Online grocery sales finally impacting traditional market share

U.S. grocery sales account for $600 billion annually, the largest retail category by far, but less than 1 percent of all e-commerce sales. Now, according to a new in-depth report by BI Intelligence, e-commerce startups and big-name tech companies are pursuing more grocery sales online and changing the grocery delivery industry for good.

Between 2013 and 2018, online grocery sales will grow at a compound annual growth rate of 21.1 percent, reaching about $18 billion by the end of those five years. During the same period, offline grocery sales will rise by 3.1 percent.

According to the report, there are a number of reasons why consumers do not like to buy groceries online, which translate to negatives for the business side as well, including the cost of logistics, shipping fees and the quality and freshness of orders.

Advantages to purchasing groceries online include a larger selection of products. While only 15 percent of U.S. adults have ever purchased general food items online, 25 percent have bought specialty food and beverages online.

Other findings show that concierge shopping and subscription prepared meals are innovating the online grocery model and differentiating them from traditional grocery models.

As customers get used to ordering online and receiving same-day delivery, the grocery division will follow. E-commerce players such as Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) are paving the way. Google recently announced the expansion of its same-day delivery service and a shopping Express membership program. In the spring, Amazon launched Dash, which allows consumers to add groceries and household goods to their shopping lists using the company's AmazonFresh service.

Although same-day delivery can be expensive, 25 percent of millennials said they would pay a premium for this service.

For more:
-See this Business Insider article

Related stories:
Google, Barnes & Noble unite for same-day delivery
Google expands same-day delivery service
Amazon launches Amazon Dash for delivery of groceries
Walmart To Go offers new grocery pick-up service for Denver shoppers
Google adds retail tracking feature into Google Now app

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