Omni-channel retailing is growing and evolving in every aspect of retail as consumers continue to look for fast, efficient, and convenient ways to buy their goods and services—and that trend is taking hold in the grocery industry as well. According to a recent report from Kantar Worldpanel, grocery e-commerce sales account for 4.4 percent of the $649 billion grocery market, and those numbers are projected to increase to over 9 percent by 2025, becoming a $58 billion industry.
A new generation of consumers—those born and raised in the digital age—are now building households and raising families. The convenient, on-demand and personalized attention that often comes with digital service has become embedded in this new culture, which makes the transition of e-commerce to grocery shopping seem like a natural progression.
Many consumers are embracing online grocery shopping due to sheer convenience, saving time and avoiding the hassle of going to the grocery store. Others like the opportunity to purchase products that they might not be able to find in stores. This also serves as a service option for customers that have difficulty getting to the stores for other reasons, such as health and related issues.
Grocers are also experimenting with online ordering and store pickup. Customers are able to order their groceries online and pick up their items at a nearby store—without having to set foot inside the store. Once customers place their orders, they are notified by phone when the order is ready. Customers will arrive and pull up to a designated pick-up spot behind or on the side of the store, as directed. Then it’s only a matter of popping the trunk.
As competition heats up and shopping habits continue to change, grocers are taking steps to deliver the goods. Companies like Walmart, Safeway, and Amazon in the United States have experimented with e-commerce through online shopping and delivery. Even Costco has joined the e-commerce game; the wholesale club has recently begun testing home delivery 0f groceries with a new partner, Shipt. In the United Kingdom, MySupermarket is a service that provides e-commerce services for Tesco, Asda, Sainsbury’s, and Ocado. While e-commerce isn’t considered a major strategy for most brick-and-mortar retailers at this point in time, to stay competitive and remain relevant with today’s digital consumers, supermarkets must look at every option, and that may include getting involved in the e-groceries game.
Overcoming the Grocery E-Commerce Obstacles
There are some challenges that are inherent to grocery e-commerce and delivery. Most grocery deliveries involve perishable items, and timely delivery can become a concern. Vehicles involved in the transportation of goods may require refrigeration units and other modifications to accommodate delivery needs for perishable foods. The logistics of delivery routes, traffic issues, and related delays can contribute to both costs and service dilemmas.
Fulfillment expenses to include product selection and delivery, facility and storage management, vehicle maintenance, and similar expenditures will impact profits and add to delivery fees. Even with in-store pickup, there can be logistical challenges including storage of orders, the creation of pick-up venues, management and responsibilities of employees involved in the selection of products, and other similar challenges.
Naturally, in addition to the potential losses due to waste and spoilage, there are also loss prevention concerns involving the security and control of store facilities and assets, payment verification, theft, fraud, and employee collusion. Strong controls and asset management, employee training and awareness, and other related asset protection management strategies will play a key role in the success of these e-commerce programs.
In the new retail universe, smart retailers will continue to explore creative ways to connect to consumers, and the loss prevention industry must also evolve to keep pace. It’s all about choice. Customer behavior is shifting, and the customers are the ones who will dictate what’s most convenient for them. We have to be ready for the changes that will continue to knock on the door, and welcome them with open arms.
This article was originally published in 2016 and was updated March 22, 2017.