Despite predictions of growth and promises of investment, the question has to be asked — are U.S. supermarkets really interested in the ecommerce channel?
In public statements most major grocery chains have talked up the online angle, and why wouldn’t they? While still a small portion of the $600 billion sector, the digital channel is seen as a major driver for growth in 2016 and beyond. According to industry watcher IGD, U.S. online grocery sales totaled $7 billion in 2015 and are forecast to rise to $18 billion by 2020. Many other analysts believe the number will be far higher, especially in urban areas where more and more consumers look to complete their major weekly shop online, while only visiting physical stores for smaller “top up” trips.
Despite this, a study of online grocery stores carried out by analysts at Clavis Insight would indicate that many supermarkets are still lagging far behind what could be considered best practice when it comes to their online offerings. So how can grocery retailers up their game and avoid being reduced to the “top up” add-on, as online natives such as AmazonFresh capture the bulk of grocery buyers’ budgets?
Here are seven key areas retailers need to focus on:
1. Customer experience
Consumers interact with the online store in a very different way. They don’t have a shelf to scan where they can very easily see dozens of products. On a desktop or mobile screen their view is significantly restricted, which means the consideration set is smaller.
To circumvent this, stores need to make it as easy as possible for consumers to view full brand offerings. Associate product offering — that phrase made famous by Amazon, "Customers Who Bought This Item Also Bought…” — are an essential part of expanding the consumer’s view online. But not everyone is making the most of this obvious tactic. While many grocery retailers use affinity analysis to populate associate choices, others seem to present buyers with similar products (i.e. competing products) rather than the complementary products that are more likely to increase a buyer’s basket size.
2. Landing pages
Retailers should spend some time gaining a greater understanding of how the consumer engages with their landing pages and subpages. These are the portals to the shopping experience, but they are not analogous to walking in the front door of a store. Consumers approach these pages with very different expectations and needs in mind, and retailers need to craft the look, feel, navigation and content of these pages accordingly.
3. Content is king online
A well-worn phrase, but still worth remembering. Stores need to think about ensuring the right content is available, accurate and up-to-date, to replace the ability consumers have to touch and feel items in the offline channel. Descriptions should be clear and concise, and nutritional and ingredient information for food needs to be easily accessible. It also makes sense for product pages to include multiple images. Something as straightforward as having multiple images and sizing information goes a long way towards reassuring the buyer that they are selecting the product they want. In our study only AmazonFresh and FreshDirect offered this functionality.
4. Mobile first
A further consideration that supermarkets need to take into account is that content and images need to work across different platforms including desktop, tablet and mobile. Speaking at the Clavis Insight EMEA Forum last year, Hannah Gibson, head of grocery merchandizing & product at U.K. online grocery chain Ocado, said brands and retailers really need to take a mobile first strategy to content, as mobile is the most difficult platform to solve for.
5. Prioritize search
The advent of the search bar has got to be the most significant change in how consumers navigate the path to purchase in the online channel versus traditional retail. Instead of trawling up one aisle and down the next in search of what they want, online shoppers simply type in a few search phrases and expect the products to come to them. The key for the online retailer is to employ a search algorithm that truly delivers what the consumer wants on the search results page, while also supporting the brands it knows will result in conversion.
6. Consumer reviews
Another big change in the online world is the emergence of the consumer review, but most U.S. online grocery chains appear to have missed this point. The online channel opens up a massive opportunity for developing consumer engagement strategies and utilizing user-generated content (reviews) to accelerate sales for retailers and brands.
Retailers with too few product ratings and reviews risk losing on- and offline purchases to retailers that offer consumers sufficient peer-to-peer feedback in the form of product reviews. At the same time consumer reviews can be a significant help when it comes to new product introductions, which is otherwise something of a challenge in the online channel.
7. Delivery options
Last but not least, consumers are becoming accustomed to being offered what they want, how they want it, when they want it. In the context of online grocery this also includes the right delivery options in the time windows that work for them and at the right cost. Whether it home delivery, “click and collect” or refrigerated lockers, convenience is the key for consumers.
While some of our national supermarket chains still have their heads in the sand in respect to online grocery — or at very best are hedging their bets with sub-par offerings — the fact is grocery ecommerce has already established itself as a major feature of the retail landscape. It’s time for the laggards to make the investments in the channel to ensure they are future-proofed against going the way of the bookstore.
Clavis Insight provides daily online-store and digital channel analytics for global consumer products brands.
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