U.S. Online Grocery Market Size By Type (Food Products, Non-Food Products) By Geographic Scope And Forecast

U.S. Online Grocery Market Size And Forecast

U.S. Online Grocery Market size was valued at USD 32.14 Billion in 2023 and is projected to reach USD 65.51 Billion by 2031, growing at a CAGR of 9.31% from 2024 to 2031.

• Online grocery shopping refers to using web-based platforms to purchase food and household essentials, providing convenience through various methods.
• Consumers can order groceries from nearby supermarkets through e-commerce websites or mobile apps, or opt for delivery from larger companies like Net Grocer or Amazon. These platforms offer various products, including dairy, fruits, vegetables, and non-grocery items.
• Retailers in the U.S. enhance online shopping experiences with services like click-and-collect and subscription options.
• The convenience of online grocery delivery is particularly beneficial for the elderly, individuals with limited mobility, and those without access to transportation. Busy families also find online grocery services essential.
• A significant advantage is the ability to stick to a shopping list, reducing impulse purchases compared to browsing store aisles.
• Customers can often apply manufacturer coupons and online discounts to their orders, while major companies like Amazon frequently waive delivery fees for regular subscribers or minimum order amounts.
• The proliferation of smart devices and internet accessibility drives the growth of online grocery sales in the U.S. Additionally, factors such as busy work schedules and increased female workforce participation contribute to the market’s expansion.
• The evolution of e-commerce technology and the rising preference for convenient shopping experiences further propel the growth of the U.S. Online Grocery Market.

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Global U.S. Online Grocery Market Dynamics

The key market dynamics that are shaping the U.S. online grocery market include:

Key Market Drivers

• Increased Demand for Convenience: Consumers increasingly seek convenience due to busy lifestyles, long working hours, and hectic schedules. Online grocery shopping provides hassle-free shopping and saves time, allowing consumers to shop from the comfort of their homes. For instance, U.S. e-commerce sales grew to about $1.119 trillion in 2023 from $1.040 trillion in 2022 (7.6% growth).
• Availability and Delivery Options: Online platforms offer 24/7 availability of grocery items and provide options like home delivery and specific time delivery. This flexibility in delivery options has boosted consumer confidence and convenience in online grocery shopping.
• Technological Advancements: Technology integration in online grocery stores has revolutionized the shopping experience. Features such as AI assistants, self-checkout options, and advanced supply chain management software enhance efficiency and customer satisfaction.
• Personalized Shopping Experience: Analytics and AI-powered recommendations personalize the shopping experience by suggesting items based on past purchases and consumer preferences. This tailored approach improves customer engagement and satisfaction. For instance, Kroger uses AI to monitor self-checkout lanes, ensuring all items are scanned. Albertsons tested smart shopping carts similar to Amazon’s Dash Carts in 2022. Sam’s Club integrated AI into its Scan & Go app, allowing customers to bypass lines; 30% of members use the app, attracting more Gen Z shoppers with its convenience.
• Pandemic Impact: The COVID-19 pandemic accelerated the shift towards online grocery shopping as consumers prioritized safety and convenience. Clic-and-collect services saw increased adoption, providing a safe alternative to in-store shopping. For instance, according to the S. Food and Drug Administration online grocery sales in the U.S. surged during the COVID-19 pandemic, rising from $62 billion in 2019 to $96 billion in 2020. This trend is ongoing, with online grocery orders anticipated to account for over 20% of all U.S. grocery sales this year.
• Innovative Business Models: Grocers are introducing innovative delivery models such as slotted or express delivery and subscription services. These models offer flexibility and cost-effectiveness, further driving consumer adoption of online grocery shopping.
• Economic Factors: Rising disposable incomes and attractive discounts offered by online service portals make online grocery shopping more appealing to consumers. This economic factor contributes to the market’s growth by enhancing affordability and value for money.
• Urbanization and Changing Shopping Habits: Continued urbanization and a shift in consumer shopping habits towards digital platforms are key factors influencing the preference for online grocery shopping. Consumers are increasingly comfortable with online transactions and digital shopping experiences.
• Customer Experience Enhancements: Grocers are focusing on enhancing customer experience through improved click-and-collect capabilities and efficient delivery services. These efforts ensure convenience and reliability, driving repeat business and market growth.
• Future Growth Prospects: With ongoing technological advancements and evolving consumer preferences, the U.S. online grocery market is poised for continued expansion. Innovations in delivery logistics, customer engagement strategies, and product offerings will shape the future landscape of online grocery shopping.

Key Challenges

• Delivery Costs: The high cost of delivery in the market impedes the growth of market. While some retailers mitigate this by offering free delivery with minimum order requirements, these thresholds are often substantial, discouraging customers from placing smaller, more frequent orders.
• Profitability Challenges: For retailers, the logistics of fulfilling online grocery orders can be prohibitively expensive. Costs associated with picking, packing, and maintaining cold chain logistics for perishable items add up, making it difficult for retailers to achieve profitability in the online grocery sector. Ensuring that fresh items like produce and dairy are delivered at the correct temperatures further complicates the process and adds to the expenses.
• Product Selection Limitations: Although the variety of products available online is improving, online grocery stores still struggle to match the breadth and depth of selection found in physical stores. Fresh produce, bulk items, and specialty products are often less available online, which can be a significant drawback for customers looking for specific items or quality guarantees.
• Customer Hesitation on Perishables: Many consumers are reluctant to purchase fresh produce, meat, and other perishable items online due to concerns about quality and potential spoilage during transport. The inability to personally select these items can lead to worries about receiving products that are not as fresh or are damaged.
• Technological Limitations: The efficiency of picking and last-mile delivery for online groceries hinges on continual technological advancements. Improvements are needed in inventory management systems, warehouse automation, and the development of self-driving delivery vehicles. These technologies are critical to enhancing the speed and reliability of online grocery fulfillment, yet they require significant investment and development to reach their full potential.

Key Trends

• Soaring Sales and Expanding Customer Base: The surge reflects a rapidly expanding customer base, which is expected to reach 138 million U.S. shoppers by the same year. As more consumers turn to online platforms for their grocery needs, the market’s potential continues to rise, attracting more retailers and innovations.
• Convenience Reigns Supreme: The convenience of online grocery shopping is a significant driver of its popularity. Busy lifestyles and the desire for contactless shopping options are pushing consumers towards online platforms. Features like in-app list building, scheduled delivery, and personalized shopping recommendations save time and streamline the shopping experience, making it easier for customers to manage their grocery needs amidst hectic schedules.
• Quick Commerce (Q-Commerce) on the Rise: Ultra-fast delivery services, known as quick commerce (Q-commerce), are gaining traction. These services aim to deliver groceries within an hour, catering to the increasing demand for immediate fulfillment. Whether it’s for forgotten items or last-minute meal preparations, Q-commerce meets the need for speed and convenience, further enhancing the appeal of online grocery shopping.
• Subscription Services Gaining Momentum: Subscription-based services offering curated groceries or meal kits are becoming increasingly popular. These services provide convenience and cater to specific dietary preferences or the desire to explore new cuisines. By delivering pre-selected items or complete meal kits directly to customers’ doors, subscription services simplify meal planning and introduce variety into everyday meals.
• Focus on Freshness and Quality: As consumer confidence in purchasing perishables online grows, retailers are placing greater emphasis on the freshness and quality of their products. Advanced cold chain logistics and meticulous handling ensure that fresh produce, dairy, and other perishable items reach customers in optimal condition. This focus on quality helps alleviate concerns about spoilage and enhances the overall online shopping experience.
• Technological Innovation: Technological advancements are revolutionizing the online grocery industry. Innovations in warehouse automation, AI-powered order picking, and self-driving delivery vehicles are streamlining operations and reducing costs. These technologies not only improve efficiency but also make online grocery delivery more affordable and reliable. Enhanced inventory management systems and predictive analytics further optimize the supply chain, ensuring that customers receive their orders promptly and accurately.
• Brick-and-Mortar Integration: Many traditional grocers are integrating their online and physical stores to provide a seamless omnichannel shopping experience. Options such as click-and-collect or in-store pick-up for online orders blend the convenience of online shopping with the immediacy of physical stores. This integration allows customers to enjoy the best of both worlds, offering flexibility and enhancing overall satisfaction.

U.S. Online Grocery Market Regional Analysis

Here is a more detailed regional analysis of the U.S. online grocery market:

United States

• In the United States the rapid rise in online grocery shopping has highlighted the need to improve both access and labeling, a priority that the federal government is actively addressing. This article will provide an overview of the federal government’s efforts to enhance the online grocery shopping experience for all consumers.
• White House’s National Strategy on Nutrition and Health (National Strategy), which details the Biden–Harris Administration’s plan to improve both access to online grocery shopping and the clarity of online food labeling. This strategy underscores the Administration’s commitment to ensuring that all Americans have access to nutritious food and clear information to make informed choices.
• Online grocery shopping has experienced exponential growth in the United States. Between 2019 and 2020, sales surged by more than 50%, increasing from $62.2 billion to $95.82 billion.
• The United States Food and Nutrition Services (FNS) has undertaken significant initiatives to upgrade the Supplemental Nutritional Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) to allow for online food purchases.
• These upgrades are aimed at increasing access to nutritious food for vulnerable populations, ensuring that beneficiaries can participate in the convenience of online grocery shopping. By enabling online purchases, FNS is working to remove barriers and make healthy food options more accessible to low-income families.
• The U.S. Food and Drug Administration (FDA) is focusing on the challenges associated with online food label information. The FDA is developing guidelines and regulations to ensure that food labels are clear, accurate, and easily accessible to consumers shopping online.
• This includes ensuring that nutritional information, ingredient lists, and allergen warnings are prominently displayed and easy to understand. By improving the transparency and reliability of online food labels, the FDA aims to empower consumers to make healthier choices.
• Densely populated areas with high disposable incomes are often the early adopters of online grocery shopping, driven by factors such as convenience, time constraints, and access to delivery services. Cities with strong tech presences and established online grocery players are also at the forefront.
• The West Coast, considered the most progressive online grocery market, has high penetration rates, with tech giants like Amazon Fresh leading the way. The East Coast follows closely, with established online grocery players and a growing customer base in dense urban areas like New York City and Boston. In the Midwest, adoption is rising but may lag behind coastal regions due to lower population density and infrastructure limitations.
• Meanwhile, the South is experiencing accelerating growth, fueled by increasing internet penetration and rising disposable incomes, though challenges like rural areas and limited infrastructure remain.

U.S. Online Grocery Market Segmentation Analysis

The U.S. Online Grocery Market is segmented based on Type And Geography.

U.S. Online Grocery Market, By Type

• Food Products
• Non-Food Products

Based on Type, the U.S. Online Grocery Market is bifurcated into Food Products and Non-Food Products. The food products segment is showing significant growth in the U.S. online grocery market owing to the increasing consumer preference for online food purchases, this trend is largely fueled by the desire to minimize social contact. The COVID-19 pandemic has significantly influenced shopping behaviors, leading many to seek safer alternatives to in-person grocery shopping. As a result, consumers are increasingly turning to online platforms to meet their food purchasing needs. This shift is not just about convenience, but also about health and safety, as people aim to reduce their exposure to crowded public spaces.

U.S. Online Grocery Market, By Geography

• United States

Based on Geography, in the United States, the rapid rise in online grocery shopping has highlighted the need to improve both access and labeling, a priority that the federal government is actively addressing. This article will provide an overview of the federal government’s efforts to enhance the online grocery shopping experience for all consumers. White House’s National Strategy on Nutrition and Health (National Strategy), which details the Biden–Harris Administration’s plan to improve both access to online grocery shopping and the clarity of online food labeling. This strategy underscores the Administration’s commitment to ensuring that all Americans have access to nutritious food and clear information to make informed choices. Online grocery shopping has experienced exponential growth in the United States. Between 2019 and 2020, sales surged by more than 50%, increasing from $62.2 billion to US 95.82 Billion.

Key Players

The “U.S. Online Grocery Market” study report will provide valuable insight emphasizing the global market. The major players in the market are Amazon, FreshDirect LLC., Instacart, Jet.com, Peapod LLC, Safeway Grocery Delivery, Shipt, Kroger Co., Vitacost.com, Inc., and Walmart, Inc., among others.

Our market analysis also entails a section solely dedicated to such major players wherein our analysts provide an insight into the financial statements of all the major players, along with product benchmarking and SWOT analysis.

U.S. Online Grocery Market Recent Developments

• In May 2022, Walmart’s aerial announced collaboration with DroneUp will reach new heights, with the debut of expanded drone delivery services. This would allow them to serve potential clients in about 4 million homes across six US states.
• In April 2021, Ahold Delhaize and private equity firm Casterbridge Partners announced the acquisition of FreshDirect, a pure-play online supermarket.
• In March 2021, Albertsons Cos. supermarket chain Safeway, in conjunction with automated logistics expert Tortoise, will test a remote-controlled food delivery cart in Northern California.
• In November 2021, Amazon announced that the merger of its food operations Fresh and Pantry had been completed, resulting in a single, consolidated store known as Amazon Fresh.

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