Los Angeles, CA (PRWEB) December 13, 2013
During the past five years, the Online Grocery Sales industry has been driven by Americans' affinity for the internet, and while revenue fell during the recession, overall performance was not severely marred over the period. Over the five years to 2013, broadband connections have increased, while, the number of mobile internet connections skyrocketed, underpinning demand for online retailing services. As a result, industry revenue has grown, and despite weak performance during the recession, IBISWorld expects revenue to significantly surge in 2013 alone, characterizing consumers' growing taste for online grocery shopping. In the height of the recession (2008-2009), the industry suffered revenue declines as per capita disposable income weakened and shoppers opted for lower-priced items. Some consumers even avoided internet grocery shopping altogether, in to avoid delivery charges. Industry profit (i.e. earnings before interest and tax) also declined as a result, bottoming out in 2009. However, as a result of improving incomes and rising food prices, industry profit has grown in 2013.
IBISWorld estimates that the Online Grocery Sales industry has a low level of concentration, with the top players (including PeaPod and Fresh Direct) accounting for less than 20.0% of total industry revenue in 2013. Many online grocery retailers are small to midsize private establishments that operate on a state and regional level and serve niche markets. Although online grocery retailers offer similar products and services, low industry concentration stems partly from the diversity of regions covered by industry operators. For example, the industry's major player PeaPod captures a significant portion of the total industry's market share (For major player market shares see IBISWorld report OD5085). However, external competition from traditional brick-and-mortar grocery stores remains a consistent threat. Industry operators compete on the basis of price, product selection, timesaving and customer service. If online grocers fail to price products competitively, or avoid offering products not easily found in physical supermarkets, they risk losing business to traditional stores.
Looking ahead, the five years to 2018 promises strong growth for the Online Grocery Sales industry. According to IBISWorld Industry Analyst Jeffrey Cohen, “Driven by declining unemployment and increased internet usage, industry revenue is forecast to grow in 2018.” This is because falling unemployment will decrease consumers' leisure time, making internet food shopping more convenient and attractive. Moreover, “as people return to work, incomes will grow, further stimulating industry demand,” says Cohen. Consequently, input price increases will also be easier to pass on to consumers, growing profit further.
For more information, visit IBISWorld’s Online Grocery Sales in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Operators in the Online Grocery Sales industry sell grocery items through online channels. The industry comprises companies that are based online, and those that have both a physical presence and also sell food products on the internet.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.