Well before COVID-19 struck, industry watchers saw the importance of online grocery shopping, with many pundits predicting slow but steady growth. However, COVID-19 promoted a rather dramatic expansion of online grocery shopping. Supporting this growth was the expansion of the online grocery pilots of the Supplemental Nutrition Assistance Program (SNAP), with nearly 90% of SNAP households now having access to these pilot programs. While the widespread availability and use of online grocery shopping is a benefit to many consumers in terms of convenience and safety, online shopping platforms are curated environments. The potential of tools like dynamic pricing or online nudges could have substantial implications for consumers and producers.

C-FARE has assembled a panel of experts to discuss the economic and policy issues related to online food retail.

Norbert Wilson (Duke University), Sean Cash (Tufts University), and Jennifer Pomeranz (New York University).

Dr. Norbert Wilson lead off the panel with his presentation titled “Current and Future View of Online Grocery Shopping”. This presentation provides an overview of the potential implications of the evolving online shopping environment and the societal implications of these platforms. The COVID-19 pandemic spawns a resurgence of interest in food at home, and online shopping became a vital mode for purchasing food for many consumers (Ellison et al. 2021). With only a few stores to dominate the space and the expansion of Supplemental Nutrition Assistance Program (SNAP) for online purchases it raises the question: What does this expansion mean for consumer wellbeing? 

Online grocery shopping had a faster than expected growth due to the pandemic. An early 2020 prediction of online groceries was of a 10 percent market share by the mid-2020s (Begley et al., 2020). After the pandemic, these predictions have changed and by the mid-2020s, the predicted 10 percent market share is now 20 percent (Begley et al., 2020 and Statista, 2021). Extending pilots of the SNAP on online platforms, which covers 90 percent of all SNAP households, allowed for a larger, more diverse consumer base to use online groceries (USDA, 2020b). While online groceries will continue to grow, there are a few issues of concern to address such as product display, privacy, SNAP, and labeling.  

The next panelist, Dr. Sean Cash, followed up his presentation titled “Inconsistent provisions of required food labels in online grocery stores”. This presentation describes the failure of online food retailers to consistently provide nutrition information that is otherwise required and expected in conventional environments and discuss possible repercussions of these incongruences. In the absence of clear requirements, provisions of NFPs, ingredient lists, voluntary claims, etc. are inconsistent in online environments. Even when the packaging contains all the required information, nothing in current regulations requires that it be visible to an online consumer. Not having this information can undermine public health. 

This study examined a basket of packages products available nationally online and noted presence and accessibility of mandated information (nutrition facts panel, ingredient list, common food allergens, and & juice for fruit drinks). The analysis included nine prominent retailers. The goal is to: establish consistent methods and baseline data for tracking market evolution and regulatory compliance; assess feasibility of policy options under current statutory authority. In the sample of ten products across nine retailers the study found that: 

1. All categories were “present, conspicuous and legible” on average, only 36.5 percent of the time  

1. Potential allergens were only disclosed on 11.4 percent of the products 

1. Marketing health and nutrition-related claims such as “low-sodium” on online products images (63.5 percent) were more common than nutrition facts and ingredient lists (45.7 percent and 54.2 percent, respectively) 

Professor Jennifer Pomeranz closed out the panel with a presentation titled “Legal and Policy Issues: Online Food Retail” where she describes the legal challenges to, and possible remedies for, address the current deficits in the information available to online food shoppers described in Dr. Cash’s presentation. Professor Pomeranz identified three federal agencies – the Food and Drug Administration (FDA), the Federal Trade Commission (FTC), and U.S. Department of Agriculture (USDA) -- that already have relevant authority that could be used to address these shortfalls. 

The FDA is responsible for Nutrition Labeling and Education Act (1990) that requires nutrition facts panel, ingredient list, common food allergens, and & juice for fruit drinks on food packaging as mentioned earlier in the panel. The terms label or labeling are both used in the regulations and is defined as written, printed, or graphic matter accompanying the product. However, the Supreme Court explained that labeling requirements apply when it performs the same function as it would if it were on the container. The images used by online grocery retailers perform the same function as labeling.  

The FTC is a consumer protection authority that addresses false, deceptive and unfair acts or practices. This can be food advertising, marketing, promotion, mail orders, or online sales. The retailers’ failure to provide required information may be unfair and deceptive. It may mislead consumers to purchase products they may not have otherwise purchased.  

In terms of the USDA, this agency has authority to identify factors for consideration and designate which stores are authorized to accept and redeem SNAP benefits. SNAP has expanded to now include online platforms, thus the SNAP retailer must display the required information clearly. 

Q&A with the audience followed the panelists’ presentations

1. Is there a price discrimination/difference between online and offline food prices?

   Norbert Wilson: In interviews with consumers, we have heard this concern. However, we do not have documented evidence of price differences or price discrimination.

2. Do you have data on sociodemographic differences in online shopping behavior after COVID other than income status (e.g., are there differences in adoption of online grocery shopping by age groups etc.)

   Norbert Wilson: Yes, data sources like Statista have survey data that breaks down online shopping by age and income strata

3. Do you know if there is any data about the food products that consumers buy mostly online in terms of healthiness? Do they tend to purchase more unhealthy food and if yes do you think that adding some more filters like healthy or cheaper might be a solution and why?

   Norbert Wilson: While some of the survey data show the categories of foods that people purchase online; we do not know the nutritional quality of those foods. However, the data point to processed foods such as coffee and tea and snacks and candy relative to fruits and vegetables as commonly purchased products online (Statista, 2021). Concerning the second question, the display of products can influence choices. However, the evidence of such efforts is limited and needs additional research.

This program is supported in part by the Agricultural and Applied Economics Association and the US Department of Agriculture’s Economic Research Service, and the National Agricultural Statistics Service. 

Those who register but cannot attend our webinar can always view a recording of it later at the council’s YouTube channel.