Mentions of online grocery shopping have roughly doubled since the beginning of the year in the US market, reflecting the fast changes in the market. Big retailers like Costco and Target are entering the market by partnering with startups like Instacart, to try and give Amazon and Google a run for their money (themselves relatively new entrants).
Same day grocery delivery is growing quickly in the US, and although Amazon Fresh was initially the market leader, they are seeing their market share being evaporated by new entrants. These new entrants are becoming further competitive by partnering with huge established brands. Big players like Costco and Target are partnering with startups like Instacart, and are challenging brands like Amazon and Google in a way that would have been seen as very difficult just 12 months ago.
Amazon Fresh is also struggling in terms of sentinment as it has has a slightly lower sentiment score than most other US same-day grocery retailers. It has 63% positive sentiment, while the others are all above 70% currently. However as we can see from more established markets like the UK, as market share grows and scale increases, it can be hard to maintain positive sentiment.
Grocery delivery is more established in the UK and this has allowed more time for brand sentiment to cause issues. Sentiment for UK grocery delivery services is a real issue, in part due to these brands not being purely focused on online and having large challenges in terms of logistics. US services have been able to select limited geographic areas and limited product ranges. Their UK counterparts were stuck with huge product ranges and national delivery from the outset. Asda performs worst, with only 46% positive sentiment. Sainsbury’s and Tesco are almost neck and neck with 58% and 59% positive respectively, but it should be noted that Tesco has a significantly higher market share and far higher levels of engagement online than Sainsbury’s. Ocado currently has the highest level of positive sentiment.
With only around a 6-7% gap between the main players, and Tesco being in the middle of a brand re-focus, the market could change very quickly. The opportunity will be for established supermarkets to focus on positive customer sentiment and to grow word of mouth recommendations and market share.
Amazon has a chance to poach those unhappy customers from the established retailers and is focusing its efforts on growing it’s market share. However its current product range doesn’t envy those of the major established retailers and doesn’t have the current geographic reach outside of London.
As the US market has demonstrated, pure online players can disrupt the market very quickly and even steal market share from the likes of Amazon and Google who seemed to be getting traction. However, the profitability of these new players will come into focus once they need to establish truly national delivery services and expanded product ranges.
The clear battle ground is in customer sentiment, and a focus on customer service, perfect logistics and social engagement will be a key challenge for the market.
With thanks to Brandwatch for access to their market data and analysis.