Online grocery sales totaled $6.8 billion in May, flat year over year

A new report indicates consumers shopped less often for online groceries and consumables in May, with orders totaling $6.8 billion, down 0.4% from a year ago, despite looming inflation in many food categories.

Brick Meets Click/Mercatus Group reports a pullback in order frequency offsetting a higher number of monthly users. The report looks at online grocery orders by consumers and includes receipt via customer pickup, delivery and ship-to-home.

“Customers appreciate the convenience of online grocery shopping, but they are increasingly looking for ways to save money as inflation has taken a toll on the household wallet,” said Mark Fairhurst, chief growth officer at Mercatus.

Online grocery sales picked up curbside by consumers decreased 3.9% in May, compared to a year ago, despite nearly 3% more monthly shoppers. Order frequency fell 6% along with a slight drop in average order value. Total online grocery sales for pickup totaled $3.3 billion in May, down from $3.5 billion a year ago.

Mercatus reports pickup lost 1.78% in market share last month compared to a year ago, but continued to take share from delivery in large metro areas.

Online groceries delivered finished May up 0.2% from a year ago. Mercatus said the delivery segment grew monthly average users by more than 10% while the average order value rose about 2% year over year. Delivery is becoming more popular with consumers and is about 33% of total orders. Online groceries delivered totaled $2.2 billion in May, flat with a year ago.

“During May, order delivery benefited from deep discounts related to annual memberships offered first by Instacart (80% off) and later in the month by Walmart (50% off),” said David Bishop, partner at Brick Meets Click. “These promotions likely drove delivery’s strong jump in users and show how players like Instacart and Walmart are attempting to keep active customers engaged by getting them to commit to 12 months instead of just one.”

Walmart U.S. CEO John Furner said this week that delivery orders are outpacing the number of pickup orders. He said an increase in Walmart+ memberships that includes free delivery is also adding to the growth.

The ship-to-home option posted sales growth of 9% in May, thanks to average order values being up more than 10% year over year. The number of monthly active users also grew 3%. Mercatus said ship-to-home captured 18.4% of all online grocery sales in May, up 1.59% over May last year. The total value of ship-to-home orders was $1.3 billion, up from $1.2 billion a year ago.

Mercatus said Amazon captured ship-to-home market share while mass retailers like Walmart added users in all three delivery methods, and supermarket formats saw user bases contract. Online shoppers who received orders from supermarkets, hard discounters and mass discounters increased 5.1% to 31.5% in May indicating cross shopping behaviors as consumers look for the best values.

Mass retailers like Walmart increased online grocery penetration by 1.1% in May, to 39.7% of the total share. Mercatus said supermarkets hold the top spot with 41.1% of the market share.