Online sales drop $1 billion in April-May 2022, driving migration to bulk buying through channels

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Sales for pickup (including orders received by customers either in-store or outside of a store or at a specific location/locker) and delivery (including orders received from first- or third-party carriers such as Instacart, Shipt or the store’s own staff) have increased compared to last year retailers) rose 9% and 5% respectively in the month of May.

Pickup, the largest online grocery shopping segment with a 45% revenue share, saw a 10% increase in its monthly active user base (MAU) and a mid-single-digit increase in average order value (AOV), offset by a modest decline in order frequency .

Delivery saw slight gains in MAU and AOV with a dollar share of 36% and a drop in order frequency of about 5%.

Ship-to-home, which accounts for 19% of online grocery sales, saw the largest revenue decline of 16% year over year, a more than 10% decline in AOV and order frequency, and a 10% decline in MAU base.

“Among the top-line results, it’s evident that as prices fall in purchasing power, customers are increasingly focused on finding ways not to pay more than they need to when shopping online,”said Brick Meets Click in its survey.

Cost tops list of primary purchase drivers

For customers shopping in bulk and grocery stores, price has become a primary motivating factor in grocery shopping. According to the survey, the percentage of shoppers who cited cost as their top selection criterion increased by 6%, from 37% in August 2020, when shoppers were first asked the question, to 43% in May 2022. The jump was with groceries Even steeper customers than in bulk, with the number of grocery channel shoppers up 10% and citing cost as the most important consideration when shopping.

“Interestingly, for grocery shoppers, the importance of getting the products they want has fallen from the top priority to the bottom one compared to cost and convenience, and this is true for both pickup and delivery services,” said David Bishop, Partner at Brick Meets Click, which speculated that the importance of cost could push more shoppers towards pickup services.

“Less than a quarter of online grocery shoppers who shop online at Grocery or Mass use both pickup and delivery, so increased cost considerations within this group may actually result in greater demand for pickup.” he said.

“Customers appreciate the convenience of online ordering, but are also becoming more cost-conscious,”​ commented Sylvain Perrier, President and CEO of Mercatus.

“To defend the base business, grocers can encourage pickup to address both issues. Assuming the pickup experience meets customer expectations, you can better protect your online customers and sales by demonstrating the savings associated with pickup’s lower fees, no fuel surcharges, or no tips by offering a more cost-effective alternative to delivery home.”

Migration to the mass channel

While the mass channel isn’t immune to the effects of inflation, last month the channel saw its MAU base rise 20% from the same period last year. In comparison, grocery retail declined over 10% in its MAU base year over year.

A similar trend played out in order frequency. On average, online shoppers shopping in the bulk channel placed almost 2% more orders in May than a year earlier, while the online grocery channel saw a 5% drop in order frequency. And while AOVs for both groceries and bulk items rose during the month from May 2021, both lagged the overall grocery inflation rate, suggesting fewer items in the basket, according to the survey data.

The proportion of the MAU base of grocers who also bulk-buyed groceries online during the month reached 33%, a new record high in cross-channel shopping.

“While this increased rate may be temporary, grocers are at risk of losing customers,”said Brick Meets Click.

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