It’s no secret that online food shopping has exploded since pandemic-related stay at home orders started going into place all over the United States in March. The U.S. Chamber of Commerce has reported “dramatic sales spikes” across grocery delivery platforms like Instacart, Amazon Prime and Shipt. And ShipBob has found that the month-over-month increase in online sales for food is nearly 20 percent. Meanwhile, in-store grocery purchases have fallen. While lines outside grocery stores might seem encouraging, the number of people getting through the doors has actually decreased.
Even before Covid, online grocery was already the fastest-growing product category online. Its market value doubled between 2016 and 2018 (https://www.businessinsider.com/online-grocery-report). Social distancing has put this pre-existing growth on steroids by forcing even older generations, who were formerly often reticent to adopt new tech platforms, into the virtual world. Experts say they are unlikely to ‘go back’ to all in-person shopping even after stay at home orders lift because of the newfound ease of these platforms.
The Opportunity for Food Entrepreneurs
This shift in grocery spending represents an enormous opportunity for start-up food entrepreneurs, particularly in the shelf-stable snack space because it puts brand new entrepreneurial start-ups ‘shoulder to shoulder’ with big CPG brands. Start-ups don’t need to break into the shelves of Target and Whole Foods – now consumers can find them online just with the right ad-spending.
The ‘gorilla in the room’ when it comes to food eCommerce is – of course -- Amazon. Many brands and sellers pursuing a direct to consumer (D2C) model are dominating their nutritional niches by using Amazon’s fulfillment service, FBA. Amazon FBA navigates the logistics of fulfilling orders and shipping products to customers for its sellers, giving them access to Amazon’s warehouses, distribution network, and huge customer base (300 million customers worldwide). Another advantage of selling through Amazon is that entrepreneurs gain access to Amazon Prime and its two-day free shipping, a huge competitive advantage in the online shopping space.
Shopify is also a good alternative, suitable for those who want a more hands-on approach. As an all-in-one eCommerce platform, they have been making big moves in the eCommerce market with cheaper plans to allow more people to sell through the platform. By recently extending the free trial to 90 days, Shopify aims to continue gaining market share in the intensely competitive space. In terms of fulfillment, sellers can connect their Shopify store with services such as ShipBob, enabling them to ship their products directly to their consumers.
The coronavirus is set to leave an everlasting footprint on the way consumers purchase their groceries. As the market permanently shifts to eCommerce, businesses that start selling their protein bars online will have a huge opportunity to grab market share without ever having to woo traditional brick-and-mortar buyers.