August 30, 2022 (press release) –
But Walmart will increase its lead as No. 1
August 30, 2022 (New York, NY) – Instacart narrowly surpassed Amazon in 2021 to become the second-largest grocery* ecommerce player in the US. But keeping that position will be a challenge. In its latest grocery ecommerce forecast, Insider Intelligence raised its sales outlook for Instacart following positive news from investors about the company’s sales and order volume. But while Instacart and Amazon compete neck-and-neck for the No. 2 slot, they won’t catch up to leader Walmart anytime soon.
Instacart, whose IPO is expected soon, will grow its grocery business by 17.4% to reach $30.60 billion in 2022. This growth gives it a 21.8% share of US grocery ecommerce sales, a figure that will hold relatively steady through 2024.
“As a delivery intermediary, Instacart’s business model is heavily reliant on the partnerships it has with grocers and retailers, many of which are exclusive,” said Zach Goldner, forecasting analyst at Insider Intelligence. “One of Instacart’s biggest challenges will be to maintain these relationships moving forward. In the coming years we’ll see grocers expand their first-party services as they seek to reduce their dependence on intermediaries.”
Instacart is running an extremely tight race against Amazon, which we expect will overtake Instacart next year to once again be No. 2. Amazon will grow its online grocery business 16.5% to $29.49 billion this year, capturing 21.0% of the market. By the end of 2023, Amazon will generate $35.46 billion in online grocery sales, compared with Instacart’s $35.19 billion.
“Grocery has become a battleground for many of the top players in ecommerce,” said Blake Droesch, senior analyst at Insider Intelligence. “Food and beverage, as well as health and personal care, are among the fastest-growing categories in ecommerce, so these companies are depending on grocery to drive growth.”
Walmart Inc., which encompasses Walmart and Sam’s Club, is the leader of the US online grocery market, having surpassed Amazon’s grocery ecommerce business in 2019. In 2022, Walmart Inc. will generate $38.72 billion in grocery ecommerce sales, equating to 27.6% of the market. It will further increase its lead over Amazon and Instacart through 2024.
“Walmart is the leading US grocer overall,” said Droesch. “Since customers already associate the retailer with grocery, Walmart is poised to capture a large chunk of grocery dollars that flow from in-store to online. It’s also investing in its own fulfillment services, so it will be less reliant on Instacart and other delivery services going forward.”
In fact, Walmart and DoorDash ended their years-long partnership earlier this month.
Inflation is fueling strong growth in overall US grocery ecommerce sales. The total category will grow 15.8% to $140.19 billion this year, giving it a 13.3% share of the US ecommerce market. It will make up nearly 10% of US grocery sales for the first time. The growth comes as food-at-home prices rose 13.1% YoY in July 2022, which is the largest 12-month increase since the period ending March 1979, according to the US Bureau of Labor Statistics.
“Inflation is the main contributor to digital grocery sales growth this year,” said Droesch. “But long-term sales growth will be sustained by current digital grocery buyers** spending more of their overall grocery dollars online. The biggest proof of that is digital grocery sales reaching 15% of total grocery by 2026. True, that’s still a fairly small share percentagewise compared with ecommerce-mature categories like apparel or electronics. But grocery is a massive retail category, so 15% is still a huge market in terms of dollars.”
* Groceries are defined as food and nonfood products that people regularly buy from a grocery store, including food and beverages, pet food, household cleaning products, personal care products, and others.
** ages 14+; digital grocery buyers are defined as internet users who have made at least one grocery order via any digital channel during the calendar year regardless of method of payment or fulfillment; includes grocery delivery and pickup
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Forecasts and estimates from Insider Intelligence are based on an analysis of quantitative and qualitative data from research firms, government agencies, media firms, and public companies, as well as from interviews with top executives at publishers, ad buyers, and agencies. Data is weighted based on methodology and soundness. Each eMarketer forecast fits within the larger matrix of all its forecasts, with the same assumptions and general framework used to project figures in a variety of areas. Regular re-evaluation of available data means the forecasts reflect the latest business developments, technology trends, and economic changes.
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