A new e-commerce report shows a gap between digital order platforms and fulfillment capabilities.
If it’s important for grocers to provide a seamless in-store and e-commerce presence, it’s also crucial for e-commerce elements to align. New research from insights firm Incisiv and platform provider Wynshop shows that although grocers’ digital commerce platforms are largely set up to handle demand, including recent holiday-related spikes, some of their digital operations platforms have been lagging.
According to the firms' “State of Digital Grocery 2022 Performance Scorecard,” 82% of grocers reported their digital websites and apps were ready for the 2022 holiday season. In contrast, only 34% said that their fulfillment, scheduling and picking platforms were ready for the peak retail period. The scorecard, based on data from 1.7 million shopper orders analyzed throughout the 2022 calendar year, also revealed that digital grocery sales hit $128 billion last year but $298 million in margin was lost.
Shoring up the operations part of e-commerce is a resolution that is carrying into 2023, the report found. A strong majority of 77% of digital grocers said their top priority for this year is improving fulfillment efficiency. As they work towards that goal, e-retailers are also dealing with ongoing market challenges, such as inflation — cited by 91% of respondents as a business obstacle — rising workforce costs and uncertain product availability.
Efforts to sync all aspects of the business will bolster e-commerce as it continues to evolve. The report predicts that digital grocery sales will reach $146 billion this year, growing the e-comm share to 15.3% of the market compared to 14.4% of grocery volume in 2022. Incisiv and Wynshop also expect a 47% increase in the number of shoppers who use mobile devices in store and a 16% uptick in the number of pickup orders.
To sustain and even improve digital performance this year and beyond, grocers are projected to continue to invest in grocery tech, with 81% of grocery executives and 73% of store associates affirming that upgrades are needed. About one in five retailers said they will test and deploy artificial intelligence (AI) capabilities this year, and one in seven will test and deploy robotics for fulfillment.
"The 2022 holiday data amplified and affirmed what we have seen throughout the year," observed Gaurav Pant, chief insights officer of both Incisiv and Grocery Doppio, the industry insights website that published the scorecard. "Grocers continue to improve their e-commerce credentials as digital sales improve, stealing market share away from third-party platforms."
Added Charlie Kaplan, chief revenue officer at Wynshop: "The online shopping trends in 2022 followed a familiar pre-COVID shape, observing a summer dip, and a Q4 increase. The big challenge for grocers in 2023 is to improve their fulfillment capabilities in order to keep up with demand and achieve profitability."