After the COVID-19 pandemic, grocery eCommerce became an essential part of the food and beverage industry. For example, shoppers pushed the grocery chain, Kroger’s, into the top 10 companies for digital sales in the United States. Consumers around the globe turned to eCommerce to get their groceries during COVID-19 and many will keep ordering online for years to come.
It wasn’t only the United States which saw a dramatic increase in online grocery sales. The online grocery business also saw a significant boost in the United Kingdom. For example, a UK grocer, Ocado Group Plc, reported a 27% increase in their grocery eCommerce sales. In one month, France saw supermarket sales rise by 34%. Online shopping, especially in the food and beverage industry, is here to stay as grocery eCommerce adds more convenience to the customer journey.
In this article, we discuss key challenges, lessons and grocery eCommerce trends for merchants to keep in mind. We’ve compiled this knowledge while working with companies across the food and beverage industry, such as Jack Daniel’s, Heineken, and Selver. With this information, you will increase your long-term success in grocery eCommerce.
We’ll then also look at Selver’s results in 2020, and its success in selling groceries online after scaling up its eCommerce website to meet customers’ needs during COVID-19.
Although grocery stores typically stock a wide range of products, food dominates—and this brings specific requirements. Food products are sold via a range of different options. Some are sold by weight rather than by piece, and their perishable nature dictates unique storage conditions across the supply chain. But the challenges don’t end there. As we’ll see, merchants need to navigate optimal pick & pack processes, refunds, replacement products and deliveries, to name but a few. Each step holds its own set of challenges that must be overcome if you can offer your customer the experience they demand. Let’s take a closer look at each point to keep in mind.
Related Reading: Trends Shaping the Supermarkets of the Future
1) Business Model
Grocery retail companies often have a business model with a mix of corporate, franchise, and independent stores under the same retail banner. This model adds complexity when launching a grocery eCommerce solution with in-store picking due to local variations in product assortments, sales prices and promotions.
Grocery retail has a long history of loyalty programmes with bonus points, earn and burn, personal offers, etc. Consumers expect the same loyalty features when shopping online and also want suggestions on my usuals, relevant recommendations and recently purchased products based on historical online and in-store purchases.
- Low profitability is historically common for pure players and traditional grocery retailers that start with in-store picking. Research shows that home delivery and in-store picking are the main cost drivers and offer the biggest potential for increased efficiency.
Related Reading: D2C Ecommerce in 2021 — Trends, Growth, and How to Succeed
Certain products need to be stored under appropriate conditions until delivered to your customer. For example, there may be regulations around storage temperatures, or the recipient must be 18 or 21 years old, which needs to be validated at delivery.
Food and beverage retailers that sell fresh, produced and food-to-go products manually packed in the store add further complexity with more product attributes, expiry dates, and minimum order quantities.
Perishable groceries are often ordered by weight, and a variety of methods exist to present, buy, and pick them. It’s impossible to determine the exact weight of watermelon, for example. A variation in weight requires the card amount pre-authorisation to reflect the allowed variation. The total price still needs to be recalculated based on the delivered weight, which can get complex with thousands of orders.
A grocery store may just have food and beverage products, but what if you add a range of non-food items? And what if we then include clothing, electronics and DIY? As in many industries, there are a handful of products that generate the bulk of sales, and then there are long-tail products that are rarely sold, but that make a significant contribution to profit.Related Reading: What is Product Information Management?
Food products have a limited shelf life and a high turnover. Plus, warehouse and store area capacity is limited. Therefore, frequent replenishment is needed, but supplies are not necessarily 100% guaranteed. For grocery eCommerce with in-store picking, customers will be walking around in the store with some of the stock in their shopping baskets. That is why the IT system stock level is never completely accurate, which adds complexity.
In most eCommerce scenarios, you want to pick, pack, and ship items as soon as possible. But for grocery eCommerce, the order is picked as late as possible—just before store pick-up time or the time of departure for home delivery. The time between the order placed and then shipped could occur over several days. So when an order is received, it’s almost impossible to know the product stock at the time of picking.
4) Storage Conditions
In line with regulations, food products need to be kept in specific conditions until handed over to a customer. Food products must also have no contact with household chemicals. As such, grocery stores must have complete control over the supply chain—from receiving a product at the warehouse or store to final delivery.
The key challenge with storage is that certain conditions must be met during each phase (picking, packing, delivery, transit) and across product types (frozen, cool, alcohol, chemicals).
- In high volume in-store eGrocery, it's important to manage storage efficiency in buffer storage areas before route departure or pick up.
With self-service 24/7 grocery lockers with temperature zones, there are even stricter requirements to secure freshness until custom pick up.
5) Service Area
Ecommerce has no international boundaries. But for grocery eCommerce, the service area is limited to one country and often to an even smaller geographic area depending on the fulfilment centre’s location and the product assortment sold. You can set up multiple service centres to extend your reach, but there will always be blind spots. In our experience, optimising your service area is one of the keys to a successful online grocery business.
6) Time Slots & Delivery
Unlike the delivery of say, a book, your shopping delivery can’t a) fit through a letterbox or b) be left alone for hours on end after delivery. Managing available order delivery times helps you organise your processes, balance the workload (order load) and provide the best service to your customers.
Integration with best-of-breed software is crucial in optimising delivery and courier administration. This integration boosts efficiency and profitability for grocery eCommerce when order volumes increase.
7) Pick & Pack
Grocery orders typically consist of many products, requiring lots of time to pick and pack. The picking process is both time-consuming and time-critical. And during the picking process, teams must consider various factors: the weight of products, products requiring special treatment, replacement products, cancellation of products, and the need to communicate with the customer.
8) Which product?
Let’s take the case of bananas. A merchant may have available to them bananas at different stages of ripeness. Let’s assume they then receive a large order of bananas. Which ones should you pick? If for a family’s long-term consumption, then expectations might differ. But what if the same order is made for a conference, where attendees consume them at the same time? As a merchant, you need a way to anticipate their preferences.
9) Price Recalculations, Replacements and Refunds
After ordering groceries online, you most likely received a substitute product. You ordered milk Brand A, but it was unavailable, so you got milk Brand B instead. If this is the case, merchants must consider the associated price difference—if the replacement product costs less, you’ll need to refund. Still, if it’s more expensive, you’ll need to discount the product to match the price paid in the initial order.
10) User Experience
When shopping online, customers want to see their favourite products right away. This obstacle makes grocery eCommerce a nightmare for merchants seeking a quality user experience. Merchants can meet customer expectations with more intuitive navigation and features such as favourite products, suggested products, or saved shopping list.
Many consumers require further product filtering to avoid specific allergens, carbohydrates, fat, sugar, vegan, eco-friendly, etc. The filter list for product characteristics is long and keeps growing. With such a diverse list of preferences, it’s essential that simplifies the process of finding products.
Vaimo's Impact on Grocery Ecommerce
There’s a lot to think about when selling groceries online. A key challenge is selecting the right software platform and the right project team. Few eCommerce solution platforms are available for the food and beverage industry to support fresh food items, rich product attributes, temperature-restricted products, fragile items, age-restricted items, replacement products, and weighted items. But with our help, our clients have defeated these challenges.
As an example, our client, Selver, adjusted its business model and eCommerce capacity with Vaimo’s help to match their increase in demand:
- Increased server performance to cope with the new online traffic, plus capacity to deal with the increase in average order volumes (3-4 times more goods are being purchased with every single order compared to before the crisis)
- An extension in its delivery window from one week to ten days
- A new partnership with Bolt Food to increase delivery volume and reach more customers
- Ongoing work with Vaimo to scale up existing infrastructure to handle the increase in orders and provide for its customers
Selver's Grocery Ecommerce Performance
In April 2020, Vaimo assisted Selver to start picking orders in multiple physical locations. Selver, as a result, met the increased customer demand during the most critical moments of the COVID-19 pandemic. Selver’s adjustment allowed customers to experience an even higher level of service when they needed it most.
With many changes taking place—both in grocery eCommerce and the food and beverage industry—a scalable eCommerce/UX solution is vital. Businesses need to respond to changing market conditions and do so with eCommerce solutions that aid the quick adoption of new features and technology, as in Selver's case. As the trend toward selling groceries online continues, flexible and scalable eCommerce solutions are the best equipped to win customers.
Vaimo is one of the world’s most respected experts in digital commerce. As a full-service omnichannel agency, we deliver strategy, design, development and managed services to brands, retailers and manufacturers all over the world.
Our sharp focus, broad experience and deep expertise within B2B, B2C, PIM, Order Management and ERP integrations makes us a key partner for driving success in digital commerce. Our 12+ years track record of technical excellence coupled with our proven results in helping our clients succeed with business development, digital strategy and customer experience design is proudly manifested in our status as an Adobe Platinum Partner.
With local offices in 15+ markets across EMEA, APAC and North America and over 500 employees, we provide an international presence that allows us to cultivate close, long-term relationships with our clients.
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