Australian consumers are expected to spend $3.3 billion on grocery products online in 2018-19, largely thanks to click-and-collect, which has been driving sales at an annualised rate of 21.7 per cent over the five years to 2018-19, according to data from research firm IBISWorld.
“Consumers trust in online grocery shopping has taken time to develop,” IBISWorld senior industry analyst Tom Youl said, noting that lingering concerns about the quality of the food they receive, especially in the fresh category, have kept consumers from purchasing groceries online.
“These trends greatly constrained revenue growth, despite a steady rise in the proportion of Australians who purchase groceries online. However, the introduction of click-and-collect services has opened up the market.”
The ability for customers to check the quality of items before taking them home, through a click-and-collect option, has driven the annualised expansion of the online grocery category, according to Youl, and has grown online customers average expenditure per online transaction.
As in bricks-and-mortar, the two major online supermarket players in Australia are Woolworths and Coles, which are estimated to hold 45.3 per cent and 30.9 per cent of the online grocery market respectively.
Both companies invested in infrastructure to enable such capabilities, with click-and-collect being integrated across almost 1400 supermarkets nationwide in 2017-18.
While Woolworths benefited from being the first to market with its click-and-collect offering, Coles responded quickly, and now offers the service at around 200 more locations than Woolworths.
“Click-and-collect functions have also been added to Coles Express petrol stations, which has increased the company’s footprint within the segment,” Youl said.
“Additionally, Coles’ near $1 billion investment in two distribution warehouses, due to be operational by 2045-25, will likely improve the company’s efficiency in delivering online grocery shopping service.”