Walmart recently purchased Jet for $3.3B to gain a stronger competitive position against Amazon in the consumer goods and grocery space online. Amazon is planning on building brick-and-mortar grocery stores in order to expand its presence and inventory in closer proximity to consumers. These dynamics point to a market disruption that is not just coming to traditional retailers—it’s already here. And it may be too late for retailers to build proprietary online solutions that will keep them in the game. Their best hope might be to bring in third-party, B2B solutions from outside providers who can help them make the leap to a combination on- and off-line shopping experience that a fast-growing market segment is demanding.
Trey Holder, Co-Chair of the GMDC Retail Tomorrow Board, explains this dynamic. “As consumers look for more convenient ways to research and buy products, their expectations continue to increase. Today’s consumers want the ability to shop online from their trusted retailers, including their grocers.”
The rate of growth of online customers in this space is staggering. According to The 2016 Grocery eCommerce Forecast by Unata:
- 31% of U.S. consumers are likely to shop for groceries online in 2017
- The growth in adoption is expected to increase to 31%, up from 19% of consumers who bought groceries online in 2016, which more than doubled from the year prior, showcasing steady and aggressive year-over-year eGrocery adoption growth
- eGrocery is here to stay: 80% of online grocery buyers will buy online again
- A top-of-the-line eGrocery experience is key to winning and defending market share: 68% of consumers that shopped online last year are likely to switch grocers to one with a better online shopping experience (quick, easy, convenient, enjoyable)
Many retailers are left wondering how to catch up to the accelerating customer demand for online access, but that’s not their main concern. The last bullet point in the above Unata data reveals that the quality of the online experience must be top-notch, or the retailer will soon lose customers to more adept online competitors. This raises a disturbing conundrum for the average brick-and-mortar retailer regarding the basic identity of the enterprise. How can they obtain the competencies and talent necessary to become something they aren’t, and almost immediately compete at an extremely high level? Grocers have the proximity advantage and brand loyalty for now, but those advantages are beginning to disappear into the ether.
As an alternative to creating and maintaining an online commerce solution in-house, grocers can partner with B2B companies that provide high-quality online customer experiences that will keep them in the game. Instacart is one solution that is starting to create some traction for its grocery store clients. Another likely suspect for quick adoption is Selfpoint, which just entered the U.S. market. There will be many willing partners with viable solutions to help existing retailers compete in a quickly changing industry. Digital transformation has disrupted many markets in recent years. Now it’s grocery’s turn.
Choosing a compatible B2B partner is a big step for retailers, and there is little room (or time) for mistakes. Here are some of the online features shoppers will need to experience in order to remain loyal to a grocery brand:
- Quick implementation and easy updating of inventory
- Option of customer pickup or delivery to customer’s home
- In-store mapping to help customers when shopping on site
- Customer relationship owned by the retailer, not the application
- Comprehensive and accurate picking, packing and prepping of orders by store employees
According to Mayer Gniwisch, Chairman of Selfpoint, one of the most important considerations for an online experience is the relationship between the retailer and the customer. “Shoppers expect their retailers to know who they are and what they want,” says Gniwisch. “If grocers lose control of that relationship they run the risk of losing years of brand equity and loyalty with their customer.”
It is interesting that this massive change in market dynamics and the disruption that digital transformation is bringing to an entire industry comes down to one main issue. And it’s not necessarily the technology that everyone is focusing on. Instead, it’s the basic customer relationship. The more things change the more they remain the same.