business news in context, analysis with attitude

The new TABS Analytics Annual Food and Beverage Consumables Study is out, saying that "despite more interest in online shopping during the COVID-19 pandemic, eCommerce grocery saw only a slight uptick in sales from new users this year … Overall, online grocery transactions increased 15% year-over-year, as existing buyers made more frequent purchases, and smaller eCommerce retailers saw massive surges in new buyers. Walmart was one of the beneficiaries of the shift to online, as it overtook Amazon in share of transactions for the first time."

Among the conclusions:

"Companies, like Fresh Direct, NetGrocer and Peapod, saw a 140% increase in transactions year-over-year. Walmart remained stable at around a 30% share of transactions, while Amazon dropped to more than five points to 27% and Target declined to 11%. The significant drop by Amazon points to potential supply chain issues as they contended with the demand during the pandemic."

"Traditional stores are still reporting strong sales, indicating that they are not sacrificing sales to online channels. While most brick and mortar channels remained consistent year-over-year, value grocery chains, like Aldi, experienced a significant uptick in regular shoppers, while dollar stores and Costco experienced declines."

"Even though average transactions per buyer grew, regular purchasing dropped to 29% from 35%. Stated loyalty also saw a double-digit decline to 53%."

 Dr. Kurt Jetta, executive chairman and founder of TABS Analytics, issued the following statement:  "Since eCommerce grocery has not succeeded in expanding the pool of buyers at a time when demand is expected to be greatest, it has become even clearer that this channel will never have the scale necessary to be profitable with the current business model. New, creative approaches are needed to address pricing and streamline the supply chain."

KC's View:

I'll be honest.  I have no idea what to make of this study.  

I know they interviewed a whopping 1,000 people, and examined 15 categories.   Maybe they were the wrong thousand people, or the wrong categories.  Or maybe I just don't understand analytical studies.  (Or all of the above.)

But this seems at odds with everything else I've heard anecdotally … and it certainly seems like hyperbole to say that e-grocery will never have the scale necessary to be profitable.