How Many Australians Actually Purchase Groceries Online?

April Davis By April Davis | 19 Mar 2019

The Australian online grocery sector is in a period of fast growth, but how quickly are consumers adapting to the new supermarket model?

New research from Product of the Year Australia (POY) suggests that Australians are slower to adapt their grocery purchasing habits than the wider retail sector believes, with only one in ten consumers surveyed saying they always shop for groceries online.

According to POY, 53 percent of Australian women have never purchased their groceries online, while 52 percent of males are yet to try online grocery shopping. Of these, those aged 55 and above are reportedly the least likely to shop online (72 percent), compared to only 49 percent of 35-54-year-olds and 37 percent of 18-34 year-olds.

However, the company’s research also revealed that 42 percent of consumers who had purchased groceries online in the last six months would continue to do so for the majority of their grocery needs in the future.

Sarah Connelly, the director of POY says that Australian retailers are letting themselves down when it comes to delivery and the freshness of produce.

“Our findings show that in order to continue growth and increase revenue through digital offerings, it would bode well for retailers to place more focus on lowering delivery costs, providing fresh products consistently, and ensuring customers receive all items ordered. Only once they have tackled these issues will consumers be more encouraged to move from physical stores to online shopping permanently,” she said.

The Australian market paints a very different picture to the US and UK, where the rate of online grocery shopping has almost doubled in recent years. According to POY, 48 percent of British residents surveyed said they did at least some of their grocery shopping online. In the US, 5.5 percent of all online shopping in the region can reportedly be attributed to online groceries.

In Australia, retailers have taken great strides over the last few years to improve their e-commerce offerings, with Coles recently launching a selection of its pantry and fresh goods on eBay and Amazon Australia increasing competition in the space with its own pantry range of grocery items available online.

These efforts were recognised at the recent Power Retail All Star Bash, where Woolworths took out the award for No.1 Online Retailer of the year, followed closely by its main competitor, Coles, in second place. This marked the third year in the row that Woolworths ranked the highest for acquisition, fulfilment, conversion and retention in Australia’s fast-growing online retail sector.

Nielson’s latest Grocery E-Commerce report also indicated strong growth in the Australian sector when it was released in November 2018, with the company’s data revealing 39.7 percent growth year-on-year for the sector. Meanwhile, Australia’s total grocery market only grew by 2.7 percent.

Based on this, Nielson says that online groceries have carved out a greater share of the overall market, gaining an extra percentage point to reach a 3.8 percent stake in total grocery dollar sales.

In line with the results of Power Retail’s 2019 Top 100 Online Retailers list, Coles and Woolworths still hold the largest market share, representing a combined stake of 85 percent of total online grocery sales. It’s unclear how much of an impact Coles’ partnership with eBay and Amazon’s entrance into the grocery sector will have in fiscal 2019.

“The online grocery landscape is likely to continue its rapid growth as Australians get more comfortable with the experience, and certainly as Amazon expands its offering,” says Alfredo Costa, head of retail at Neilsen.

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