Retailers Win in Online Grocery

When consumers buy groceries online, they place their trust in retailers, not marketplaces.

By the Numbers

The PYMNTS Intelligence report “How Preferred Payment Availability Can Reduce Cart Abandonment” drew on insights from a survey of more than 3,500 U.S. consumers to better understand their behaviors when shopping online.

The results revealed that consumers’ channel preferences vary by retail category. While often consumers choose to make purchases from online marketplaces rather than retailers’ or brands’ websites or mobile apps, in grocery, shoppers’ behaviors tell a different story.

Specifically, 44% of consumers prefer retailers’ websites or apps when shopping for groceries online, while only 29% prefer online marketplaces and 24% prefer brands’ sites or apps, indicating that consumers’ digital loyalty lies with the grocery stores themselves.

The Data in Context

The findings suggest that leading grocers such as Kroger and Walmart are gaining ground with online grocery shoppers faster than third-party players such as Instacart.

“Digital is an important growth accelerator in our business, and in 2024, we expect to deliver another year of double-digit sales growth,” Kroger Chairman and CEO Rodney McMullen told analysts on the company’s earnings call Thursday (March 7). “As we grow volume, particularly in our Kroger delivery network, we expect our unit economics to improve and become a tailwind to our long-term financial model.”

To keep pace, Instacart is constantly rethinking its marketing initiatives.

“[W]e try to get more and more efficient with marketing every year and unlock new tactics,” Instacart Chairman and CEO Fidji Simo told analysts on an earnings call last month. “And what you’re hearing this quarter is that we did shift some of our marketing investments toward incentives because we have really unlocked the ability to deliver incentives in a way that allows us to both acquire customers but also retain them over time by incentivizing the behavior that leads to habituation.”

Source: pymnts.com