Most Americans aren’t yet ready to order their groceries online.
A new BMO Capital Markets report highlights just how slowly adoption of grocery delivery services is going — and, more importantly: why.
The analysts highlight an important trend: even in 2012, for consumer products like electronics or sporting goods, between 25% and 40% of Americans bought products online — but only a very slim percentage, around 2% said they shopped for groceries this way.
And, in the cities where BMO surveyed in late 2014, that had changed little: 4% of consumers in Los Angeles were buying groceries online, and just 8% in Seattle. In New York, 16% were using these services, but FreshDirect has operated for 15 years, slightly skewing results. Nevertheless, 16% in more than a decade is a slim majority if Amazon, Google or Instacart aims to dethrone grocery titans like Kroger or Whole Foods.
So, why exactly are consumers so reluctant to order groceries online?
Silicon Valley can disrupt a lot of things, but it can’t find an app that will help you squeeze an avocado. Consumers’ preference to shop for themselves is a big hurdle for the companies that want to profit by procuring your produce. The biggest hangup for consumers remains needing to pick out their own foods.
Still, the online grocery delivery industry is in its earliest stages, and unlike Webvan, both big tech companies’ developments, along with bigger startups, have developed a more sophisticated capital structure that’s aimed at weathering slow consumer adoption.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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