More and more consumers are beginning to open their doors to the online grocery business. So much so that market research publisher Packaged Facts is projecting the industry will reach $100 billion in annual sales by 2019.
Currently, online grocery shopping accounts for 3.5 percent of the overall grocery shopping market with $23 billion in annual sales. Packaged Facts’ report claims this market share will grow to nearly 12 percent within five years, citing U.S. consumers’ rapidly increasing familiarity with online shopping.
As to who might reap the benefits of this tremendous growth, Amazon.com and Walmart are among those expected to become major players in the space, given their widespread distribution systems and company infrastructure. Last month, Amazon announced that it would be taking its Amazon Fresh delivery service, which currently operates in Seattle, San Francisco, Los Angeles and San Diego, to New York City. The company is expected to launch service as early as this month.
It remains to be seen just how this expansion will impact FreshDirect, the New York-based online grocer that has dominated the Northeast market to date. The company currently generates between $400 and $500 million in sales annually, with delivery service in select areas of New Jersey, Connecticut, Delaware and Pennsylvania in addition to New York. In a recent interview with Re/code, FreshDirect CEO Jason Ackerman addressed concerns regarding Amazon’s arrival:
“Food is a very different business,” Ackerman says. “We know that the retailer can meaningfully affect the product itself and in this business we compete on quality of food…We’re not about being a delivery business; we’re about being a great food business and great tech business.”
FreshDirect carries a vast variety of beverages, from bottled water and soda to ready-to-drink coffee and cold-pressed juice. Earlier this year, FreshDirect partnered with Reed’s Inc. to distribute the company’s line of natural sodas including Reed’s, Virgil’s and Reed’s Culture Club Kombucha. At the time, Reed’s Inc. CEO Chris Reed called FreshDirect “a true pioneer in the online grocery retail channel.”