While online shopping in general is booming, shopping online for groceries has been slower to catch on. “The question is why? Why are consumers not trying the online grocery category?” asked Paula Courtney, product founder at WisePlum, while moderating a panel discussion at The Retail Council of Canada’s Store 2018 conference.
The panel, entitled “E-commerce Grocery Disruption: a Wake-Up Call for Retail,” included Daryl Porter, vice-president, omni-channel and online grocery at Walmart; Jamie Shea, co-founder of Chef’s Plate; and Peter van Stolk, CEO of SPUD.
Before delving into solutions with the panellists, Courtney noted that research showed three main reasons why consumers are reluctant to try online grocery shopping. “First, they don’t really trust that the grocer is going to pick for freshness the way that they would do [themselves],” she said. “The second reason is the perception that it’s going to be way more expensive to shop online, because they have to pay for delivery. And the third reason is that people think they can get their groceries faster if they just drive in their car and pick them up.”
Van Stolk said that to attract more customers online, “the first thing is you have to be really good at what you do. You have to deliver what you promise … So if you deliver fresh food, if you deliver really good service, and if you deliver the time slots that you want, people will shop with you.”
Shea noted that Chef’s Plate doesn’t have a lot of trouble acquiring first-time customers—“There are a lot of Canadians who want to try online services,” he said—but the challenge is in “finding the right customer and making sure they come back to us.” Once Chef’s Plate acquires a customer, it makes every effort to understand who the customer is, “and once we have a clear idea of who those customers are, then we start to double down on the best channels to reach them and ultimately bring them to the business.”
As the discussion turned to customer retention, Courtney noted that research showed 6% of online grocery shoppers were “lapsed shoppers,” meaning they tried it but had a negative experience, so stopped doing it. “So how do we mitigate those as part of your retention strategy?” she asked.
Walmart’s Porter said it’s important to listen to customers, identify any mistakes, and then tell customers about improvements. “One of the things that we did—and we’ve done for two holiday seasons now—is that we sent out a gift box as a product and marketing tool,” he said. “But inside that gift box it said, ‘Thanks for shopping with us, here’s what we’ve done to get better since the last time you were there.’ … So as we make those enhancements, I think it’s really important to tell customers that you’ve done them.”
Van Stolk added that it’s also important to make a connection with the consumer, using tactics like geotargeting, and making efforts to build community. “As an online company, our number-one objective is to build community. If you build community, you build strength, and if you build strength, you build loyalty,” he said.
The panellists also discussed some of the efforts to address consumer concerns about freshness. “We’re really attacking that in two ways,” said Shea. “First and foremost, it’s really reinventing the supply chain as well as the cold chain in terms of managing throughput of product and at what temperature that product sits at… And now we’re seeing a lot of technology coming out that helps preserve freshness in the boxes. The second is actually on the front end side of your business and how you’re really navigating your users through your site, and what you’re showing on that site.”
For example, apples in their off season simply aren’t as fresh as when they’re in season locally, he said. When customers are shopping in store, they can see the selection and pick the best of what is available at that time of year; but when shopping online they have no basis for comparison, and may be comparing the apple they receive in March with the ideal concept in their head of an apple they would get in September. “So for us, we’re very deliberate from an offering perspective to make sure that we’re pushing seasonal based menu items and SKUs that are relevant for that time of year.”
And on the subject of substitutions, which can upset online shoppers if they get substitute products they aren’t happy with, Porter said Walmart trains staff to err on the side of the consumer when considering substitutions. “If you order a size of ketchup that’s a smaller bottle, for example, we’ll at least give you a bigger bottle—we always err on your side.”
Porter also said artificial intelligence could have some very useful applications when it comes to substitutions. “Substitution selection that’s predetermined based on their online experience, and what people like them have been purchasing—I think it’s going to be really interesting,” he said.