In a world where convenience is king and you can buy pretty much anything from the comfort of your couch—new clothes and shoes for growing children, a new shower caddy for your bathroom, any kind of food you want—it’s logical that the next step in ecommerce is grocery shopping.
Online grocery a growing trend
According to Brick Meets Click, online grocery sales accounted for 6.3% of all grocery shopping done by United States households in 2019. Brick Meets Click predicts that percentage will rise to 7% this year.
While it’s a small percentage at face value, it represents a growing trend: while overall grocery sales remained stagnant, Brick Meets Click reported, online sales grew 15% on a year-over-year basis.
“This is a growing trend because of convenience to the customer, overall shifts to online spending, etc.,” said Clark Kleinman, Senior Brand Manager at Pattern. “Stores and retailers need to be on top of it or risk falling behind.”
Currently, Walmart is at the head of the pack when it comes to selling groceries online. As of November 2019, Walmart offered online grocery delivery from about 1,400 stores and increased the number of pickup points for online orders to 3,100, an increase of 47.6%.
Amazon No. 2 for online grocery, but No. 1 in customer satisfaction
The Retail Feedback Group found in a survey of online shoppers that Amazon comes in at No. 2 for online grocery shopping. In terms of customer satisfaction, however, the survey found Amazon comes in at No. 1.
Amazon Fresh and Prime merged early 2018, and in October 2019 the company announced “ultrafast grocery delivery” service from Amazon Fresh and Whole Foods Market would be free with a Prime membership. Without a Prime membership, grocery delivery costs $14.99 a month.
Challenges for Amazon grocery
The thing that’s really holding back Amazon from overtaking Walmart is Amazon doesn’t have the same kind of large store footprint that allows grocery delivery and pickup to be an option in multiple locations. Amazon is taking steps in this direction as well, though, announcing in October 2019 that it now offers fresh grocery delivery in more than 2,000 U.S. cities and towns, with plans to continue to expand the service.
One of the major challenges facing Amazon when it comes to online grocery delivery is simple: fresh products can’t be stored in warehouses for a long time and there are other logistics to consider when delivering food items that might expire in the heat.
The second challenge is the fact that other grocery chains, notably Kroger and Albertsons in addition to Walmart, have already begun to add grocery pickup and delivery to their business. Other, smaller chains will likely enter the ecommerce grocery space as well in 2020.
“Any grocery brand that is not participating in ecommerce grocery programs is leaving revenue on the table,” Kleinman said.
How brands can take advantage of online grocery
As for individual grocery brands looking to increase profitability online, Kleinman noted a few factors to focus on.
First, because of the low price point of many grocery items, it may be necessary to bundle items to achieve profitability on Amazon, for example. Brands like Yogi Tea have found success by focusing on 6-pack cases, or other case sizes that are offered at the same per-product price as their in-store counterparts.
Second, it’s important that brands are aware of and involved in content creation and management across all ecommerce marketplaces. Especially as ecommerce continues to grow, individual brands will ultimately be responsible for ensuring images of products are high resolution and adequately portray brand voice. These two things are essential for preserving the brand image and growing ecommerce sales.
It’s a thrilling time for ecommerce as grocery stores begin to build fulfillment centers, testing new programs and even turn to robotics in order to stay competitive and please customers.
To learn more about major players leading the way, like Amazon and Walmart, contact Pattern’s ecommerce grocery experts below.