Is Walmart the New Grocery Ecommerce Threat? Part 2

February 18, 2019

All online grocery shopping experiences are not created equal.

In this second installment of our Is Walmart the New Grocery Ecommerce Threat? series, we will explore if consumers prefer to shop on Amazon’s website, at a major retailer’s site or at their local supermarket’s website. We will take a look at how Walmart plans to grow its digital grocery share and finally answer the question we posed in the title: is Walmart the new grocery ecommerce threat?

(For a general look at the online grocery industry and online grocery shoppers’ behaviors and preferences, read the first installment in this two-part series here.)

How does Walmart Compare to Target and Kroger?

Consumers rated how well Walmart, Target and Kroger delivered a seamless grocery shopping experience in a recent assessment.

To help put this in perspective, Kroger is the market leader in the supermarket/grocery industry, but not in the online grocery industry. Walmart is the market leader in big box retail and the second biggest market player in the online U.S. grocery market. Target is not a market leader in grocery ecommerce but has 1.4% market share in the big box retail industry.

Shoppers rated these three retailers in three areas: accessibility, attractiveness and acceptability. Accessibility is how easy it is to use a retailer’s solutions. Attractiveness is the retailer’s ability to improve or replace in-store shopping and acceptability is the retailer’s ability to generate better experiences.

So which retailer was ranked the best? The below lists are in order from highest-ranked to least in the three areas the assessment asked.

Accessibility:

  1. Target
  2. Kroger
  3. Walmart

Attractiveness:

  1. Kroger
  2. Target
  3. Walmart

Acceptability:

  1. Target
  2. Walmart
  3. Kroger

Key Takeaway: When it comes to online grocery shopping, Walmart is not the most user-friendly or pleasant shopping experience. In this survey, Target appears to be the top dog since it was rated as both the easiest to use and the best experience generator.

How do Amazon, Walmart and Supermarkets Compare?

Amazon and Walmart are the top two market leaders in the U.S. online grocery industry. But do shoppers prefer to patronize one of these giants, or do they like buying their groceries online from supermarkets?

The Retail Feedback Group’s 2018 U.S. Online Grocery Shopper Study provided an in-depth look at the online grocery shopper. A significant portion of its findings compared shopper preferences by major providers—Amazon, Walmart and supermarkets. All data in this portion of this article is from this report.

Which of these three online retailers do customers buy their groceries from?

33% Walmart

up 7% from 2017

31% Amazon

down 5% from 2017

More shoppers tend to shop at Amazon for their groceries multiple times.

26% Supermarket/Food Stores

up 2% from 2017

More shoppers start buying groceries online from supermarkets/food stores, but tend not to return for multiple online shopping trips.

11% Other

down 3% from 2017

In general, 49% of online grocery shoppers plan to shop online more often in 2019 than they did in 2018 and 48% plan to shop about the same amount. However, how often shoppers planned to shop at their preferred retailers did vary. Here’s the breakdown how often shoppers will purchase groceries online by retailer:

Amazon

47% more often

52% about the same

2% less often

Walmart

52% more often

44% about the same

4% less often

Supermarket/Food Stores

50% more often

47% about the same

3% less often

Overall, online grocery shoppers ranked Amazon higher than Walmart and supermarkets in the online grocery process. This includes order accuracy, finding the item they were looking for, ease of navigation, convenient pickup and the ease to identify and apply sales. The only area that shoppers rated Walmart above Amazon was on good value for money (57% said Amazon vs. 59% Walmart).

Elements of the online shopping experience satisfaction rankings by retailer:

Online Checkout Process

76% Amazon

65% Walmart

61% Supermarkets/Food Stores

Website/App

75% Amazon

61% Walmart

57% Supermarkets/Food Stores

Navigation

72% Amazon

60% Walmart

53% Supermarkets/Other Stores

Item Availability

71% Amazon

59% Walmart

45% Supermarkets/Other Stores

Identify Sales/Specials and Apply at Checkout

63% Amazon

57% Walmart

45% Supermarkets/Other Stores

Good Overall Value

57% Amazon

59% Walmart

50% Supermarkets/Other Stores

Amazon Key Takeaways: Online grocery shoppers ranked Amazon above Walmart and supermarkets in the most categories, which include overall satisfaction, order accuracy, online checkout process, website/app, navigation, item availability and ease with identifying sales and applying them at checkout. Amazon also has the most repeat shoppers.

Walmart Key Takeaways: Walmart now has the highest share of online grocery shoppers—in 2017, 36% of online grocery shoppers went to Amazon while 26% went to Walmart. In 2018, 33% of online grocery shoppers went to Walmart while 31% went to Walmart. In terms of the customer shopping experience, Walmart was the middle-of-the road option (between Amazon and Supermarkets). Walmart rated above Amazon in just one category of the online shopping experience: good overall value.

Supermarkets Key Takeaways: Online grocery shoppers has the highest percentage of first-time online shoppers, but was on the lower end of repeat buyers. Supermarkets were rated overall lowest satisfaction with the shopping experience in all the categories from navigation to checkout process to order accuracy.

What is Walmart’s Plan?

Walmart is trying to increase its online grocery share using an interesting mix of innovations and services.

For example, it has a pilot grocery delivery system that uses Ford’s self-driving vehicles to deliver groceries in Miami-Dade County in Florida.

Tom Ward, senior vice president of digital operations at Walmart, detailed how the retail giant is looking to grow its market share in online grocery:

Grocery pickup: customer orders on the app, which is then passed on to an in-store personal shopper, who fulfills the order and checks the app to bring the order to the customer within 5 minutes when the customer arrives to store.

Favorite items are highlighted to make re-ordering easy.

Home delivery at 10.5% of its U.S. stores (at 500 of its 4,761 U.S. stores) .

Spark delivery, a crowd-sourced delivery platform that makes scheduling more flexible.

Pickup towers, which are like giant vending machines. Customers scan a barcode order confirmation on the app and their items come out of the pickup tower in about 10 seconds. Walmart expected to have 700 of these pickup towers at its stores across the country by the end of 2018.

Is Walmart the New Grocery Ecommerce Threat?

Well, kind of. Walmart isn’t the new threat—the growing online grocery shopping industry is what’s really new.

Walmart is established as the big box market leader in the U.S. But Amazon has dominated most of the conversation when it comes to ecommerce since they have the largest share of the U.S. ecommerce market.

So, Walmart isn’t necessarily the new threat in online grocery but perhaps the threat that wasn’t being paid much attention to until recently.

The growing number of online shoppers that choose Walmart is a cause for concern. Bigger stores like Walmart and Amazon of course have more resources to allocate for the online shopping experience. But more first-time shoppers start shopping at a supermarket’s website than at Walmart or Amazon.

That says that online grocery shoppers look to a grocery store first to fulfill their needs. If supermarkets want to reclaim a bigger share of the online grocery shopper’s wallet, they are going to need improve the shopping experience.

The image for this blog was Designed by Freepik.

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