According to IGD, online retailers market share is set to increase from 6.2% to 8.9% by 2022.
It doesn’t stop there, with around 90% of people who turned to online shopping during the pandemic expected to continue shopping online, it is estimated that eCommerce groceries will continue to grow to around 21.5% of industry sales by 2025 with a spend of $250 billion.
This is a stark contrast to the 2019 pre-covid predictions from Incisiv and Winsight Grocery Business who estimated online grocery sales would increase to 13.5% of total sales by 2025.
So why the massive leap to buying online throughout the pandemic? Aside from those that have no choice but to buy only, there is also increased concern from shoppers around contracting covid whilst shopping.
According to a study by Digital Commerce, over 30% of shoppers were ‘somewhat concerned’ about contracting the virus. This cautious behaviour has contributed to the shift to online grocery sales.
Source: Digital Commerce 360
The typical online groceries customer avatar has changed throughout 2020. According to Superfood, the typical age of these shoppers are 25-35 years old who make up 55% of the total shoppers. It also found that men who are more affluent were making the most use from online grocery shopping.
It also seems that of these shoppers, a mobile first approach was preferred.
Preparing for the eCommerce Future
With the dramatic upturn in online grocery sales, there is a lot to consider when preparing for the eCommerce future.
Is online grocery profitable?
This is the first question you should ask yourself before considering retailing groceries. The cost of delivering groceries are high. Firstly, you’re contending with multiple different shape items, countless available SKUs and items with a range of ideal temperatures.
It’s also worth bearing in mind that with a surge of online shopping, you must also wrestle with fulfilment. When there are high waiting times (in some cases people shopping weeks ahead) there are issues with stock quantities. Where there are multiple items out of stock, items are either replaced for similar items or left out altogether which can decrease the profitability of each order and encourage last minute cancellations. This can also take up more staff time which comes at the expense of the business.
The logistics are typically the difficult bit to ensure profitability. Miss Fresh, a leader in the grocery ecommerce industry in China, found the way to be profitable was to create a network of ‘micro warehouses’ which hold fewer items than a supermarket but come with lower overheads. However, it is reported that it still took 3-9 months for each micro warehouse to break even.
How to overcome fulfilment challenges
The difficulty with delivery is making it speedy, effective and as mentioned above, profitable. A route around this is the use of BOPIS and BOPIL.
BOPIS stands for buy-online-pickup-in-store, it’s also known as ‘click and collect’. This is a great way to offer a customer a seamless shopping experience online whilst negating the issue of costs. Cutting on driving time and fuel costs increases the profitability of online shopping for each order. The downsides are; it requires a physical store and if the customer wants to purchase additional items, they are often less inclined to go into the store after going through the BOPIS process.
BOPIL on the other hand stands for buy-online-pickup-in-locker. This is by far the easiest fulfilment for retailers. It not only makes it easier for staff but also encourages the customer into the store where they are more inclined to purchase additional items should they want to.
Over the years, grocery stores have struggled to adopt a social media presence. However, upon adoption social media has been used to communicate effectively with customers and encourage more purchases.
Throughout 2020, major retailers have been seen to run campaigns that are designed to ease worries and highlight the extra lengths they are going to throughout the pandemic. For example, Whole Foods launched a “we’re here for you” campaign which kept customers updated on how they’re dealing with the situation and Tesco’s social distancing campaign was designed to drive more in-store sales.
For the smaller scale retailers, social media can be an incredibly effective way of reaching new audiences with sharable posts and social media ads to reach your target audience.
Website appearance and user experience
When it comes to a website for grocery shopping, it goes without saying that the site needs to be user friendly. Here are some quick tips to help improve the experience:
- Offer reminders - where a customer may have missed out on an offer, it’s good to have something that reminds them to complete the offer. It’s also worth using offers around the shopping experience, similar to in-store shopping experiences.
- Saved shopping lists - these can help encourage your shoppers to return to buy their usual items on a regular basis.
- Make booking delivery slots easy - a delivery booking system that’s hard to understand can turn a customer off completely or lead to incidents where the customer has got the wrong time/day entirely. For example, Tesco have made it easy:
- Remember the increase in mobile usage - with more people using their phones and tablets to complete their purchases, it’s important to ensure the navigation and functionality is sound for mobiles as well as desktop.
- Shopping suggestions - cross selling works incredibly well for grocery stores. It can increase the average order value not just once but time and time again when the customer makes future purchases.
Communicating with shoppers
With the shift to online shopping experiences, there is a greater expectation for retailers to be available to talk online. It is also good practice to be ‘available’ in other ways too. This increases trust and helps customers with questions that could be preventing them from purchasing. Communication methods can include:
- Live chat functions
- SMS and Whatsapp messaging
- Facebook messenger
- Telephone numbers / request a callback.
Optimizing and improving performance
Now that we’ve covered the essentials, it’s time to look at how we make the most of your online store and how to encourage users to come to your site and spend more per visit.
Having an optimised feed is very important to ensure customer’s searches can be matched to the items they are looking for. Things to consider:
- Images - clear concise imagery is needed. It doesn’t need to be anything fancy, but it should be professional. The item against a white background is usually the best.
- Optimise the title to ensure the most important information shows up. Try this order of information: Brand + Product Type + Attributes.
- Use the product description to preempt and answer customer questions. Use an easy-to-read layout with headings and bullet points.
It is important to keep your feed up to date where possible, especially if running paid advertising. Customers will often turn away from a site if the item they specifically clicked on is out of stock. This costs you customers and click costs.
Ways for retailers to increase online sales
- Look to upsell/cross sell items.
- Offer deals throughout the site.
- Offer support via various channels to help customers with queries.
- Guarantee good quality - people can get nervous about letting someone pick items for them. Ensuring you never send bad quality items helps.
- State important information right away. For example, if you do not deliver in a specific areas, don’t wait until the checkout to tell the customer.
- Ensure you have a trustworthy and simple checkout process.
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This year has been pivotal for the grocery industry and driven a surge of new customers. Finding a way to make it profitable can be difficult, but if worked out well, it looks as though the demand for ecommerce grocery shopping is here to stay.
Ensuring you make the most of your customers and optimise their visit to your site can help to make their visit more profitable for you.
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