The UK and France are the two countries with the most developed e-grocery markets in Europe, valued at €7.8bn and €6.7bn respectively (2013), according to a new report from product data exchange network SyndicatePlus.
The State of Online Grocery Retail in Europe study explores the online grocery market in major European countries including the UK, Germany, France and the Netherlands plus the United States.
In Europe, researchers found e-grocers in the UK focus on excellent home-delivery services, while France leverages its extensive drive-through pick-up point network to drive sales.
The Netherlands and Germany are the two smallest online grocery markets covered in this study, valued at €0.29bn and €1.45bn respectively (2013).
While the Netherlands is held back by an existence of one dominant player (Albert.nl), the German market altogether lacks a fully-functioning e-grocery market. Both scenarios hamper a large-scale development of the market, say researchers.
In contrast, the e-grocery market in the US is by far the largest and most vibrant market in the world – valued at over $15.4bn (2013), according to SyndicatePlus. Within the market, traditional brick-and-mortar retailers are successfully leveraging the online channel.
At the same time, a proliferation of start-ups is disrupting the market by introducing new models that are reshaping the landscape, researchers report.
While online grocery retailing is still at an early stage compared to the offline channel – less than 8% of all consumers in the European Union (EU) buy groceries online – it is tipped to grow.
“A growing e-grocery market, increasing levels of global competition, and shifting consumer preferences will change the e-grocery sector in the next three years,” says SyndicatePlus.
The e-grocery market is expected to grow in all of the researched countries. This increase will largely be driven by increasing retailers’ focus on and budget allocation for the online retail channel, say researchers.
In the US, retailers, such as Amazon and Walmart, have entered the online grocery market. Amazon will also soon start operations in Germany.
“Together with an increasing number of new companies entering the online grocery market and introducing new and innovative business models, such entry is bringing about unprecedented levels of competition,” SyndicatePlus reports.
“To avoid delivery fees, consumers increasingly prefer to pick groceries up from physical stores. This shift in consumer preference is driving retailers to turn to the click-and-collect distribution model.”