Conventional grocery stores in the top-performing quartile generated average weekly online grocery sales of $43,895, compared to $6,934 for rest of the stores.
That’s 6.3 times higher than the median sales of the lower-performing ¾ stores , according to the Brick Meets Click eGrocery Performance Benchmarking 2021 Wave. Brick Meets Click is an analytics and strategic insight firm for the grocery industry.
What is one reason these stores are doing so well?
A dramatically higher average order value at the top stores was 46% higher, as customers spent nearly $126 per order, compared to $86 at the lower-quartile stores. Also, the availability of alcohol, whether beer only, beer and wine, or beer, wine and liquor, likely played a role in the higher average order values, as 90% of the top-quartile stores sold alcohol online, while only 60% of the others did.
“Grocers are well aware that many variables affect performance across their base of stores, but they need to occasionally challenge or retest assumptions about growth drivers as selling online evolves and matures,” Brick Meets Click Partner David Bishop said in the release. “This quartile analysis reinforced that excelling at selling online — like operating a physical store — requires both a sound strategy and effective execution.”
February's e-grocery sales in the U.S. rose almost 9% versus 2021
The 2021 eGrocery benchmarking wave, sponsored by Mercatus, Cardlytics and Hussmann, is based on online transactional data linked to non-personal identified households across almost 950 stores from 45 U.S. banners. The study is the largest independently conducted online grocery benchmarking initiative completed to date, according to the release.
The findings also revealed insights into how location, age and range of services contribute to the significant performance gap between the top-performing stores and the others.
- Store location: Where a store is located is not as significant a factor as some may believe. While many assume the best places to operate are in the most metropolitan areas, that assumption isn't true for the top performing stores. There’s an inverse relationship between population size and sales performance. Top-quartile stores operating in zip codes with a population under 10,000 reported 31% higher weekly sales than stores in areas with a population over 40,000. In contrast, sales at stores in the lower quartiles increased as the size of the population did.
- Age of service: Top-quartile stores had operated online longer, as 50% have done so for four or more years as compared to 34% of the others. Only 10% of the top-quartile stores had operated for less than one year versus 25% of all other stores. Analysis also showed that the top-quartile stores generally grew with age while the others typically contracted. Stores operating online for four years or longer had more than 50% higher sales than stores that had been online for less than one year. However, a comparative analysis of the remaining quartiles revealed a choppy sales trend that ultimately resulted in the oldest stores reporting weekly sales that were 23% lower than their youngest cohorts.
- Range of service: Offering multiple ways to receive an online order mattered the most. Top-quartile stores were 1.5 times more likely to offer both pickup and delivery services — 67% of the top-quartile group offered both services, while only 44% of the others did. Top-quartile stores that offered both Pickup and Delivery generated weekly sales that were 39% higher than those that offered only one service. But for all other stores, making both options available didn’t generate higher sales for some reason.
“It’s helpful for grocery executives to consider what factors may be preventing their online grocery business from performing at the same level as the top quartile,” Mercatus President and CEO Sylvain Perrier said in the release. “The same factors that go to making one location successful in terms of online sales will not necessarily translate to all locations. The best performers likely have ironed out their operational wrinkles, resulting in the best possible fulfillment experience for customers. Meanwhile, the level of marketing investment directed to promoting online service options also will have an impact over time.”
Related: Remembering longtime grocery industry leader Bill Bishop