Online Grocery: Mapping the Scalability Playbook for a $2.2 Trillion Market

The opportunity is staggering. The global online grocery market, valued at USD 670.8 billion in 2025, is on a path to become a $2.2 trillion industry by 2035, expanding at a robust 12.8% compound annual rate. This isn't a niche trend; it's a fundamental shift in how people source essentials. The market has stabilized from its pandemic-fueled frenzy into a phase of habit-driven, daily consumption, with platforms like DoorDash and Instacart demonstrating massive, recurring user bases. For a growth investor, the question is not if this market will expand, but where the most scalable profit will come from.

The map is sharply divided. Regionally, the growth story is dominated by the Asia Pacific region, which captured 59.56% of the global market share in 2025 and is expected to see the highest expansion rates. This region represents the largest and most dynamic battleground. In contrast, the United States is a mature, high-penetration market where the growth is about deepening share. Here, online grocery spending reached $12.3 billion in November 2025, a 28% year-over-year jump, and now accounts for 17% of total food and consumable sales. The U.S. trajectory shows a market where scaling means capturing more of a consumer's wallet through higher order frequency and basket size, not just first-time users.

This divide is the core of the scalability playbook. In Asia Pacific, the focus is on building the infrastructure and logistics to serve a vast, digitally-adopting population at scale. In the U.S., the focus is on operational efficiency and customer loyalty to convert a high base of active users into a profitable, recurring revenue stream. The secular growth is clear, but the path to dominance requires a regional strategy. The most lucrative regions are those where penetration is still rising, but the U.S. offers a model of profitability that can fund expansion elsewhere. The key for any player is to identify its most fertile ground and build a model that can scale profitably within it.

The Scalability Engine: Business Models and Unit Economics

The path to scaling profitably in online grocery is defined by a stark choice between business models. Platform aggregators like DoorDash and Instacart have built a powerful moat through massive user bases and high retention. DoorDash's record 42 million monthly active users and Instacart's 14.4 million active customers create a network effect where more shoppers attract more retailers, and vice versa. Their scalability is amplified by bundled memberships that lock in recurring revenue and increase customer lifetime value. This model leverages existing store inventory and delivery fleets, avoiding the massive capital expenditure of building fulfillment infrastructure. For a growth investor, this is a high-velocity play on market share capture.

Retailers, however, are pursuing divergent paths to solve the fundamental profitability problem. Kroger's strategy is a classic pivot toward operational efficiency. The company expects its online business to turn a profit next year, a key milestone driven by $400 million in savings from closing costly automated fulfillment centers. It is shifting to store-based fulfillment, partnering with Instacart, DoorDash, and Uber. This approach trades some control for lower fixed costs and faster scaling. Yet, the core challenge for any retailer model is the brutal unit economics of online fulfillment. Research shows it requires up to 125% more labor than in-store shopping, a cost rarely passed to the consumer. This labor intensity is the central friction that scale alone may not resolve.

The bottom line is that scalability is not just about user growth; it's about unit economics. Platforms scale by aggregating demand and supply without owning the physical fulfillment, but they capture a smaller margin. Retailers aim to capture the full margin but face a steep labor cost wall. Kroger's plan to use its retail media business to subsidize e-commerce profits highlights this tension. The most scalable model may be the hybrid: a platform that uses a retailer's physical assets as a fulfillment network, sharing the cost and risk. The winners will be those who can build a user base large enough to drive down the per-order fulfillment cost while maintaining a pricing power that reflects the true operational expense. For now, the labor cost remains the single biggest variable in the scalability equation.

Pathways to Profitability: Innovation and Integration

The shift from market share to financial returns hinges on two critical innovations: customer retention and fulfillment efficiency. For a growth investor, the most powerful catalyst is the move toward subscription and membership models. These are not just perks; they are profit engines that lock in recurring revenue and dramatically increase customer lifetime value. The evidence is clear: subscription-based services are experiencing swift adoption and are emerging as a key catalyst for market growth. Platforms like Amazon Prime have already proven this model, and its adoption across grocery is a direct path to stabilizing cash flows and funding further expansion. The goal is to convert the massive user bases-like DoorDash's 42 million monthly active users-from one-time shoppers into loyal, paid members.

The other frontier is operational, where the most significant innovation is in fulfillment. The brutal labor cost of online grocery, which can require up to 125% more labor than in-store shopping, is the central friction. The scalable answer is to leverage existing assets. Models like Walmart's ship-from-store strategy use the retailer's physical inventory and workforce, compressing costs by avoiding the capital-intensive build-out of dedicated fulfillment centers. This approach trades some control for a faster, cheaper path to scale. The failure to adopt such models is a major risk, as the cost of last-mile delivery alone now accounts for 53% of total shipping costs, with labor making up half to two-thirds of that expense.

Yet, even with better fulfillment, a massive friction point remains: the cart abandonment rate. The data is stark: Over 90% of customers will abandon shopping carts due to delivery fees. This isn't just a minor annoyance; it's a direct drain on conversion and revenue. For scalability, this fee wall must be addressed. Solutions could include membership perks that waive fees, dynamic pricing based on order size or location, or more efficient routing that lowers the marginal cost enough to absorb the fee. The bottom line is that profitability requires a dual focus: using subscriptions to build a sticky, high-value customer base, and using smart fulfillment integration to keep the cost of serving that base low enough to sustain margins. The companies that master both will capture the scalable profits in this $2.2 trillion market.

Catalysts and Watchpoints for Growth Investors

The path from a $2.2 trillion market to dominant profits is paved with near-term catalysts and watchpoints. For a growth investor, the most critical development is technological innovation in last-mile logistics. The fundamental barrier to profitability is the 125% more labor required to fulfill an online order compared to in-store shopping. Any breakthrough that compresses this labor cost gap-whether through advanced robotics, AI-driven route optimization, or new delivery models-could fundamentally alter the economics and accelerate the shift from market share to margin. This is the single biggest catalyst that could validate the scalability thesis.

Investors should also watch for consolidation among platforms. As the market matures from hyper-growth to profitability mandates, the competitive landscape is likely to tighten. The evidence shows a shift toward consolidation, profitability mandates, and technological integration. This could mean strategic partnerships, mergers, or the exit of weaker players, concentrating market power and capital in the hands of a few scalable operators. The evolution of delivery economics will be a key indicator. The high cost of last-mile delivery, where labor makes up half to two-thirds of the expense, will be under constant pressure. Watch for companies that can demonstrate a clear path to reducing this cost per order, either through scale, technology, or more efficient fulfillment models like ship-from-store.

For retailers, the watchpoint is integration. The success of a model like Kroger's, which expects its online business to turn a profit next year, hinges on its ability to weave digital sales into its core, profitable operations. Kroger's plan relies on $400 million in savings from closing fulfillment centers and partnerships with third parties, but it also depends on its retail media business to subsidize e-commerce profits. The key metric is whether online sales can become a self-sustaining profit center without being a drain on other segments. The broader risk, as research cautions, is the failure of the long-held "scale will bring profitability" thesis. Despite years of investment, the physical reality of grocery may make consistent profits elusive for many. The companies that master both customer retention through subscriptions and fulfillment efficiency through smart integration will be best positioned to capture the scalable profits in this high-growth market.