A shift to eCommerce for grocery shopping is quickly occurring. Trends are showing that the sector is set to explode. We believe that every CPG and grocery brand needs to be ready for it. Many challenges still exist for the market to fully mature. However, there is no doubt that grocery eCommerce is here to stay.
We believe that every company in this industry should be aware of how quickly things are moving. That’s why we focused on 3 most important changes happening in the grocery industry. The eCommerce grocery growth is also changing customer preferences. This has significant impacts on how grocery brands will need to operate. Traditional grocery is going. And we’re helping brands and producers get ahead of the eCommerce curve.
Grocery is the Fastest Growing eCommerce Category
The next decade will be a time for massive growth in Grocery eCommerce. Consumer eCommerce spending on grocery is expected to reach $100 billion by 2022. Over 70% of U.S. households will be purchasing goods online according to research from the Food Marketing Institute and Nielsen. Those numbers are quite impressive considering that only about 30% of U.S. households in 2018 shopped online.
Rapid growth is being driven by innovation from eCommerce platforms such as Amazon – who instantly became a force in the grocery industry after their acquisition of Whole Foods. They are driving traditional brick-and-mortar grocers to keep up or try to get ahead on the growth. The end result is increasing ease of access, appeal and shopper experience.
But it is also opening up massive opportunities for food brands and manufacturers. The consumer preferences shift to eCommerce will benefit the brands that are ready to take advantage of the change. It is more important than ever to have a solid eCommerce strategy to keep up with the rapid pace of change. Ecommerce grocery sales tripled between 2013 and 2018 and are set to quadruple by 2023. Getting ahead of your competition and diving into eCommerce is the best way to guarantee your share of that growth.
Omnichannel eCommerce Grocery Shopping
One of the largest trends that we will continue to see in the grocery sector is a focus on omnichannel shopping. Customers want convenience. The platform or store that can provide the most convenient option is in position to take advantage of eCommerce grocery growth.
Existing retail grocers will increasingly turn to offering digital options to their shoppers. Digital experiences will make it easier for customers to find, research and buy the food brand they want. This could come in the format of simplified in-store experiences, such as Amazon’s Go stores, or more convenient grocery collection such as Walmart’s Click & Collect. Adding convenience like these features will allow platforms and retailers to compete in the digital space.
Existing features on platforms like Amazon’s Subscribe & Save provide the opportunity to create recurring sales for everyday household items. This can provide an added level of convenience for shoppers to keep their home stocked with everything they need.
Omnichannel shopping allows grocers to provide more personalized shopping experiences. Each shoppers’ digital footprint will be traceable. And that will provide much greater insight into what customers want. This also has the potential to provide significant marketing savings for grocers and grocery brands through better customer targeting and acquisition.
The current omnichannel grocery market is valued at over $1 trillion by Nielsen and Rakuten. This market has continued to grow each year – and is expected to continue growing as eCommerce grocery shopping becomes more popular. Capturing this growth by taking advantage of omnichannel will be important for grocery brands and retailers to become significant players in the eCommerce grocery world.
Logistics and Supply Chain Changes
The largest obstacle or challenge to grocery eCommerce outside of consumer tastes is logistical in nature. How can you quickly provide the freshest quality ingredients to the largest number of consumers? This is the question that grocery brands and brick-and-mortar grocers need to answer.
Solving this problem requires grocers and platforms to become more efficient. Minimizing food waste requires high-quality food supplies and reliable storage and fulfillment options. We believe there are a few ways that will be achieved.
Cold-storage and fulfillment centers will become increasingly important for eCommerce. Ensuring food quality and safety is a massive challenge that will need to be solved. One solution to ensure quality will be to increase the quantity of cold-storage facilities in proximity to major population centers. Bringing the product closer to the consumer will help reduce food waste. It will also guarantee quality of both fresh and frozen goods. We expect the number of cold-storage facilities coming online to increase drastically in the next few years.
Along with increased storage comes more rapid fulfillment. We are already seeing how this is evolving between the major eCommerce platforms. Amazon has recently announced that 1-Day shipping is on the way for non-food products and that drone delivery could be a reality soon. Target has also announced guaranteed same day delivery for a flat fee to customers in 47 U.S. states. Walmart likewise has similar delivery goals. Grocery store chains like Kroger are also uniquely positioned to provide delivery. With locations covering the U.S., it’s no surprise that they have started to roll out 1-hour delivery in certain U.S. cities to compete in the eCommerce space.
Shorten delivery times will also contribute to less food waste and increased efficiency. However, the largest contributor to reducing waste and guaranteeing quality may be data analytics. Ecommerce grocery shopping will create a massive digital footprint. This will create an enormous quantity of data points. Predictive analytics will help grocers accurately determine demand, promote related products and optimize distribution for just-in-time deliveries.
Identifying new grocery trends can provide unique investment opportunities and help grocery brands maximize profit. Improving grocery logistics will be vital to the success of eCommerce grocery shopping.
Grocery eCommerce Going Forward
Online grocery shopping is becoming the standard in many U.S. households. It is most heavily used by millennials and that shows no sign of letting up. There are significant hurdles that will need to be solved as the market continues to evolve.
We expect that the continued demand will lead to increased omnichannel shopping experiences for customers. Convenience is the key to capturing the eCommerce grocery shopper. The platforms that can create the most seamless experience will be set up to succeed. Platforms like Amazon and Walmart are already ahead of the eCommerce curve. You need to ensure your brand has the visibility it needs.
We are helping grocery brands take advantage of those growing market place – and navigate the supply chain and logistics headaches. Our close partnership with the largest cold-storage distribution networks in the United States helps our customers succeed in the eCommerce grocery space. Paying attention to these trends and changing the way you do business can help your CPG brand succeed as well.
Contact us today if you need help taking your CPG brand digital[/vc_column_text][/vc_column][/vc_row]