Online Grocery Sales Are Booming

Online Grocery Sales Are Booming

over 3 years ago2 mins

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Grocery sales are soaring on both sides of the Atlantic, helped by a significant shift towards online food shopping. But with Amazon and Ocado dominating on logistics tech, the curbside combat could be over before it’s begun… 🚚

What does this mean?

Lockdown has led to more eating in – and therefore more buying in of ingredients. Data from research firm Kantarthis week showed UK grocery sales rising a record 14% last quarter compared to a year before, while US sales are also spiking. And although you can’t (yet) squeeze an avocado online, circumstances have driven more people to try doorstep delivery. UK e-grocery sales are up 75%, with one in five households now giving it a go; in the US, 52% of consumers have bought food online.

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Among those online grocery shoppers, internet giant Amazon remains the top destination – with free Prime shipping seen as a key perk. All those deliveries, however, are proving a headache for the Everything Store. Shipping costs soared 49% last quarter, eating into profit. Hence, perhaps, reports on Wednesday that Amazon is now looking to accelerate the development of its own logistics network by buying self-driving startup Zoox at a knockdown price.

Of course, ecommerce fulfilment is even more expensive for most supermarkets, who also run old-fashioned things called “stores”. Not tech-savvy Ocado, however. Its UK grocery sales grew 33% last quarter – and a partnership with high-end British retailer Marks & Spencer will soon join automated warehouse deals in the US, Europe and Japan 🤖

Why should I care?

Some standalone grocers – particularly budget brands – are still waiting to see if online food shopping really takes off post-pandemic before building complex logistics chains. More working from home has to be weighed against more single-person households (where cooking is, understandably, less frequent). Wait too long, however, and the likes of Amazon and Ocado could have grocery shipping sewn up...

Ocado’s share price has risen 60% this year amid the coronavirus crisis
Ocado’s share price has risen 60% this year amid the coronavirus crisis

Self-driving tech, meanwhile, could also be set for consolidation. Following numerous false dawns, some investors think Google parent Alphabet is now the only firm apart from Amazon with enough cash to cover the enormous research costs involved. Check out our Packs on the two companies for more on their efforts in this area… 🚘

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