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Two-hour delivery is not enough

How grocers can succeed in an e-commerce world where competition is everywhere

Grocery shoppers want more from the online shopping experience, and the brands creating those expectations aren’t just selling food.

In the past, grocers needed to worry only about direct competitors: Beat them on price, convenience or assortment and your customers were happy. With the universal appification of retail, the arrival of industry players such as Amazon-Whole Foods and the constantly evolving convenience created by mobile technology, that’s no longer the case. Today’s shoppers have a best-of-everything, all-the-time expectation that grocers need to address if they want to succeed—especially in e-commerce.

The new benchmark for a great digital shopping experience is now set by a best-in-world example from any industry, which means your competition is everywhere. Simply put, customers’ digital expectations are set by the best of the best, constantly raising the bar. It’s not enough to have the best e-commerce experience for grocery shopping; you now have to strive for the best experience, period.

So how do grocers keep customers happy in a world of constantly evolving competition? Here are a few things to consider.

Go beyond fast, free delivery

Grocery is so challenging because customer expectations start much higher than in other categories. When people shop for a sofa, book or television online, they don’t expect it to arrive right away. Groceries are different. Today’s grocery shoppers want fresh products that arrive in time for that night’s dinner.

Every single grocer is rushing to meet that demand, and thanks to Amazon’s purchase of Whole Foods and the introduction of free two-hour delivery, fast and free delivery is quickly going from differentiator to table stakes. You need to offer it, but standing apart going forward will require new ways to personalize the online shopping experience, add value and reduce friction.

Solving the delivery challenge

Grocery margins are thin, which is why finding an efficient delivery option remains one of the biggest barriers to achieving the tipping point in e-commerce. There are several ways this might be accomplished. In the short term, it could look like click and collect, offering tiered delivery or going out of house to partner with dedicated delivery services that can minimize your internal investment. Many brands, including Loblaw, are already working with third parties such as Instacart to offer shoppers a fast, simple and well-designed home-delivery option.

In the not-too-distant future, grocers may also turn to emerging technologies as delivery options, including drones, which are already being tested by Amazon, and self-driving cars, which are being tested by Kroger.

Offer fewer, better choices

Personalized assortments and “people like you bought” product suggestions are table stakes on major e-commerce sites, and there is a real opportunity in grocery to stand out by creating a curated experience. The average grocery store carries 50,000 to 65,000 items. The average customer only buys 1,000. Why make customers search through all those products when you can curate the items most relevant to their needs?

Taking advantage of your shopper data on past purchases, searches and saved items to personalize your assortment for each customer will save them time and drive relevance.

Provide smarter recommendations and get personalized

Shoppers don’t like being super-sized with obvious upsell suggestions. Instead, manage your recommendation engines to develop living lists for each shopper that adjust based on previous orders, patterns and even surprise buys. Also, utilize your customer data to personalize pricing for individual shoppers. Trialing lower costs can drive specific product purchases and offer added value to the shopper along the way. You can even combine both practices, offering customized online circulars with specific items inspired by past purchases, paired with special pricing just for them.

The rise of grocery e-commerce isn’t slowing down anytime soon, and the only way to meet your customers’ expectations is to constantly improve their experience. In the short term, that may mean offering free two-hour delivery, but that’s not going to be the case for long. The competition is everywhere — and growing. Be sure you’re taking the steps to stay ahead.

To hear more about improving your grocery e-commerce platform, reach out to Brian Ross at bross@precima.com.

 

 

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