Dive Brief:
- While certain major players dominate online grocery retail and delivery, they aren't growing nearly as fast as their smaller competitors, according a 101data report provided by Supermarket News. The report examined the performance of four major grocery e-tailers through the first 10 months of 2016, including FreshDirect, Peapod, Amazon Fresh and Instacart.
- FreshDirect is the clear leader by total sales, with more than twice the market share of the study's next biggest company, Peapod. Both FreshDirect and Peapod reported sales growth of about 7% year over year for the study's timeframe.
- That growth rate is significantly lower than the sales growth posted by Instacart and Amazon Fresh during that timeframe, at 72% and 43% increase, respectively.
Dive Insight:
A variety of factors influence where different online grocery retailers have an edge over competitors. Peapod's average basket size far surpassed its competitors, due in part to Peapod's lower delivery fees on orders exceeding $100. However, those larger basket sizes may also be why Peapod consumers place orders less frequently than the e-tailer's competitors.
These types of features — such as differentiations in delivery fees or timeframes — are ways grocers can lure consumers away from competing services. Online grocery retailers can also easily harness the power of big data to make targeted and customized product suggestions for shoppers based on what they've viewed or added to their cart.
But e-tailers can also borrow from strategies that brick-and-mortar retailers commonly use to inspire customer loyalty. These might include rewards and frequent buyer programs or online-based circulars advertising current discounts and promotions, which retailers could provide via email, mobile-friendly coupons or an app.
More online grocery retailers are also embracing private label brands, such as Thrive and Amazon, to differentiate from major brands and other services.