eGrocery Benchmarks Part 2: Established customers drive 3.5 times more revenue than new ones

Top Line

Long-term, established online grocery customers collectively generated more than 3.5 times the revenue for conventional grocers than new customers did during the final 4-week period examined in the Brick Meets Click eGrocery Performance Benchmarking 2021 Wave .

“Grocers need to build more meaningful engagement with their online customers,” said David Bishop, Partner at Brick Meets Click. “The market has contracted as expected, but the fact that nearly three-quarters of the customers that shopped online last year have lapsed and nearly two-thirds of the customers today are considered new to the grocer’s service simply underscores that those attracted to shopping this way are still in search of a service they deem acceptable compared to the alternatives.”

Sponsored by Cardlytics, Mercatus, and Hussmann, the research analyzed transactional sales data linked to non-personally identified households of nearly 950 stores from 45 U.S. banners and is the largest independently conducted grocery benchmarking initiative completed to date.

Customer Metric Insights: Part 2*

Here are several key customer metric insights from the analysis of three corresponding four-week periods in 2020 and 2021.

Longer relationships with customers pay substantial dividends.

The more established customers, those who have shopped online with a grocer for over 60 weeks, spent 2.4 times more than new customers who started shopping that same grocer within the past 4 weeks.

Relationship dividends are generated by increased order frequency and spending per order.

Comparing the two customer cohorts quantifies that the more established customers’ order frequency is 1.9 times higher than for new customers, and their average order values are 1.3 times greater.

Offering customers choice dramatically enlarges the size of the addressable market.

Most customers have strong preferences when receiving online orders from conventional grocers. In fact, when given the option, fewer than 5% used both Pickup and Delivery services from the same grocery banner during the entire 12-week period in 2021. So, if a grocer only offers one receiving method, it could be sending the 54% of shoppers who prefer Delivery and 42% who prefer Pickup to a rival.

Attracting new customers is important but nurturing existing ones is essential.

During the final period (four weeks ending September 28, 2021), 34% of online customers had used the grocer’s service for 60 weeks or longer and accounted for 46% of overall online sales, while 23% of customers placed their first order with the grocer and accounted for just 13% of sales. Collectively, the long-term established customers generated more than 3.5 times the revenue than new customers.

Sponsor Appreciation & Message

We thank the teams at Cardlytics, Mercatus, Hussmann for their generous support of this important research.

“Consumers’ brand and channel preference has been more difficult than ever to predict as a result of the pandemic,” said Mike Novosel , Head of Grocery at Cardlytics. “We focus on helping brands understand whole wallet behavior through our access to $3.5 trillion of annual consumer spend data, and work with them to identify who is not as loyal as suspected, or most inclined to engage with them digitally, then reach them through their bank, where spending is top of mind, to incent behavioral change.”  

*eGrocery Performance Benchmark Reports

The complete results of the Brick Meets Click eGrocery Performance Benchmarking 2021 Wave is being released in a series of three reports:

1. Top-line Performance Findings (released late January) focuses on key causal factor that can impact top-line performance, such as how long a service has operated,what services are offered by each store, and where the store operates.  These findings were discussed in the Feb. 3 webinar featuring Dan Sullentrup of Hussmann . Click here to watch now .
2. Key Customer Metrics (released late February) explores key eGrocery metrics, ranging from attracting new customers to growing sales from existing ones, supported by additional perspective from Cardlytics .  Findings will be discussed a public webinar, featuring David Bishop of Brick Meets Click and Andrew Van Aken of Cardlytics.  Click here to watch now .
3. Top-Quartile Analysis releases in late May, and will highlight factors and issues that can show grocers how they can further improve performance with practical guidance from Mercatus .

About this research

The Brick Meets CliceGrocery Performance Benchmarking is an annual initiative based on ePOS data provided by participating retailers. It began in 2016 with 17 grocery store banners and has grown to 45 banners for 2021.

The 2021 wave generated key insights based on an analysis of comparable 12-week periods during 2021 and2020, examining performance across three 4-week periods (8, 9 and 10) ending with September 28, 2021.

The study examines the critical business questions related to improving strategy and execution when operating a first-party ecommerce shopping service.