Brick Meets Click study identifies biggest threats in online grocery to supermarkets
May 23

Brick Meets Click study identifies biggest threats in online grocery to supermarkets

More than 40% of digitally connected shoppers now buy some groceries online. But who are they shopping with instead of traditional multichannel supermarkets? According to a study by Brick Meets Click, it’s not who you think it is.

Based on surveys with 12,000 digitally connected grocery shoppers in three metropolitan areas across the United States, the primary online competition supermarkets face isn’t direct competitors like Peapod who steal customers entirely.

It’s from what Brick Meets Click calls “basket bandits.” These sites offer only a portion of supermarket products but meet the needs of busy yet prudent shoppers. Amazon, online-only sites like Thrive Market and meal kit purveyors like Hello Fresh and mass retailers and club stores like Target and Costco are all basket bandits.

Basket bandits appeal to consumer’s emerging and changing needs for unique products, lower prices and convenience through subscription services. However, one-stop-shopping options are still important to consumers—and multichannel supermarkets shouldn’t take that lightly.

Analyzing the competition

Brick Meets Click analyzed four dimensions of the online grocery landscape: sites shopped for groceries, the reach of those sites, share of trips and share of spending.

Basket bandits dominate every dimension—perhaps because they make up 91 percent of online grocery sites compared to the 9 percent owned by multichannel supermarkets and their direct competitors. They also command 84 percent of the share of total online grocery trips, with Amazon alone attracting 48 percent of all trips.

However, reach numbers and dollars spent are more sizable for supermarkets and direct competitors despite basket bandits still winning out. The one-stop-shop multichannel supermarkets and direct competitors have the opportunity to win a greater share of trips and basket size once established in a market. But without that presence, consumers rely heavily on basket bandit sites which can then capture 25 to 50 percent more spending.

A closer look at the basket bandits

Basket bandits can be broken down into three main groups: Amazon, mass & club and non-Amazon sites. According to Brick Meets Click, mass and club e-commerce sites account for 15 percent of total online grocery trips. Non-Amazon sites account for 21 percent, which is further broken down into multibrand HBC, multibrand CPG, better-for-you, meals and meal kits and CPG-branded sites.

The Amazon advantage

Amazon commands the largest share of online grocery trips at 48 percent. This is up from 39 percent just two years ago due to the rising popularity of Amazon Prime, Prime Now and Subscribe & Save. AmazonFresh is not a large part of these results as it was new or not available in the markets surveyed.

The impact and competitive challenge posed by Amazon is clear to multichannel supermarkets—but it’s even clearer when Amazon’s share of online grocery spending is compared to that of multichannel supermarkets. Both command an almost equal 32 percent of online grocery spending.

Perhaps what’s even more concerning to multichannel supermarkets is that as online grocery trips per month increase, Amazon’s share of grocery trips significantly increase as well. When online shoppers just shop once a month, 43 percent of those trips are to Amazon. Once they’re making six or more trips per month, Amazon captures 64 percent of those trips.

The rundown on shopper satisfaction

Shopper satisfaction with all basket bandits also surpasses that for supermarkets in all but one area—getting additional discounts with coupons. Supermarkets have an opportunity here to expand upon this unmet desire, as well as go above and beyond its direct competitors who already don’t deliver the same level of satisfaction on a number of activities.

What’s next

Once consumers begin shopping online, it’s hard not to see the appeal basket bandit sites offer. They’re able to check every unique item off their list using a number of sites with ease—and often at a lower price.

However, all is not lost for multichannel supermarkets should they be willing to adapt, according to Brick Meets Click. These supermarkets will need to offer exceptional shopping experiences compared to current basket bandit sites, ensure online shopping experiences complement in-store experiences and balance what’s unique and what’s expected.

More consumers will be checking out at basket bandit sites should multichannel supermarkets not move to meet their changing needs. Consumers need to be convinced that filling up their cart at a one-stop-shop is worth their while—and their clicks.