What keeps people from shopping online for groceries and what we can do to help them.
People need to eat regularly. Most of us visit a grocery store or supermarket at least once a week to stock up on basic food supplies, perishables such as fruit and dairy, household supplies and toiletries. In fact, grocery shopping is such a common pastime that it is listed as one of the five basic activities of daily living.
In 2017, the average US household spent $7,729 on food, making up for about 11% of their total spend — third only to housing and transportation. While eCommerce accounts for 10% of all retail sales in the US, 98% of Americans continue to buy their food in a brick and mortar store. But according to Statista, of the 2% who did try online grocery shopping in 2017, 72% had a positive experience. What is keeping people from trying online grocery shopping? How can we persuade them to try and how can we keep them as regular customers?
Let’s look at the key reasons preventing shoppers from buying groceries online and what can the industry do to help them.
Key Barriers to Online Grocery Shopping
Barrier #1: manually selecting products
When asked, a whopping 75.5% of shoppers state they don’t shop online because they like to see and choose products in person before buying them. Online grocery shopping removes the ability to squeeze and smell the vegetables. Long delivery times and distances mean that produce is not always fresh when it arrives.
Surveys show that people are most comfortable buying dry and canned produce online, since they know exactly what they will receive and are not worried about it becoming bad in transit. People also like to buy specialty items that are hard to find. Online retailers need to focus on what people are buying online and draw them to the online store using these items.
In order to address the personal experience, Freshdirect added a “Guaranteed Fresh” feature to their website indicating, on a daily basis, how fresh are their fresh products and for how many days from delivery they’re expected to remain so. A more elaborate solution will be to upload a daily photo or broadcast a live feed of the fresh products, allowing customers to look at the actual products they’re expected to receive. True, this will not be the same as feeling and smelling the fresh produce (although there are some startups working on solutions in that direction) but it will help those 75.5% that need a more personal touch to their online experience.
Barrier #2: shopping experience
In that survey, 53.9% indicated they don’t shop online simply because, hold on to your chairs … they like shopping for groceries in-store.
Well, until “liking to shop for groceries in-store” is added to the Diagnostic and Statistical Manual of Mental Disorders, we can look for a more conventional ‘cure’ for that. This is a perfect place to be creative and introduce new technologies like AR and VR to make online shopping a more exciting experience, just look at what mixed.place are doing and see that the possibilities are endless.
Barrier #3: delivery
Next in line, with 42.2% is the fact that people don’t like paying for delivery.
Countless words have been written on the challenges of last-mile delivery. Kroger is experimenting with autonomous cars to deliver while investing heavily in fully automated warehouses while amazon are aiming high with drones and flying warehouses. One thing is clear, big players are pouring endless resources to make the logistics of delivery cheaper and faster.
Other possible solutions to the problems of last mile delivery include crowdsourcing, where retailers and logistics partners contract local courier services to do their deliveries, or share deliveries with other retailers.
Barrier #4: convenience
The last major concern for customers is convenience, with 37.6% of people stating it as a key reason for avoiding online grocery shopping. This includes the need to plan ahead, to stay at home to accept the delivery or to pick it up from the store.
Amazon, pushing the boundaries once again have started its in-home service, allowing couriers to place orders inside customer’s homes, even when they’re not there.
Many customers complain that doing an online shop can take as long as driving to the grocery store, shopping and coming home. Doing an online shop does take some time — the first time you try. After that, the site will save your basket and it becomes much easier to locate the products you buy regularly. Consolid, a new startup, is offering customers to transfer their shopping data across retailers thus making it easier to complete that long first shop.
Another creative solution comes from Tesco, a leading British retailer that has been experimenting with a virtual supermarket as far back as 2011, allowing customers to shop online while waiting in the train station.
Most grocery retailers are still losing money on every online order. There are a lot of overhead expenses tied to correct online grocery shopping execution, the most notable being last mile delivery. Once you add warehouse and stock management as well as the many UX challenges relating to human preferences, it becomes difficult to consider how an online grocery store can attract and hold customers, while still making a profit. What do they need to do to get it right?