Rapid adoption of grocery e-commerce in 2020 caused many growing pains, and heading into 2021, further pains are inevitable. The quest for those in the industry is how they will endure and cope with the challenges.
Without question, the rapid rise of online commerce has placed the grocery industry on the cusp of a digital tipping point, and the residual whiplash of this growth will have a lingering effect on both short- and mid- to long-term strategy. Growing pains can either push a company to a breaking point or be a catalyst for growth to more rapidly embrace change and invest in new ways to build their business for a new era. The key is preparation. As such, here are a few tips on how to weather the inevitable e-commerce growing pains coming in 2021.
UNDERSTAND WHERE YOU ARE ON THE E-COMMERCE MATURITY CURVE
The digital transformation driving e-commerce growth isn't a one-step process; all e-commerce programs develop along a maturity curve. We’ve identified five stages of e-commerce maturity, primarily identified by the degree to which e-commerce is embedded in the functional DNA of an organization. To be successful within a stage, and to move along the five stages of the maturity curve, accompanying investments in data, technology and organizational competencies also need to be considered. The five stages consist of the following:
- Brochureware: A digital site with marketing collateral, product information and a link to “where to buy” retail locations, but without direct selling on the site itself.
- Single-party selling: Many brands start here -- and choose a single retailer or channel for sales. The data journey typically also begins here, with transactional data providing limited insight into first-party success.
- Multichannel: More than one digital sales channel. Here, data needs become more complex and may require aggregation or normalization across data sets.
- Omnichannel: An integrated online-offline strategy for selling, merchandising and advertising goods. Data needs to represent the full consumer journey.
- Headless: Decoupling the front and back end of digital selling to execute in a way that’s interoperable with various platforms. This requires the most flexible and mature underlying data and technology infrastructure.
LEVERAGE TECH ENABLERS OUTSIDE OF GROCERY
Tech will be a primary catalyst for helping manufacturers and retailers drive incremental growth in 2021 and in the years to come. Regardless of where you are on the maturity curve, an accompanying data and technology strategy are foundational enablers to progressing through the continuum.
To simply convert a shopper from in-store to online will not be enough to improve the bottom line in the year ahead. Retailers will need to take inspiration from other sectors and lean into innovative, shoppable experiences to help build incrementality with online purchases. The best examples show that awareness, consideration and conversion are happening in an increasingly efficient way in today’s consumer journey, powered by increasingly sophisticated and personalized recommendations and offers.
Take the popular takeout food delivery service, Caviar, which has grown in popularity during the pandemic. Caviar’s underlying data sets enable flexible definition of categories within its site, including the ability to pivot restaurant categories based on important social causes. It caught my eye as a consumer, because of the ability to search for and support Black-owned or women-owned restaurants.
Looking outside of the United States, the next wave of social commerce in Asia is gaining momentum, in which influencers, artisans and shop owners can directly engage with buyers at scale without needing to be in a physical store. In this expression of headless commerce, stores, homes, workshops and even farmlands are serving as broadcasting stations, where sellers and buyers are able to interact in real time with consumers through video and live chat.
Picture rural farmers live-streaming their crop cycles and growing process in a way that allows consumers to see with their own eyes, unfiltered, produce that may then make its way onto their dinner tables. This not only illuminates increased opportunities for consumer transparency and engagement, it also highlights the ability to monetize parts of the operation previously not monetized, like the supply chain.
These opportunities for headless engagement are powered by the top platforms in Asia, such as Alibaba, Naver, Kakao and Pinduoduo. Additionally, platforms like Instagram and Facebook are increasingly offering path-to-purchase drivers and payment options, creating new channels of social commerce instead of just avenues for advertisements.
Despite the rapid growth, however, the United States remains in its infancy in terms of digital share of CPG sales, compared with markets like China (30%) and South Korea (26%). How quickly the U.S. market accelerates to those levels depends in part on the industry’s technology adoption. Using savvy marketing, advanced technology and enhancing overall experiences to attract new shoppers, reduce leakage or grow basket sizes will make the margin compression more sustainable.
DON'T OPERATE IN MAINTENANCE MODE
Finally, it needs to be said that anyone operating in maintenance mode is already at risk of falling behind. Companies that are not making moves to advance their position across the e-commerce maturity curve will lose ground, most likely for good, if not eventually. "Speed" and "agility" will remain the operative words for retailers and brands in 2021.
Although no one can wholly predict how the next wave of change and adaptation will play out in the next year, the emergent winners will be the ones who didn't wait for a perfect plan to take action. Be the company that will see and use the inevitable ecommerce growing pains as a catalyst for growth. Be the company that operates with a flexible plan — one that is powered by data and technology, and is organizationally enabled to pivot and match whatever circumstances arise.