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eGrocery in the Year of Inflation

In this Innosight:

Inflation disrupting the market

The cost of living is going up, and it’s impacting our wallets in a big way. According to Statistics Finland, the inflation rate in Finland was 8,1% in September. The last time Finland experienced such high inflation was in 1984. The whole eurozone, in turn, hit a 9,9% inflation rate in September, Eurostat reports. As the inflation keeps rising, we become more and more conscious about prices and the contents of our shopping carts. While online food services helped us through the worst stages of the pandemic, the rising prices limit our possibilities to use eGrocery. Thus, some setbacks may be seen in the eGrocery field this year.

An eGrocery can be a brick-and-mortar grocery store that offers online ordering or an eCommerce that operates completely online. The main use cases for groceries in a digital format are e-commerce grocery delivery and home delivery food.

eGrocery always comes with a premium. During times like this, many would rather save on the costs and walk to the supermarket themselves.

Pros and Cons of eGrocery

eGrocery always comes with a premium, because the work is done on your behalf; the groceries are gathered and delivered for you all the while you’re comfortably sitting on the sofa. During times like this, many would rather save on the costs and walk to the supermarket themselves. Moreover, not all products that exist in physical stores are available online. This means challenges and even setbacks to the eGrocery service providers. 

On the other hand, there are some factors in the favour of eGrocery. Those who need to run errands by car may be thinking about the cost of going to the stores right now. As gas is currently costly, people are planning their weekly drives beforehand. For some, it may be cheaper to get groceries delivered to them than to physically visit a supermarket. It also saves time, and as the old saying goes, “time is money”.

Furthermore, with eGrocery there is more leeway for personalisation, as eGrocery providers can utilise customer data (with their consent of course) and get to know their customers better. This could help eGrocery to offer something that traditional grocery retail may not be able to provide in terms of loyalty programs and personal offers, for example. Lastly, eGrocery eases the comparison of products and prices and helps the customer to keep track of their shopping cart total. 

Emerging trends in eGrocery

Driverless Delivery

Consumer Data & Personalisation

Direct-to-Consumer (D2C)

Business-to-Business (B2B)

Innovation & Investment

Even with the current solutions that already make grocery shopping effortless, there is still room for innovation. Whether it is about tackling down prices with drone deliveries or customising shopping baskets with machine learning (ML), eGrocery is likely to come to the rescue. eGrocery innovation has the potential to change what we already know about grocery shopping in the future.

We’ll discuss the innovations and trendlines later on, but let’s first have a look at some numbers from the field.

The data gathered from our pool of over 2 million companies in tech & innovation reveals that the growth in capital invested in eGrocery has been unsteady. However, the year 2021 was a major year for eGrocery with more than €65 billion worth of investment that year. In 2022 we can expect somewhat low numbers of capital invested due to the current world economic situation. The numbers shown in the chart also indicate that 2022 will be weak in terms of investment made in eGrocery. However, as the current year is not finished yet, we can only estimate what the final outcome will be. 

Capital invested in egrocery

Capital Invested in eGrocery (in € Billions) between 2011 and 2022.

We can also see the current top seven countries in eGrocery with the United States in the leading position, India following next, and China in the third place. The number of eGrocery companies in solely these three countries was 261.

Top 7 Countries in eGrocery

Number of companies

Emerging Trends in eGrocery

There are several trends that are shaping the future of eGrocery. We have highlighted four major trends in the market: Driverless Delivery, Consumer Data & Personalisation, Direct-to-Consumer (D2C), and Business-to-Business (B2B) services.

Driverless Delivery

Current food delivery providers save time and effort, but eGrocery companies are constantly trying to figure out how to improve one of their biggest competitive advantage: delivery. eGrocery players have already figured out what the solution is, namely, driverless delivery. How it could actually be implemented to a larger audience is, however, still in the progress phase for many. Driverless delivery means technologies that would enable the delivery of food without actual drivers. It could imply drones or electric vehicles, for example. Driverless delivery would, at its best, mean less emissions and faster delivery.

Example company: Flyby

Consumer Data & Personalisation

Even the traditional grocery retailers have their own mobile applications that allow them to collect data from customers and get to know their purchase behaviour better. However, eGrocery companies may use this advantage to an even greater extent. They may use it to e.g. display more personalised offers to their customers, offer substitutable products, and send their customers different alerts and reminders.

Example company: Parkday

Direct-to-Consumer (D2C)

Consumers have a constantly growing interest for fresh and local ingredients without preservatives. Before, only the retailers took care of selling groceries to the consumers. Now, there is a growing interest in ordering from the manufacturers instead of using any brick-and-mortar stores as middlemen. Thus, eGrocery has great potential to develop their online offering related to Direct-to-Consumer (D2C), and several companies have already entered the market.

Example company: Farmy

Business-to-Business (B2B)

Until recently, many eGrocery providers have had their main focus on consumers rather than businesses. However, corporate clients demand the same effortlessness as consumers and they often have even greater need for time-saving solutions. With new innovations and technologies, eGrocery providers are developing their B2B platforms and services to serve a wider audience than they are now serving. This field of eGrocery is likely to grow, but the service providers must adapt their services to match with the corporate demand and scaled volumes.

Example company: Collectiv Food

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