Online sector shows excellent growth potential for grocery
Global online grocery purchasing is up 15% in the last two years, leading to an estimated US$70-billion additional sales in online FMCG, according to a new report by global measurement company, Nielsen. Closer to home, online shopping has also evolved significantly in South Africa during the past two years, with consumers displaying increasing trust and confidence within the online buying ecosystem. This has led to online purchase of a broader range of categories, with a particularly interesting upswing seen in online restaurant deliveries and meal kit services and good growth in packaged grocery.
The 2018 Nielsen Connected Commerce Report, which looks at consumers’ online purchasing habits, reports that 91% of South African consumers who have access to the internet have made a purchase online, up 3% vs 2017. Stalwart e-commerce categories travel, fashion and books continue to account for the largest proportion of local online transactions (with 48%, 48% and 45% of consumers respectively having purchased within these categories).
Meanwhile, the categories posting the most significant growth in e-commerce activity include fashion at 48%, which represents a 5% increase versus 2017, online restaurant deliveries and meal kit services have also increased by 5% to 34% and beauty and personal care products, have gone up by 3% to 26% over the 2017 figures.
Nielsen South Africa Retail Lead Gareth Paterson says; “The behaviour of shoppers online varies depending on the category. Travel, fashion and books have typically seen early adoption with consumers willing to make purchases online. As factors like trust, security, and comfort have improved, we have seen the category repertoire expand into other areas including packaged grocery which is showing good growth in South Africa, with categories such as online-based restaurant delivery, and meal kit delivery services also seeing significant growth within the last year.”
Reasons to believe
In terms of some of the drivers of this growth, the Nielsen report reveals that consumers would be more open to purchasing packaged and fresh groceries online when offered certain purchasing options and quality assurances. For example, 63% of local online consumers said a money back guarantee for products not matching what was ordered would encourage them to buy online. A further 56% of consumers are enticed by same day product replacement service for products not available, while 55% are looking for free delivery services for purchases above a minimum spend.
Looking ahead Paterson says; “eCommerce will continue to gain ground as digital touchpoints are incorporated, and barriers are overcome (delivery, fulfilment and payment security). That said, bricks and mortar will not disappear but channel relevance will change, and many stores will continue to fulfil a vital role in the shoppers repertoire and missions. The next wave of evolution in online purchasing behaviour will therefore be driven by innovations in digital capabilities like personalised recommendations based on programmatic consumption and online behaviour.”