While grocery e-commerce is still relatively small in Australia - accounting for just over 2% of total grocery sales - it is growing seven times faster than the total market. We predict that online consumer spending will inject up to $2 billion of incremental sales into the Australian grocery industry over the next five years.
Up until now, however, it has been hard to find examples of brands and retailers in the Australian FMCG industry who have mastered their offer in the online grocery space – the majority are still in the exploratory phase, testing different tactics and strategies to understand what works best in this market.
Nielsen Homescan research reveals the ‘20-20-20’ growth opportunity that grocery e-commerce represents to the Australian industry. With a substantial growth prize up for grabs, a strong focus on the dynamics and drivers of online trade is a surefire way for retailers and manufacturers to secure their slice of this lucrative pie.
Our busy lifestyles combined with widespread Internet penetration and around-the-clock connectivity, has paved the way for grocery e-commerce. Nielsen data from around the world reveals one-quarter of online respondents say they order grocery products online, and more than half (55%) are willing to do so in the future.
Australian shoppers are growing accustomed to the benefits of digital in other retail settings and are beginning to expect them in grocery as well. Retailers are now facing unprecedented pressure to maintain profit margins by keeping up with these increasingly demanding, empowered and connected consumers. Those that are winning in this space are leveraging technology to enhance the overall shopping experience and meet consumers’ evolving desires.
However, online grocery shopping still presents sizeable logistic and cost concerns that have mostly not yet been solved in this market. Retailers need to experiment with clever ‘delivery’ options that circumvent these issues. In France and Italy, where labour costs are high, retailers have seen some success with ‘click and drive’ initiatives.
Online grocery may still be relatively small in Australia today, but it has the potential to grow very rapidly once initial adoption rates increase and challenges are overcome. Once consumers break through the trial barrier, retailers who get the assortment, delivery and seamless online experience factors right will benefit from the frequent purchasing patterns of regular online shoppers.
Want to find out more? Purchase a copy of the Nielsen Australian Grocery E-Commerce report here!