a year ago

The U.S. online grocery market ended October 2024 with $10.5 billion in monthly sales — a 27.9% increase over last year — as all three receiving methods posted solid year-over-year sales growth, according to the Brick Meets Click/Mercatus Grocery Shopper Survey fielded Oct. 30-31.

October’s total monthly sales set a record high and marked the second straight month in which year-over-year e-grocery sales gains exceeded 20% as the impact of ongoing deep-discounted offers, predominantly for delivery, affect key metrics such as monthly active users and order frequency, according to a news release.

Delivery experienced another turbocharged month, with year-over-over sales climbing 46% to $4.8 billion, a record-setting high for the segment, the release said. The monthly-active-users base for delivery expanded much faster than for either pickup or ship-to-home, growing 16% versus 2023 with most of the gains coming from households between the ages of 30-60.

Combined with increased order frequency, this user-base growth drove delivery’s order volume up 24% versus October 2023 and widened delivery’s order share lead over pickup for the second consecutive year in large metro areas, which represent roughly 60% of U.S. households, according to the report. In addition, delivery’s average order value climbed by over 15%, partly due to a growing share of customers who use the services more frequently and tend to spend more as their usage increases.

Pickup also had a strong month, the release said, finishing October 2024 at $4.2 billion, up nearly 20% versus last year, even without the same level of promotional support. The number of pickup orders completed during October climbed 6% with most of the volume growth being driven by higher order frequency as opposed to household penetration.

Pickup’s MAU base expanded by less than 1% as a contraction in the 45-60 age group compared to last year offset growth in other age groups, according to the report. Pickup’s average order value increased by almost 13%, propelled by strong gains generated by mass and favorable shifts in order frequency similar to delivery.

Ship-to-home sales totaled $1.5 billion for October, up 6% versus 2023, with year-over-year gains aided by a larger customer base and higher AOVs. The ship-to-home MAU base grew just under 3% during the month driven by strong demand growth in the youngest (18-29 years old) and oldest (60-plus years old) households while its reach into the two middle age groups fell versus last year, the release said.

Order volume declined 5% as MAUs completed fewer orders during October versus last year. Ship-to-home’s AOV was up almost 12% aided by strong results from Amazon’s pure-play segments, the largest sales contributor of the method, which posted a nearly 16% increase versus 2023, according to the report.

The overall MAU base for e-grocery grew by 1.6% year over year as 54% of U.S. households completed at least one online grocery order during the month via delivery, pickup or ship-to-home, the release said. At the same time, the total pool of households that has ever shopped online for groceries expanded by just 0.6% in October, representing nearly 79% of U.S. households. The gap in expansion rates reveals that most of the MAU growth in October was the result of reactivating light or lapsed users, according to the report.

“Delivery is riding its next growth curve, fueled not simply by subscriptions or membership offers, but by promotional pitches that incent the customer to commit for a year,” said David Bishop, partner for Brick Meets Click. “While firms occasionally revert to their standard ‘free trial’ offers, the surge of new discount tactics seem to have a broader appeal that extends beyond the existing customers of the retailer or provider offering it.”

Since May 2024, several retailers and third-party providers have stoked the market by periodically offering deep discounts for their annual subscriptions or membership plans in lieu of standard free trial offers, the release said. These discounts ranged from 20% at Kroger to 50% at Walmart to 80% off an annual plan from Instacart, and there were more firms offering similar deals.

Some traditional retailers have also experimented with promoting limited time offers that waive the delivery fee on large orders that exceed a specified purchase threshold, such as $100, the release said. Other providers newer to grocery delivery, like DoorDash and Uber, have introduced 30-day or 4-week free membership trials respectively to drive demand, and Amazon extended its free trial from 30 to 90 days around the most recent Prime Day period.

The growth in delivery connected with subscriptions and memberships may create headwinds for retailers without a competitive offer due to the increase in cross-shopping behaviors. The share of households that ordered online from a grocery format in October and that also received an e-grocery order from mass during the month rose over five percentage points versus last year to 40% in 2024, the company said.

Additional headwinds for grocery, which includes supermarket and hard discount, flow from a growing gap in the repeat intent rate with mass which has doubled compared to a year ago, the release said. In October, the repeat intent score gap between grocery and mass was nearly 20 points higher for both pickup and delivery services versus last year. The gap for delivery services has held steady, but the gap for pickup services has grown significantly as the mass lead was only in the mid-single digits last year.

"As national giants like Walmart accelerate growth with aggressive membership offers, there are effective ways for regional grocers to adapt and better connect with their core customers," said Mark Fairhurst, chief growth officer for Mercatus. "By improving loyalty programs and enhancing the relevance of digital initiatives to leverage targeted and personalized campaigns that integrate online and offline promotions, regional grocers can seize new opportunities to strengthen their position in a competitive market."