Future of Online Grocery Delivery Services: A Look into Major Geographies

Table of Contents:

• Introduction
• The Need for Strategic Retooling
• Future of the US Online Grocery Delivery 
• Scope of Grocery Business in Canada
• Trends in UK Grocery Shopping
• Online Grocery Delivery Business in Germany
• UAE Grocery Business Insights
• Future of the Spain Grocery Delivery
• Opportunity in Grocery Business in Mexico & Brazil
• Pointers to Start an Online Grocery Delivery Service
• Conclusion

Grocery has been one of the most constant assets businesses could bank on for decades. Economies traversing between highs and lows have rarely been able to impact the grocery industry. It has so emerged that the grocery business has proven to be the most lucrative of upcoming choices for entrepreneurs and enterprises to venture towards.

Even as the industry stumbled during the unanticipated pandemic, grocers worked towards meeting the basic requirements for everyday living.

Online grocery retail, already a hit, picked up pace as the world faced a crisis, and people were shut down inside their homes.

The New Normal – Adapting Markets

Making the best use of available resources, as people started traversing towards the online channels, companies, brands, and businesses started investing towards improvising this domain for the betterment of the public as well as the industry.

Since digital transformation is becoming a significant integral part of the online grocery industry, we planned to build insight into the trends around major economies and geographies. Our write-up here will try to list out how these markets have adopted online grocery delivery services as their mainstream source of connecting with their consumers.

Upcoming businesses and prospective service providers will find the information here as a guide to contribute to the future of online grocery delivery.

The Need for Strategic Retooling

As we are talking about the future of an entire industry per se, we must look at the possible pitfalls bound to surface if not thought of well in time.

The current scenario depicts a positive outlook for both the grocers as well as the consumers. Brands like Ocado, FreshDirect, and Peapod have emerged globally. Migrating towards similar offerings has been stabilizing small-time grocers and given them the opportunity to continue everyday sales.

With the re-shaping and staying in power doing well, those providing omni channel platforms have looped in the shoppers’ major chunk. New models of engagements pertaining to subscriptions have been able to work with consumers. But amidst all this, the fact that disruptive sources could influence the success so far should not be overlooked.

Concerns that need to be well addressed to keep the markets in shape:

• AI, personalization, and automation could well disrupt the ecosystem. 
• Uncertainties related to the pandemic might still add transformations.
• The consumer-grocer relationship is facing aggregator or brand impact.
• An amalgamation of the concept – grocery and food delivery – where delivery of perishable as well as non-perishable items and ingredients as well as ready-made dishes might need to merge.
• With big MNCs becoming discounters, challenging the local grocers for a financial re-work of their improvised business models.

Bain and company have tried to lay down on the table some causes that could affect and strategies that could sustain the online grocery delivery drastically.

The grocers now need to pull up their sleeves and work up strategies towards maintaining the flow of groceries for their daily consumers. Online grocery delivery services deserve to be the key mainstay of the food industry, and a look at the major markets around the world depicts a similar thought.

Future of the USA Online Grocery Delivery

The US has always been the centre stage of all market phenomena. Global statistics are built as well as snapped as per the performance of a segment in the US market.

Coming 2022, almost 70% of buyers in the US will be purchasing groceries and other commodities online. As the US public grows aware of the benefits of maintaining social distancing and staying indoors, their bent towards shopping online has also taken a shift. The penetration of online grocery delivery in the US alone is projected to grow from 34% in the first quarter of 2020 to more than 60% by the year 2024-25.

Why is the USA Market Lucrative to Start a Grocery Delivery Business?

The USA Grocery Shoppers

More and more shoppers choosing to buy groceries online and having them delivered at their convenience has contributed to the upsurge in major brands and new businesses emerging within the domain.

Compared to 2019, there are three times the jump in the percentage of people using online grocery delivery services. The number now up to 35% has led to a significant rise in the available options for delivery services too. The entire growth is being driven by both urban as well as rural shoppers.

The game-play now focuses on how competitors cash-in to this behavioral change of the USA shoppers, who seem to be settling in with the trend of online grocery shopping. Grocery delivery picking up popularity throughout the US has built for itself a strong buyer-base, ready to explore the platforms and models upcoming in the run to outperform players in the sector.

The USA Grocers

It is rather evident that the shoppers’ behavior was definitely going to influence the business of grocers and small-time neighborhood retailers. While online shopping was already a trend popular among the US buyers with 52% of the grocery stores offering home delivery by August 2019, 25% were in the planning stage for adding grocery delivery services.

Progressing into 2021 has seemed to change very little of these stats, rather foreseeing sustenance in the persona of both the buyers as well as the grocers. Neither has the pandemic written off its note, nor do grocers recommend long queues for checkout and cash settlement when a streamlined channel has made lives easy.

Best Grocery Delivery Services in the USA

When we start searching for the most popular grocery delivery businesses in the USA, some big names top the chart. Nevertheless, new names have emerged and made their role pretty clear by reaching people in far and corner places of the country.

As a ready-reckoner, here is a list of the best grocery delivery services in the US with their popular indices:

Future of the Canadian Online Grocery Delivery

Unlike the United States, Canada is a relatively relaxed market. Where trends come and go quickly in the US, they take time to settle into the Canadian population’s mind and living styles.

Similar has been the case with online grocery and its delivery. With Toronto and Vancouver being the focal points of changes happening, the total expenditure on online grocery delivery is foreseen to go from $2 billion to $4 billion in the coming years. Comparing this to the numbers for the annual retail food market, which is somewhere around $100 billion, with 80% of it contributed by the traditional grocery stores, the online grocery delivery still seems to be a meek segment.

When comparing trends, where 81% of the global public prefers buying their groceries online, the Canadian figure falls around 70%. There is a definite role-play of people’s cultural and behavioral preferences across borders that contribute to the success of online grocery delivery practices.

Why is the Canadian Market Lucrative to Start a Grocery Delivery Business?

The Canadian Grocery Shoppers

Considering Canada as a market to launch or set up online stores is mainly dependent on the way Canadian shoppers’ prefer to purchase, their bent towards in-store shopping has slowed penetration of new trends.

A variety of shoppers within the Canadian subcontinent fall majorly into millennials and genX categories. Strengthening the future of online grocery deliveries, these urban and young are already used to the click and buy style of shopping. Also, not limiting themselves and transitioning to mainstream trends are older females from suburban regions. So typically, the penetration is happening full and comprehensive.

But with traditional means of shopping always finding interest among the Canadian public, stores like Loblaw, Metro, and Sobeys have dominated the grocery market, putting up a constant competition to the upcoming online chains of Walmart and Costco.

The availability of new channels and the assertion of the Canadian government towards opting for online options have exerted some pressure on consumer minds to migrate to new ways of ordering their groceries. Preference for staying at home, maintaining social distancing, and increased convenience has taken notice among consumers.

The Canadian Grocers

Even though unconventional shopping habits picked up pace around the world, Canada progressed slowly towards trusting new players. But the advent of the likes of Amazon for their online ordering and home-delivery has compelled local retailers and grocers in Canada to add online channels for their loyal consumers.

Initially, the Canadian grocers felt hesitant transitioning to online stores, but as the public started realising the benefits of online grocery delivery services, they introduced home-delivery and online ordering to keep up with the demands as well as their position in the market. Threats by bigger brands have coerced local grocers to add channels of delivery to their existing services.

Also, in Canada, the options to order groceries online are not uniform throughout. Different territories and provinces have different names that provide groceries to the consumer’s doorstep. In an attempt to study the opportunities and explore lucrative areas, we list here for you the popular online grocery delivery services in Canada.

Best Grocery Delivery Services in Canada

From a bird’s eye view, the major business around grocery delivery in Canada is taken care of by Walmart in cooperation with Instacart. A lot many brands and stores there are now delivering groceries in different parts of Canada under the umbrella of Instacart’s services.

Here we enlist for you the ways in which major grocery delivery services span out across Canada to draw a clear insight into the scope and opportunities for aspiring new businesses.

Suggested Read: A Guide For Canadian Entrepreneurs to Start an Online Grocery Business

Future of the UK Online Grocery Delivery

Talking about global markets and trends that differ geographically, it has time and again been observed that the UK market stands out in the way businesses flourish and perish. The pace with which the public picks up habits and sets into new ways has been impressive.

Similar has been the fate of online grocery delivery services. With the UK fast becoming one of the most expanding purchase channels, it is in line with China as the largest grocery market. The scope for new online grocery websites in the UK is promising, seeing the growth of the online grocery retail market size to £20bn.

Existing businesses like Sainsbury, Tesco, and Ocado supermarkets and retail stores have contributed significantly to the success of online grocery services in the UK. People claim to have shifted to shopping online during the pandemic lockdown, and 60% claim to spend more on online shopping than they did before.

Why is the UK Market Lucrative to Start a Grocery Delivery Business?

The  Grocery Shoppers of the UK

The shoppers of the UK have become accustomed to a lifestyle that is bound to become the future. Their mobile-friendly shopping behavior lines in with the popularity of e-commerce and the upcoming options in online shopping.

Having transitioned from traditional in-store shopping to purchasing groceries online, they have made choices that are building the future of the online shopping industry. Where the weekly grocery online sales were struggling to find their spot, they doubled since the COVID outbreak in 2020. Although not as their first preference, online grocery shopping is becoming their choice.

The UK Grocers

Considering the changes happening within the market, the grocers have been among the premier ones to adopt new ways that suit the consumers and the times.

The UK food market as compared to the German or French is much more consolidated. Due to less variety in the grocery segments, there are few hard discounters and so lesser competition in terms of the prices. This converges to retail offering high-value service, as is the case with online grocery.

Even in the large metropolitan cities, the number of grocers is less, which fall in line with the basic requirements around which online grocery flourishes. Other conditions that comply with the situation are high internet usage and high numbers of online shoppers.

Best Grocery Delivery Services in the UK

The grocery delivery services in the UK kicked off as the COVID-19 lockdown forced people to stay indoors and manage their everyday necessities from home. Many chains began site pick-ups and home delivery as on-demand service and have now matured it into one of their main service channels.

Here is a quick reference to major online grocery delivery services active throughout the UK as the country prepares to proceed to a second lockdown.

Unlike other markets, the German online grocery delivery market is a potential untapped from many angles. Where big brands with  their strategic discounts dominate the online food segment in Germany, the overall pressure is borne by the sales that happen online.

Since other European markets, including the UK, are picking up fast, adopting new channels while shopping for their food and weekly groceries, the German online food, and grocery market is still in its early growth phase.

With Aldi, Lidl, Penny, and Netto scoring more than 50% of the total grocery spend in Germany, these being hard discounters are posing a critical competition because of the huge margins they offer. But they have however set the trend, making online grocery shopping a lucrative business option.

Also, if we come to observe the projections, the average revenue per user (ARPU) in platform-to-consumer-delivery is seen to rise from USD 88.48 in 2021 to 92.13 coming 2024. These numbers suggest a positive scenario for the online delivery market.

Why is the German Market Lucrative to Start a Grocery Delivery Business?

The German Grocery Shoppers

Shoppers everywhere are attracted to the best offers with significantly visible margins. Germany’s online grocery delivery market is currently driven by such names that have primed the public with discounts and offers.

The online grocery shopping ecosystem in Germany is thus set to a competitive environment where the consumer is guided psychologically by the oversaturating outlets offering competitive pricing. Despite this, shoppers have yet to shift their buying preferences. From a mere 10% who ordered food or household items online, only 2% went for fresh food shopping through the online medium.

Of the existing models, home delivery and self pick-up availability get 76-82% of the shoppers to buy groceries online.

The German Grocers

Despite shoppers now transitioning to new ways of shopping for their groceries, grocers need to meet the increasing market challenges. As the bigger grocery chains offer extensive options with a variety of ways to lure the consumer, the local grocers of Germany need to invest in setting up online channels.

Not only being available online, but delivering the items to the consumers within same or even lesser prices is the challenge German grocers are facing. But changing consumer behavior and preferences have forced them to transition from being traditional retail grocers to online grocery delivery businesses.

The German online grocery delivery market segment now is somewhere dependent on the local neighborhood grocers who will decide which way to go. The market will either be ruled by the big brands who will take over the business from local small-time grocers, or will face competition.

With regards to the trust and relationship built between small grocers who now deliver groceries to the consumer doorsteps and the local public, the market holds huge potential for online grocery delivery businesses to flourish.

Best Grocery Delivery Services in Germany

As discussed above, the thought processes of both the German consumer as well as the grocer has been changing in sync. New players are entering into the online grocery ordering, pick-up, and delivery business.

As of now, an approximate of more than 120 online grocery delivery startups are present in Germany, with many more finding it as the best time to enter into the domain. Meeting demands and serving with enough resources is a gap yet unfilled.

Here is a list of the popular online grocery services in the German area. The list, inclusive of grocery delivery services, B2B grocery marketplaces, and other essentials, gives an idea of unexplored territory for upcoming prospects looking to venture into these grounds.

Future of Online Grocery Delivery in the UAE

UAE has been one of the lucrative markets for any business. The global interest of investors, as well as professionals from diverse domains, has prompted entrepreneurs to launch their businesses here.

Online businesses, especially online grocery delivery, is amongst the fastest growing. Not only has the pandemic pushed the public, but it has even driven capitalists, entrepreneurs as well as existing businesses to set up online grocery delivery services within the UAE.

Between 2019 and 2025, the online grocery market CAGR is seen going up to 27%. Emerging new trends with penetration of the mobile, internet, and modern methods of online payments have all led to the increase in grocery sales through online channels. This not only has improved the scenario for prospective businesses in the online grocery segment, but has driven the UAE grocery retail to a new era.

Why is the UAE Market Lucrative to Start a Grocery Delivery Business?

Considering a global shift in the way people have started shopping, grocers everywhere have started improvising on the way they are meeting demands. As people choose to stay at home while they want groceries delivered by their favorite and trusted grocery stores, the industry as a whole has acquired the wave of transformation.

As the locals in UAE get comfortable paying through online portals, and there is increasing trust with online transactions, the online grocery delivery market is also seeing positive growth. As the numbers of online orders rise, the average size of orders keeps reducing, indicating a high frequency of online shopping among the people of UAE.

So the key elements that make the UAE market a lucrative one for upcoming online grocery delivery services are:

• Surge in trusted online transactions
• More dependency on the internet
• Express delivery for food items
• Increasing working population
• Changing consumer behavior as per convenience

All these are contributing to the market growth for online grocery businesses in wide UAE. Those working expect their groceries to be delivered at times when they can receive it at home, so selecting delivery slots is the additional convenience they seek from these services.

The flexibility that comes with online grocery delivery services has modified the traditional choices of the consumer. The scope of the industry in this area thus seems ever promising from all facets.

Best Grocery Delivery Services in UAE

Some of the online grocery delivery services fast, becoming the lifeline that supports households across the UAE are:

Future of Online Grocery Delivery in Spain

Talking of the future, Spain as a market for online grocery delivery is still in the making. With minimum rates of eCommerce penetration, compared to the rest of Europe, Spain is yet to make it big with respect to the online shopping trends.

The total retail revenue is still only 4-5%, whereas eCommerce drives around 20% of the total retail revenue in other European countries. Even though the current Spanish economy is a major contribution of the digital and the eCommerce segments, the pace with which they push the economical growth is not as rapid. There is a lot of scope where gaps can be filled and how online grocery delivery can gain supremacy over existing methods.

Why is the Spain Market Lucrative to Start a Grocery Delivery Business?

The main reason why customers prefer to shop for their groceries online is because of the convenience, comfort, and flexibility they experience. A major portion of the success of online shopping in Spain can also be attributed to the penetration of technology in the lives of people.

The working segment there is spending most of their time on smartphones, and every activity, when easily possible via apps, makes choices easy and quick. Responsible for changing consumer habits, online grocery shopping has evolved between simply ordering and pick-up to delivery within 1-2 hours.

Consumers prefer ordering heavy grocery items like oranges and potatoes online. So the grocers now need to understand buyer needs and create attractive offers on such items. The idea is to generate what the customer needs. Since such deals started gaining momentum, the online sale of fresh produce in Spain also started going up.

Data suggests an increase in the perishable items or fresh food online sale by an approximate 14.7%. As the economic recession and unemployment in Spain lift, the market scope for online grocery delivery services can be foreseen to rise in popularity with the need for more and more such businesses.

Best Grocery Delivery Services in Spain

Online grocery delivery supermarkets are just starting to get popular among the Spanish. The ways in which they are connecting the consumers to their favorite nearby grocers has played much role in building the trust and confidence of the locals.

Some of the active online grocery shopping supermarkets in Spain listed here will help you realise the potential for more such businesses to launch and meet the demands in the area.

The Online Grocery Delivery Services in Mexico and Brazil

The Mexican Picture

The Mexican market for online Grocery too picked up pace as the country faced the COVID-19. Crisis. The online supermarkets began noticing a surge in traffic somewhere in March 2020, and this went up to 37% by April. As predicted, it went up further to 50% as 2020 came to an end, and this trend is expected to continue.

The digital adoption and events that lead to changes in consumer behavior provide a promising future to the Mexican online grocery delivery industry. With Uber and Walmart entering Mexico, adding grocery delivery to popular Mexican supermarkets has made a huge difference in the way businesses will foray moving ahead.

Mexico is turning out to be extremely positive in its response to such new patterns of purchasing their groceries and  household essentials.

The Brazilian Picture

A similar picture exists in the Brazilian online grocery delivery market. As consumers start becoming comfortable with new ways of shopping and bringing in their weekly or monthly groceries, Brazil-based grocers have experienced rising demands for delivery services.

The two key players in the Brazilian grocery market have leveraged their service offerings, added delivery as well as interactive online platforms for ordering. In return, the buyers responded well, and the businesses have expanded almost to all cities within Brazil.

Using buyers’ data to understand them better and offer wider service zones has also added to the quality of the grocery delivery. Joining hands with international chains like Instacart, using their delivery services to complement available resources, has made life easier for the public.

Running and popular online grocery delivery stores in these two geographies here will present the platform available for such ventures to happen.

Pointers to Start an Online Grocery Delivery Service

Having exhaustively visited major geographies and their trends in online grocery delivery and the services that are currently running the market segment in each of the above geographies, it has become evident that the scope for new businesses to venture into this direction is vast.

The world is still opening up to this side of the industry and there can be many like Instacart and Amazon Fresh that can come and create a market of their own within this domain.

However, having forayed into the details above, one must have a peek into the basic steps that need to be taken before walking the final path. A well informed entrepreneur always sets a benchmark for many businesses to come ahead of their own.

This section here will just run you through the key pointers that you need to keep checked as you decide to become the owner of an online grocery delivery service.

Step 1 – Choose a Business Model

You could be an individual already owning a small business or an entrepreneur looking to begin something new. Your first step, in any case, should be clarity on the way you want to connect as you begin.

The approach could be to follow a seasoned and tested business model, like associating yourself with local grocers, offering to bring them on an online grocery marketplace and deliver their orders for them.

Another approach could be of a market disruptor. Launch a unique idea of your own, like what Instacart did, and offer a service in a new way to create your own niche.

Suggested Read: Different Business Models to Launch an Online Grocery Business

Step 2 – Choose a Delivery Solution

You need to be clear if you want just a grocery website (online marketplace) or do you want mobile apps as well to bring it out as a complete product that conducts the service. Also, decide whether you are looking to build a ready-made grocery app or a SaaS-based solution for the services.

Step 3 – Choose How to Earn

Understanding how you will monetise your idea carries a lot of weight as you launch a new business. Research locally as to which strategy works best within the grocery market. The regional influence could play a big role in choosing a particular option.

There can be a choice between one of these or a combination of the following models:

• Subscription-based model
• Commission-based model
• Advertisements

Step 4 – Choose Your Branding Strategy

Once you launch and are running an online grocery delivery service, you must be ready to build your brand so as to run your business and expand. Be specific in your offerings and the quality associated with the services like delivery, warehousing, and inventory management.

Strategise marketing and branding of your platform. Plan campaigns according to the region, people’s interests, and what draws popularity for the platform. Online grocery is a segment every age-group and every household is aware of and is a part of, and so will be able to relate to easily.

Conclusion

A conclusion to a discussion so extensive is a task with a magnitude. The most definite way to put it would rather be simply saying that the future of online grocery delivery services is ever promising, irrespective of the geographies traversed.

Changing times, adoption of digital technologies, and in effect consumer behavior have brought many services available at maximum convenience. The result being, businesses orienting their strategies towards building platforms that connect to people and deliver at their homes, even for the most minimalistic of their wishes.

Software solutions that propel such business ideas and help budding entrepreneurs and venturists launch such platforms have hence gained traction as well as are fast becoming the need of the hour. So if you are looking to make the best out of the opportunity of becoming a part of the online grocery ecosystem, tie up with a team of experts who have launched entrepreneurs into this domain.

Grab a ready-to-launch grocery marketplace solution that could help you begin ASAP with ready-made mobile apps and a customizable platform to connect and on-board vendors instantly. This happens to be probably the best time to begin your online grocery delivery business.

Serving people in times of maximum need couldn’t hold a stronger base than setting up an online grocery delivery in your area now in these times.