Although it has skyrocketed in channels offering more durable goods in recent years, online shopping in the grocery channel still remains relatively niche.
Sales of CPGs online still average only about 3.4 percent of total store sales for ecommerce-enabled supermarkets — 5.2 percent for those with an ecommerce service for four years or more — according to last year’s “Grocery Ecommerce Supermarket Scorecard Report,” from Barrington, Ill.-based retail consultancy Brick Meets Click.
That’s all going to change soon, though. This year, roughly one in three consumers intend to shop for groceries online, says a January report from Toronto-based ecommerce platform provider Unata — a division of Instacart — and ShopperKit, an Atlanta-based order-fulfillment platform.
- Online grocery's niche status is about to change: One in three consumers intends to grocery shop online this year.
- To bring grocery ecommerce mainstream, retailers must flip their focus from the channel to the perspective of the customer.
- Grocers can solve on-shelf availability issues, a key burden, with the right store-level perpetual inventory and computer-generated ordering.
- 20 percent of voice-ordering-technology users buy groceries through the devices. This will grow as the number of homes with smart speakers surges.
Additionally, recent research from the Food Marketing Institute, in Arlington, Va., and Chicago-based market researcher Nielsen shows that number rising further: Second-year findings of the “Digitally Engaged Food Shopper” report predict that seven in 10 consumers will be grocery shopping online as soon as 2022 or as late as 2024. The $100 billion spend by then will be equivalent to every U.S. household spending $850 online for food and beverages annually.
So what must grocers do to play their part in ushering grocery ecommerce into the mainstream?
Focus First On the Customer, Not the Channel
When grocers focus solely on the online channel, retailers imagine barriers of single-channel logistics and economics. If the focus is flipped to what happens from a customer-first perspective, however, compelling facts surface that change the conversation.
For instance, retailers thinking in terms of “channel-first” can believe myths like online sales cannibalize in-store sales. According to David Ciancio, global head of grocery with Chicago-based retail analytics firm Dunnhumby, this simply isn’t true.
“The data shows that online sales are 60 to 70 percent incremental business, that click-and-collect drives top-up trips in the store by 20 percent, that multichannel customers are three times more valuable than in-store shoppers alone, and that the average basket size is four to five times larger online than in-store,” asserts Ciancio.
Another myth is that the online channel can’t be profitable, he adds. U.K.-based grocer Tesco and others have learned that a larger basket size and a higher gross-margin product mix online are key to driving favorable commercial results. Canada’s Metro and U.S. grocer Kroger, too, have realized this with a customer-first strategy over one of putting channel first.