[vc_row][vc_column width=”1/1″][vc_column_text]Major grocery retailers are focusing on how to take advantage of projected growth in ecommerce grocery shopping. The 3 largest players in the space are set to be Amazon, Walmart and Target and each have been trying to become the most convenient option for shoppers. Grocery delivery services and speed will be a major factor in consumer preferences. Understanding the consumers’ delivery options and convenience will help you determine where to focus your energy for your grocery brand.
Each platform has made significant acquisitions and rolled out features to try to gain the advantage. Improvements in supply chain management and logistics are allowing these retailers to roll out faster delivery than ever before. We are going to dive into each platform’s delivery options. We will then analyze what features might help them gain the lion’s share of eCommerce grocery.
Major grocery retailers are focusing on how to take advantage of projected growth in ecommerce grocery shopping. The 3 largest players in the space are set to be Amazon, Walmart and Target and each have been trying to become the most convenient option for shoppers. Grocery delivery services and speed will be a major factor in consumer preferences. Understanding the consumers’ delivery options and convenience will help you determine where to focus your energy for your grocery brand.
Each platform has made significant acquisitions and rolled out features to try to gain the advantage. Improvements in supply chain management and logistics are allowing these retailers to roll out faster delivery than ever before. We are going to dive into each platform’s delivery options. We will then analyze what features might help them gain the lion’s share of eCommerce grocery.
Walmart’s Click & Collect and Delivery Services
Walmart boasts a few convenient options that may help it gain consumers in the online grocery space. Walmart currently offers same-day delivery in most major metro areas in the U.S.A. A specially trained team of personal shoppers pick each eCommerce order. Orders are then delivered by one of Walmart’s delivery partners during a specified time window. Guaranteed free 2-Day delivery is also available for non-perishable items.
Delivery fees appear to be dependent on location and the selected delivery time. Customers can pay extra to have groceries delivered in high-traffic times or lower fees for delivery outside of those times windows. Walmart just announced that they are currently testing an unlimited delivery program in 3 cities for $98/year. However, it is still unclear whether that will include same-day delivery or not.
Another convenient eCommerce grocery option is Walmart’s Click & Collect program. While this is not a grocery delivery program it does provide a lot of convenience. Shoppers place online purchases that are available for curbside pickup. Walmart’s retail footprint is massive with 4,383 Super Centers and Neighborhood Markets. That footprint and well-located stores mean that many customers pass Walmart’s daily. The service is free and although it is not as convenient as having your groceries delivered it does reduce many barriers for shoppers.
Verdict: Walmart is already experiencing large growth in eCommerce grocery. Fiscal Year 2020 Q1 eCommerce sales numbers showed 37% growth and Walmart is expecting 35% growth for the full fiscal year. Walmart’s brick-and-mortar footprint may be to its advantage in the long-term for eCommerce grocery delivery. Competitive unlimited shipping rates may help it grow its market share even further.
Walmart does restrict fresh food sales to their vendors only, meaning that you need to apply to sell perishable goods. Third-party sellers are currently available to sell non-perishable food and household items only. Getting into the Vendor program could be a good place to focus on especially if Walmart continues to experience eCommerce grocery sales growth like it currently is.
Target’s Same Day Delivery
Target usually seems to be the least talked about of the 3 retailers when it comes to eCommerce. However, recent steps by the company are putting it in a good position to capture market share. In December of 2018 Target acquired Shipt; one of the leading same-day delivery online platforms. Shipt has over 20,000 personal shoppers that can pick eCommerce orders and was operating across various retailers before their acquisition.
Similar to Walmart, Target’s brick-and-mortar footprint also puts it in a unique position to reach the whole United States. 1,851 stores are operating in all 50 states. This retail foot print gives it a good opportunity to consistently provide quick and convenient delivery and eCommerce shopping options now and in the future to customers.
Target also took the recent step of announcing same-day delivery in 47 states. Customers can sign up for the program on the Target website and they are currently offering a free 4-week trial to customers. Their unlimited membership starts at $99 for order of $35 or more or shopper’s can choose to have individual orders delivered same day for a flat fee of $9.99. Target also offers free in-store pickup or curbside pick up for eCommerce shoppers.
Verdict: Recent developments from Target since December 2018 are putting the company in a unique position to compete with Walmart and Amazon. Offering same-day delivery across almost the entire U.S. is a huge step that provides a ton of convenience for eCommerce grocery shoppers. Target’s eCommerce performance does not seem to get as much coverage as Walmart or Amazon, but that could be about to change.
Grocery brands could benefit from focusing their effort to get on the platform. The sales may not be there yet, but the convenience factor for shopper’s certainly is. It will be interesting to see how Target’s eCommerce grocery sales change with same-day delivery rolling out. Positioning your grocery brand on the platform now is a good opportunity for sales down the road.
Amazon’s Fresh and Prime Pantry Delivery Services
The largest eCommerce platform has two grocery programs to try to win over consumers. AmazonFresh is Amazon’s perishable goods grocery program. The program currently has limited availability with just a few select cities eligible for the program. Customers are able to purchase products such as produce, meat and seafood and have their products delivered to their door with same day or next day deliver.
Consumers must pay a $14.99 monthly fee in addition to the steep annual Prime Memberships they must have. Orders over a local delivery threshold receive free delivery. Smaller orders or single product orders under that threshold have a $9.99 shipping fee. Delivery times are scheduled with Amazon and they promise delivery within the scheduled window.
Amazon also has the Prime Pantry program. This program is for purchasing non-perishable goods and every day household items. Monthly fees for joining Prime Pantry are a little more reasonable at an additional $4.99 a month. Members receive free shipping on orders over $10. The major drawback with Prime Pantry is that 2-Day shipping is not even guaranteed. Due to the sizes and weights of the items, Amazon says they cannot guarantee customers’ orders will enjoy the same shipping benefits normal Prime orders get.
Verdict: Amazon’s current delivery options are probably the least convenient of the major retailers. Amazon’s fees provide significant cost hurdles for customers to digest. AmazonFresh is also limited to select vendors. Brands that sell perishable items will have a difficult time selling on the platform.
However, as the largest eCommerce platform you have to believe the convenience will change as eCommerce grocery continues to evolve. Getting your non-perishable items on the platform now should be a part of your eCommerce strategy. Your perishable items will face some challenges that need to be overcome with better fulfillment options.
Where to Focus Your Energy on eCommerce for Grocery Brands
Walmart, Target and Amazon each of unique value propositions. It can be difficult as a grocery brand to determine where to focus your energy first. There is no denying that grocery is going to become a massive eCommerce category over the next few years. Every grocery brand should be establishing a presence on each platform. But your initial focus may be different depending on the type of products you sell.
Non-perishable CPG and grocery brands have very limited barriers to entry on the Amazon and Walmart platforms. Brands can quickly establish Amazon Seller Central and Walmart Seller Center accounts. This allows brands to get their products to market as a third-party Seller.
CPG manufacturers and producers have the ability to also establish vendor relationships with Amazon and Walmart. This allows selling of perishable goods on Walmart and Amazon through each respective program. Brands looking to get established on Target need to apply as a vendor. Target does not currently have a third-party seller option in the grocery category. Target+ is slowly expanding, but has not started to include grocery goods.
Our belief is that every CPG and grocery brand moving into eCommerce should take a few steps. First, if your brand has non-perishable goods you need to get them onto Amazon and Walmart. Creating third-party accounts for the marketplace are easy. While set-up can be a little challenging, the ability to sell products quickly is worth the effort.
Next, grocery brands should be looking to establish vendor relationships with Walmart and Target. Each platform allows you to apply to be a vendor. Amazon only invites vendors to the platform. Creating a first-party relationship with Amazon is a more difficult challenge.
Finally, CPG and grocery brands should be changing their website for B2C fulfillment. Working with a cold-storage company allows you to safely store and fulfill products. We work exclusively with cold-storage partners that can reach the entire U.S. in under 48 hours. They also deliver to most of the U.S. in less than 24 hours. Providing quick delivery for customers is key to selling through your website. Using a cold-storage and fulfillment company is key.
Grocery delivery services through Walmart, Target, Amazon and third-party providers are making grocery shopping more convenient. Consumers are shifting shopping preferences to eCommerce when it comes to household goods. It is important to get your CPG or grocery brand prepared for the on-going shift to eCommerce. Working with a knowledgeable eCommerce partner can help you take advantage of the coming change – and position your brand to dominate eCommerce.[/vc_column_text][/vc_column][/vc_row]
