Online Grocery Sales Jump 28%, Hit $10.5 Billion in Single Month

Online grocery sales are booming like never before. Americans spent $10.5 billion on online groceries in October, a 28% increase over last year, according to a new Brick Meets Click/Mercatus Grocery Shopper Survey. It marked the second straight month that year-over-year gains topped 20%.

Grocery delivery was the standout performer, skyrocketing 46% to $4.8 billion, an all-time high. The number of households using delivery services jumped 16%, mostly among those between 30 and 60 years old. They ordered more frequently too, driving a 24% increase in delivery order volume.

"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 at 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."

Pickup had an impressive October as well, grabbing $4.2 billion in sales, up nearly 20% from 2023. Order frequency increases drove a 6% rise in pickup orders. Ship-to-home sales rose 6% to $1.5 billion, with gains from more customers and bigger basket sizes.

Overall, 54% of U.S. households, or 1.6% more than last year, bought groceries online at least once in October via delivery, pickup or ship-to-home. But the total pool of online grocery shoppers grew just 0.6%, indicating much of the sales surge came from reactivating light or lapsed users.

Major players offered numerous promotions to drive the growth. Kroger and Walmart slashed membership prices by 20% and 50% respectively, while Instacart chopped 80% off. Retailers and third-party providers waived delivery fees on big orders. DoorDash and Uber offered free 30-day trials, and for Prime Day, Amazon tripled its typical 30-day free trial to 90 days.

These widespread promotions may create challenges for regional grocers without competitive online offerings. In October, 40% of households that ordered online from a supermarket also received a mass merchant delivery, up 5% from 2023. The repeat purchase rate gap between grocery and mass retailers doubled year-over-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 at 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."

by Alex Bailey | November 20, 2024 | SHARE