Grocery delivery has navigated a tumultuous journey since its heyday in 2020, enjoying significant investments while grappling with consumer expectations. As we prepare to dive into the state of online and in-store shopping in Food Sourcing in America 2025: Fragmentation and Focus, we’re revisiting the persistent challenges that have tempered growth of food delivery services.
According to our 2022 data on food sourcing, 22% of in-store-only shoppers found online grocery costs prohibitive due to high shipping/delivery fees, and 20% were deterred by subscription costs.1 And despite no statistically significant changes in delivery costs or subscription fees as barriers to online grocery shopping, consumers remained preoccupied with these issues:
“If you can avoid paying certain fees, then you know I would definitely do that, right? ...not only you're saving money on the groceries but you're saving like $10 in the delivery fee, right. If you order it through Amazon, it just adds up over time.” - Male, 42
Out-of-stock items and substitutions further frustrate online shoppers, although third-party services mitigate concerns by enhancing communication and control over orders. Instacart's recent shareholder letter touted a 95% satisfaction rate with item replacements in 2024 – and the company is doubling down, recently announcing investments into AI for its “Store View” feature, which allows shoppers to see what products are in stock, as well as the “Second Store Check” feature that taps a shopper at another store if an item is out of stock at the customer’s selected store.2 These promising improvements underscore the importance of consumer preferences and addressing common pain points, which could pay off with long-term consumer loyalty (and alleviate investor concerns after lackluster Q1 sales predictions).
Amidst inflation and high food prices, the relevance of grocery delivery services comes into question. While 83% of consumers feel they have at least some control over their grocery finances, a notable 69% of consumers say they are very or extremely concerned about retail food inflation.3 This could prompt consumers to reconsider services with added costs or inconveniences. Instacart's strategic move to reduce its free delivery threshold to $10 aims to boost loyalty and, notably, communicates empathy to the consumer in today’s economic environment.
Inflation’s impact on online grocery shopping highlights a complex decision-making process influenced by perceived value and quality of life. Among the 90% of shoppers who express concern with rising food prices, only 10% report buying more online; 21% report buying more in person. And of those consumers, 53% say they get better prices in store, compared to 46% who say they get better prices online. One contributing factor could be that many consumers have turned to private brands as a cost-savings strategy, and private brands may not show up as readily in ecommerce platforms.
Key takeaway:
Convenience alone may not suffice in today's economic climate. Successful grocery delivery services must align benefits with consumer expectations, offering compelling value propositions that outweigh associated costs amidst inflationary pressures.
1. Food Sourcing in America 2022, Hartman Group
2. Instacart combines AI and people power to check more items off your grocery list, ZDNet, March 2025
3. FMI U.S. Grocery Shopper Trends 2024: Finding Value, FMI — The Food Industry Association and Hartman Group