Online grocery sales rise in June fueled by delivery and ship-to-home
June was a strong month for online grocery sales in the United States, with sales increasing 8% year-over-year.
That’s according to the latest Brick Meets Click/Mercatus Grocery Shopper Survey. In June, total online grocery sales reached $7.7 billion, with each of the three subsectors either increasing or staying flat.
Delivery sales rose to $2.9 billion in the month, up 18% compared to a year ago. Brick Meets Click said the year-over-year gain was driven by surges in the monthly active user (MAU) base and higher order activity although the average order value (AOV) fell slightly. The month’s strong performance enabled delivery to gain 325 basis points (bps) versus last year, capturing 38% of online sales for June.
June’s pickup sales of $3.5 billion remained essentially flat on a year-over-year basis even though the MAU base for pickup expanded in the mid-single digit range. A combination of slightly lower AOV and a decline in order frequency offset the positive effects of a larger MAU base. As a result, pickup’s share of online grocery sales fell 352 bps on a year-over-year basis to finish at 45% in June, but the subsector still remains the share leader.
Ship-to-home sales rose nearly 10% compared to last year to $1.3 billion for June, marking its fourth straight month of year-over-year sales gains. Higher AOVs drove the sales lift despite a 1% dip in its MAU base and a dip in order frequency. Ship-to-home finished June with almost 17% of online grocery sales, up 26 bps compared to a year ago.
“Delivery’s strong performance in June likely benefited from the promotional offers made last month, first by Instacart and then by Walmart,” said David Bishop, partner at Brick Meets Click. “These promotions focused on delivery and offered deep discounts on each service’s annual membership fees, which helped boost both MAUs and order frequency for delivery and for Walmart.”
[READ MORE: NRF: June sees moderate rise in retail sales]
The overall online grocery MAU base expanded nearly 4% in June compared to the year prior, driven almost entirely by reactivating lapsed users. In contrast, the total pool of households that have ever bought groceries online grew just 14 bps over the same period. Brick Meets Click said the gap between these two measures highlights the fact that the increase in customers during June 2024 is largely due to less-frequent users making another order or lapsed customers who are giving the service another chance.
Cross-shopping rates for June remained elevated as nearly one-in-three customers bought online from both grocery and mass formats during the past month. The share of grocery customers (which includes both supermarkets and hard discounters) that also received an online grocery order from a mass retailer in June finished at 31.6%, and the share of grocery customers who received online orders from Walmart specifically reached nearly 22%, up 150 bps versus last year.
June’s overall repeat intent rates (a measure of the likelihood that a customer will complete another online order in the next 30 days with an online grocery service used most recently) dropped nearly seven percentage points to 56.0% compared to last year. The year-over-year drop was driven by the most frequent users of a given service – those who completed 4 or more orders during the past three months. This frequent-user cohort, which represents about half of the online customer base, posted an almost ten-point drop versus June 2023.
In terms of where households report buying most of their groceries, whether in-store or online, the mass format expanded its share by approximately 190 bps to 42% in June versus last year, while the supermarket format dipped 250 bps to 39%. The data shows that most of the share shift was the result of an uptick in households with annual incomes under $50,000 doing their grocery shopping primarily at a mass retailer.
"Regional grocers need to stem the tide and regain market share by leveling the playing field against mass merchants, despite these rivals having a price advantage," said Mark Fairhurst, chief growth officer at Mercatus. "Integrating personalized and targeted promotions into their first-party platform experience will be key to re-engaging lapsed customers and improving repeat purchase rates. Additionally, incorporating high-level, in-store customer service into the digital experience – a strength that regionals are known for – will be crucial and can give them an advantage over their mass competitors."
The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by the team at Brick Meets Click and sponsored by Mercatus.
Brick Meets Click conducted the most recent survey on June 30-31, 2024, with 1,744 adults, 18 years and older, who participated in the household’s grocery shopping, and a similar survey in June 2023. Results are adjusted based on internet usage among U.S. adults to account for the non-response bias associated with online surveys. Responses are geographically representative of the U.S. and weighted by age to reflect the national population of adults, 18 years and older, according to the U.S. Census Bureau.
