Beyond the e-Commerce Echo Chamber
“Yes, Virginia, online grocery is failing.” Said no one. Ever.
With one exception, that is: Kurt Jetta.
To be sure, Jetta’s made quite a name for himself as the rabble-rousing contrarian of discourse regarding the ascension of online grocery, which is growing upwards of 15 percent annually, and poised to top an estimated $12 billion in sales at the close of 2016 (final tally not available at press time).
Long story short: Jetta deems the e-grocery foot race much ado about nothing, and that the U.S. food retailing world has gone full-on mad in its “follow-the-herd mentality” to enter the online grocery derby solely because their competitors are doing so. As such, Jetta feels many e-grocery adopters are “shooting themselves in the foot” by investing heavily in a space where they make less money while concurrently undermining their fundamental advantages and core operational strengths to goose transitory online sales.
Not surprisingly, Jetta has taken heat for his stance regarding e-grocery, which, he believes, is neither enjoyable nor intuitive, is more expensive and vastly more impersonal — not to mention his biggest beef, which is a fundamental lack of demand, because the majority of folks are generally happy with their existing grocery store experiences.
His views have been characterized as “absurd,” and even sparked the ire of our website partner/contributor Phil Lempert, who opined in a recent segment of his videos, which air daily on our website, that he was “angered” by Jetta’s headline-generating proclamation “that online grocery is failing.”
The TABS Analytics CEO is unfazed — yet also gets it.
“So, what’s it like being the voice of one calling in the wilderness?” I asked Jetta during a recent phone chat. “It’s totally bizarre,” he readily admitted, with nary a shred of thin-skin regarding critics’ barbs. “It’s like facts don’t matter. Anybody on the opposite side of the [e-grocery] discussion never presents any concrete data” to verify or support their claims of the actual market penetration. “It’s always based on what they think it will be, or what they project it will be. But we are not seeing substantiated proof. I’ve read dozens of research studies,” Jetta continued, “but nobody ever talks about the consumer side in terms of real demand, and what it actually looks like.”
Jetta defends his position based on findings of his firm’s fourth annual “Food and Beverage Study,” which found that less than 5 percent of consumers regularly buy food online, versus 78 percent who regularly purchase it from brick-and-mortar stores — an increase of a mere half a percentage point since TABS’ 2015 study. The survey panel for his latest independent study, conducted in August 2016, consisted of 1,000 geographically and demographically dispersed consumers age 18-75 and included 15 top consumables categories. Amazon, which netted a 2 percent increase in shopper penetration, from 14 percent in 2015 to 16 percent in 2016, was the sole online shopping venue to increase shopper penetration in 2016.
During the past four years, Jetta notes, “Consumers have turned their backs on buying groceries online,” regardless of the volume of enticements offered. “Sixty-nine percent of consumers never buy groceries online,” he continued, with only 15 percent of users pledging allegiance. The reality of repeat business “is less than impressive,” he affirmed, especially when considering the industry loyalty rate benchmark of 70 percent. As such, grocers “need to figure out why there is such a high level of dissatisfaction with the online channel,” Jetta cautions, before funneling further investments into e-grocery assembly.
“It’s not an inevitability that online grocery will fail,” says Jetta. But if nothing changes with the current dynamics — foremost being declining penetration and low repeat rates — “the demise of online grocery is a mathematical certainty,” he contends. “It’s not like we want online grocery to fail. But as it stands, there are no facts to suggest that a massive boom can be expected any time soon,” or ever, for that matter.
He instead advocates investing in accurate, measurable data “to figure out why penetration and repeat business in the online grocery market are so low,” and what it takes to nail pay dirt in the space. “Exuberance and futurism are great — but it needs to be tempered by research and planning.”
While Jetta’s views are bound to spark continued debate, there’s one thing both he and his detractors see eye to eye on: The entire industry is rightly transfixed on grocery e-commerce. And when pondering potential progression to be made in the e-grocery arena, it goes without saying: We ain’t seen nothin’ yet.