Powering retail ecommerce for 2,200+ brands
Content text for a top bar
Q1 2026 INDUSTRY REPORT
The State of Ecommerce: Grocery category
Q1 2026 Grocery: Why volume growth is costing brands margin & ROAS
- Grocery revenue jumped 32% YoY in Q1, but ASP fell 6%, ROAS slipped below 3.0, and OOS losses spiked 70%. Volume is outrunning value.
- See how mix shift, bidding pressure, and replenishment gaps are reshaping Grocery profitability.
Growth is up. Margin, ROAS & fill rates are not. Download the report.
Download the full report
Used by the most loved brands in the world
Key takeaways
Volume is outrunning value:
Revenue grew ~32% YoY on the back of ~20% higher glance views and a ~12 point conversion lift, but ASP fell over 6% and discounts barely moved, confirming structural mix shift toward lower-priced items rather than promotional pull-through
Margin is compressing as the category scales:
Gross margin narrowed two to six points YoY, meaning Grocery's accelerating top line is coming at a measurable cost to per-unit profitability that volume alone can't offset
Ad spend is scaling faster than it's earning:
A ~36% YoY increase in ad spend produced a ROAS decline, with February dipping below 3.0 and CPC up ~10%, making budget pacing and bid discipline the clearest levers for restoring efficiency
Fulfillment is improving in throughput, not in prioritization:
Fulfilled units rose ~26% YoY, yet fill rates softened and unavailable tickets reached nearly 2.4x the March 2025 level, exposing persistent friction even as raw volume scales
Stockout losses are concentrated where growth is fastest:
OOS revenue loss spiked ~70% YoY despite on-hand inventory running 60%+ above prior year and Rep OOS% only edging up to 2.6%, confirming that high-turn, top-revenue ASINs are where brands must sharpen replenishment
Demand is outpacing replenishment velocity:
Aggregate inventory builds aren't solving availability problems on the highest-turn ASINs, and even small gaps on top-revenue items are generating outsized lost revenue
