Updated: Sep 14, 2020
Online grocery shopping is forecast to become a significant alternative to the grocery shopping experience. In today's COVID reality, access to online grocery shopping has never been more important.
Digital grocery constituted around 2.6% of total food and grocery sales in 2019, and by 2022, roughly 10% of grocery purchases are expected to be online, valued at $133.8 billion.
This amount is certainly enough to disrupt the food and beverage industry.
Online grocery services, like other digital stores, allow consumers to shop anytime they wish, at any location, without the added stress of limited time to search for products through crowds and parking queues. Digital grocery is alluringly convenient and becoming increasingly more accessible, with 23.4% of grocery shoppers having shopped online at least once in 2017 compared to 3.4% in 2007. This is indicative of a significant scope for growth.
We are seeing almost all mainstream grocers transitioning to becoming omnichannel in order to remain competitive, as shown by Amazon acquiring Whole Foods in 2017. Currently, the online grocery market is dominated by large grocery players such as Amazon, Walmart and Kroger in the US, however, as consumers begin embracing digital grocery, retailers moving early to adopt online grocery services can capture these consumers transitioning and gain market share. McKinney reported that 64% of customers switched preferred retailers when moving online.
There are several barriers which are hindering the growth of online grocery shopping:
Shoppers generally purchase food with the aim of having it immediately as purchases are largely needs-based, thus shopping is done more conveniently in-store.
Online grocery stores largely eliminate the chance for shoppers to peruse different products, which provides a sense of personalized discovery in-store. Additionally, shoppers are less likely to impulse buy since they are forced to scroll to find different products with little variation in choice.
Consumers need assurance that the products they purchase online will be fresh and of high quality. Otherwise, the additional fees in using online grocery services will be more unappealing and discourage consumers from transitioning to online grocery purchases.
Grocers have been slow to develop online services compared to their counterparts such as home-wares and apparel.
While convenience is important, it is also equally important for the consumer experience to be seamless. Thus, it is imperative for retailers to create great customer service virtually in all stages of the shopping process. Providing personalized product suggestions, adding recipe recommendations for products listed in the customer’s cart, and allowing customers to access their previous order with a single click are a few ways of creating a personalized experience for customers. On average, this would be expected to increase sales by 6.4%.
Grocers are partnering with technology companies to enhance customers’ online food shopping experiences. With the largest number of customers trying digital grocery for the first time, it is the perfect opportunity to win customers over and gain market share by providing them with an interactive experience from the start. An example of such a technology company is Israeli company Qurate.tech.
We recently interviewed the co-founder and CEO of Qurate.tech, Avishai Josman:
What is unique about Qurate?
Avishai: "Qurate.tech is the first platform to bring shoppable "How-to" content discovery into the e-commerce environment. We use AI and Big data to recommend shoppers DIY, cooking and crafting content from top content creators when they are making online purchase decisions. It is the first time retailers can engage with their shoppers seamlessly with premium and shoppable content - all in one place - retailers e-commerce websites and applications."
Covid-19 has increased the demand for online shopping. What is the major trend in online shopping?