The U.S. online grocery market finished January with $8.4 billion intotal sales, down 1.2% compared to last year, according to the monthly BrickMeets Click/Mercatus Grocery Shopping Survey fielded January 30-31, 2023.

The drop in total online grocery sales was driven entirely by Ship-to-Homesales, which declined 15% to $1.3 billion. Pickup posted the strongestgains, increasing almost 3% on a year-over-year basis to 4.1 billion, while Deliverygrew less than 1%, holding steady around $3.0 billion.

Collectively, the three segmentscaptured just over 12% of total grocery spending in the month, slightly higherthan a year ago and likely buoyed by strong overall grocery spending by U.S.households. Excluding Ship-to-Home, the shareof spending attributed to Pickup and Delivery was more than 10%.

>>> F or additional insights about Amazon's change in deliveryfees, Walmart's response, and what this means for regional grocers, and more, check out the video below (or click here to watch it on YouTube ).

Key Findings: Jan 2023 YOY

Topline - Continued growth forPickup and largest ever repeat intent gap between Grocery and Mass.

“This large gap in repeat intent isconcerning and should raise a red flag for conventional grocers,” said DavidBishop, Partner Brick Meets Click. “While our monthly research didn’t examinethe causes for the variations between Grocery and Mass, it could be associatedwith a number of variables, including product pricing, service-related costs, ordifferences in customer experience, so grocers may want to analyze what are themain culprits driving their respective rates lower.”

HouseholdUsage

The total overall eGrocery userbase for January dropped 1.6% versus last year.

• Pickup was the only receivingmethod that expanded its respective monthly active user (MAU) base duringJanuary, although it was up only by 1%.
• In contrast, the MAU base for Deliverydipped 2%, and Ship-to-Home plummeted 10% compared to the prior year.

The pullback in total MAUs wasdriven mostly by the largest user group (30-44-year-olds) which shrank 5% from the prioryear, but a 4% decline in the 60-and-over age group also contributed.

Much like in past months, thedemand for Mass is strong.

• Mass saw a surge of more than 20% in MAUs during Januaryversus last year while the Grocery MAU shrank by 6%, likely due to economicconditions and the relative price gap between Grocery and Mass.
• Meanwhile, cross-formatshopping between Grocery and Mass remained close to 30% for the month and slightly higher than year ago, whichhighlights how 3 in 10 households who shop with a Grocery retailer online alsobuy groceries online from a Mass retailer.

OrderActivity

Overall, MAUs placed fewer onlineorders for groceries during January, continuing a longer-term, downward trendsince this measure peaked in May 2020.

The decline in ordering frequency wasdriven by a combination of fewer MAUs making at least three orders during the month and an increase inthe number of households completing only one order.

Year over year, order frequencytrends varied between MAUs of Mass and Grocery.

• Mass saw order activity fromits MAU base grow 4% versus last year.
• Grocery experienced orderfrequency growth of less than 1%.

SpendingPatterns

The average order value (AOV),which excludes the costs of using the service (charges, fees, tips), were mixedacross the three receiving methods.

• Ship-to-Home experienced a drop inAOV of over 5% versus last year as monthly active users continued to adjust therole that this segment plays for receiving various types of grocery products.
• Delivery and Pickup reported gains of 6% and 8% respectively overthe same period.

By format, spending trends were generally positive although Grocery’s increase was lessthan half of the 11% gain that Mass reported.

Conversely, most of the Ship-to-Home formats reportedpullbacks in spending per order, including Amazon’s pure-play services whoseAOV fell by 4%.

CausalFactors

For January, the likelihood that acustomer will use the same service within the next 30 days dipped approximatelytwo percentage points versus last year to 60%.

The decline in repeat intent waslargely driven by the more frequent customers, which is a troubling sign becausethey spend considerably more per order than the customer segments who buy lessoften.

Comparing the repeat intent ratesof Grocery and Mass, Grocery trailed Mass by over 14 percentage points inJanuary, the largest gap since measurement started. The Grocery repeat intent ratenow hovers just above 50%.

Sponsor Message & Appreciation

“Grocerswould benefit from focusing on initiatives aimed at driving repeat engagementand loyalty to grow share of wallet with existing customers,” said SylvainPerrier, president and CEO, Mercatus. “Customers now expect retailers to engagethem based on their individual preferences and purchase patterns. A retailer’sfirst-party data is a great starting point to segment customers and develop amore personalized experience.”

We thank the team at Mercatus for their continued generous support of this research. Click here to see the February 14, 2023 press release .

eShopper/eMarket Monthly Report available

Stay on the leading edge of what's happening in today’s online grocery market.

Get a more extensive summary of this month's research insights in the State of the U.S. eGrocery Market report.

Purchase the current report or sign up for a 4-month flex or 12-month subscription to save money and receive eachreport when it works best for your business planning cycle. LEARN MORE HERE .

About this consumer research

The Brick Meets Click/Mercatus Grocery Shopping Survey is anongoing independent research initiative created and conducted by Brick MeetsClick and sponsored by Mercatus. Brick Meets Click conducted the survey onJanuary 30-31, 2023, with 1,735 adults, 18 years and older, who participated inthe household’s grocery shopping.

The three receiving methods for online grocery orders aredefined as follows:

• Delivery includes orders received from afirst- or third-party provider like Instacart, Shipt or the retailer's ownemployees.
• Pickup includes orders that are received bycustomers either inside or outside a store or at a designated location/locker.
• Ship-to-Home includes orders that are receivedvia common or contract carriers like FedEx, UPS, USPS, etc.

Results were 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 toreflect the national population of adults, 18 years and older, according to theU.S. Census Bureau. Brick Meets Click used a similar methodology for each ofthe surveys conducted in 2022 – Dec. 28-29 (n=1,715), Nov. 29-30 (n=1,749), Oct. 28-29 (n= 1,732), Sept. 29-30 (n=1,752), Aug. 29-30 (n=1,743),July 29-30 (n=1,690), June 29-30 (n=1,743), May 28-29 (n=1,802), Apr. 28-29 (n=1,746), Mar. 28-29 (n=1,681),Feb. 26-27 (n=1,790), and Jan. 29-30 (n=1,793); in 2021 – Dec. 29-30 (n =1,836), Nov. 29-30 (n=1,785), Oct. 29-30 (n=1,751), Sept. 28-29 (n=1,728), Aug.29-30 (n=1,806), July 29-30 (n=1,892), June 27-28 (n=1,789), May 28-30(n=1,872), Apr. 26-28 (n=1,941), Mar. 26-28 (n=1,811), Feb. 26-28 (n= 1,812),and Jan. 28-31 (n=1,776); in 2020 – Nov. 11-14 (n=2,067), Aug. 24-26 (n=1,817),Jun. 24-25 (n=1,781), May 20-22 (n=1,724), Apr. 22-24 (n= 1,651), and Mar.23-25 (n=1,601); and in 2019 – Aug. 22-24 (n = 2,485).

Photo credit: David Bishop, Raleigh, NC