Growth in Delivery’s user base and order frequency due to continued promotional efforts helped boost eGrocery sales gains versus prior year.

The U.S. online grocery market experienced robust growth in July 2024, with sales reaching $7.9 billion, marking a 9.2% increase year-over-year. This surge was primarily driven by a significant expansion in Delivery sales, which jumped by 22%, largely due to sustained promotional efforts.

Key growth drivers 

Delivery: The Delivery segment experienced a dramatic boost, thanks to ongoing initiatives by major players to expand their user bases and increase order frequency. 

Walmart, for instance, offered a 50% discount on its Walmart+ membership, slashing the annual fee from $98 to $49 in mid-July—a promotion that also ran in May. Meanwhile, Instacart also played a role, offering an 80% discount on its annual membership. Both moves contributed to the surge in Delivery users and increased ordering frequency.

“Walmart and Instacart aren’t the only players using deep discounts to boost delivery demand,” said David Bishop, partner at Brick Meets Click. “Amazon, for example, in July offered a 90-day free Prime membership trial instead of the usual 30 days, along with unlimited grocery delivery. Similarly, DoorDash and Uber Eats are maintaining low or no delivery fees to increase their market share.”

Market shifts

Analysis of monthly active users (MAUs) highlighted significant shifts within the market.

• Supermarkets and Mass: Both formats saw year-over-year increases in their MAU bases, with Supermarkets growing by approximately 7% and Mass Retailers by nearly 8%.
• Delivery and Ship-to-Home expand: Delivery's MAU base expanded by over 10% compared to last year, while Ship-to-Home saw a 4% increase. However, Pickup experienced a slight decline, with a contraction of less than 2% in its MAU base.

Order volume

Overall, July 2024 saw a 5% rise in eGrocery order volume compared to the previous year. 

• Delivery order volume surged by nearly 20%, driven by a combination of new users and increased ordering frequency. 
• Growth in Ship-to-Home's user base offset a slight decline in order frequency, resulting in a 2% gain in order volume for the month.
• However, Pickup order volume dropped by 3% due to lower order frequency among a shrinking MAU base. 

Spending trends

Composite spending per order across Delivery, Pickup, and Ship-to-Home increased by almost 4% in July 2024 compared to the previous year. The Average Order Value (AOV) for Ship-to-Home saw the most significant growth, climbing 4%, while Pickup and Delivery trailed with increases of 3% and 2% respectively. 

The Mass format achieved a 3% increase in AOV, while Supermarkets remained flat year-over-year. 

Ongoing financial pressures 

The July data revealed that households with annual incomes under $50K reported declines across all key metrics—MAU base, order frequency, and AOV—highlighting the impact of financial pressures on online grocery buying behaviors.

Cross-shopping dynamics

Cross-shopping rates remained elevated in July 2024, with nearly one in three customers purchasing online from both Grocery and Mass formats. Specifically, 32.1% of Grocery customers (which includes Supermarkets and Hard Discounters) also received online grocery orders from a Mass retailer. 

• Walmart saw its share of Grocery customers receiving online orders reach nearly 22.5%, a 430-basis point increase from last year and the highest level seen so far in 2024. 
• Target also saw growth, with its share climbing 100 basis points to 14.9%, the highest level for the retailer in the past two years.

What Supermarket Operators need to consider

“Intense competition in grocery delivery promotions is eroding regional grocers' control over customer interactions. While third-party marketplaces may boost short-term order volume gains, they also make it harder for grocery retailers to achieve the economies of scale needed to reduce operating costs,” said Mark Fairhurst, Chief Growth Officer at Mercatus. “I’m not sure many grocers would jump at the opportunity to put a farmer’s market in their store parking lot, yet many are willing to do something similar when it comes to relying on marketplaces for their online business.”

For more information about July 2024 results, check out the latest Brick Meets Click eGrocery Dashboard or visit the eGrocery Monthly Sales report page for information about subscribing to the full monthly report.

About this consumer research

The Brick Meets Click/Mercatus Grocery Shopping Survey is an ongoing independent research initiative created and conducted by the team at Brick Meets Click and sponsored by Mercatus.

Brick Meets Click conducted the most recent survey on July 30-31, 2024, with 1,760 adults, 18 years and older, who participated in the household’s grocery shopping, and a similar survey in July 2023 (n=1,795).   Results are adjusted based on internet usage among U.S. adults to account for the non-response bias associated with online surveys. Responses are geographically representative of the U.S. and weighted by age to reflect the national population of adults, 18 years and older, according to the U.S. Census Bureau.

The three receiving methods for online grocery orders are defined as follows:

• Delivery includes orders received from a first- or third-party provider like Instacart, Shipt or the retailer's own employees.
• Pickup includes orders that are received by customers either inside or outside a store or at a designated location/locker.
• Ship-to-Home includes orders that are received via common or contract carriers like FedEx, UPS, USPS, etc.

Image credit: Walmart.com app