Delicacies On-Demand

Americans love online purchases and the convenience of having anything from new clothes to home goods delivered directly to their door. But for the most part, this digital practice does not extend into their weekly grocery shopping.

According to the most recent report from the U.S. Census, consumers in the U.S. spent nearly $100 million on eCommerce purchases in the second quarter of 2016 alone, an increase of 4.5 percent from the year’s opening quarter. What’s more, digital sales have been growing steadily, increasing every year since 2011, according to the census.

But those sales trends have largely not been in the grocery industry. According to research from Statista, 86 percent of Americans still shop solely at brick-and-mortar grocery stores, and the industry accounted for just 2 percent of the more than $341 billion spent online last year.

Chris Bryson, founder and CEO of Unata, a Toronto-based omnichannel and online sales solution provider for supermarkets and grocery store chains, such as Lowes and Roche Bros., said that, while the lack of online grocery sales and the dearth of players in the industry surprises him, there are significant differences between selling food and selling other retail goods, whether dealing with customers online or in-store.

“Grocery is a lot more complicated and challenging when it comes to omnichannel than other retail verticals,” Bryson said. “The way in which you buy your groceries is fundamentally different than how you would buy a big screen television or something like that.”

In a recent interview with PYMNTS, Bryson said that, while he believes grocers may have their reasons for not more aggressively tackling the online market, not capitalizing on the potential of digital sales will be a costly mistake. Bryson also discussed the particular challenges of providing an on-demand grocery system and what he sees in the industry’s future.

More products, more problems

Grocery stores have the same goal as most other retail businesses: to sell as many products to as many customers as possible. However, most supermarkets have a set of challenges that other merchants do not face.

One of these obstacles for supermarkets is the sheer amount of products they normally carry. Today’s typical grocer has nearly 50,000 individual products — ranging from chips and cookies to cleaning products — lining its shelves, according to Consumer Reports.

Bryson said that large number of goods, along with the range of offers and promotions offered at various locations, makes it much more difficult for grocery stores to offer the kind of online solutions that many other retailers provide.

As a result, Bryson said his team must build more complex solutions to allow supermarkets to continue to offer the same items and prices that are available in brick-and-mortar stores.

“Grocery is incredibly complicated in the sense that the number of SKUs is typically much higher, and you have a lot of disparity in store locations,” he explained. “So, pricing and keeping things consistent and all that kind of stuff is so much more complicated for the grocery industry.”

Bryson also noted that most grocery shoppers repeat their purchases and behavior every time they take a shopping trip, emphasizing the need to keep online and in-store experiences consistent for customers.

Meeting customer expectations (and meal times)

High customer expectations also pose some problems for grocers looking to take their business online. Shoppers expect their food to be fresh and tasty and delivered when they need it. And these expectations make providing a reliable online grocery store solution that much more complicated.

In fact, Bryson said, industry concern about disappointing consumers is so high that many grocers fear that a shipment may not meet their expectations and a poor experience will erode a customer’s trust in a particular brand entirely.

“Retailers are worried an online offering might cannibalize in-store sales, and it seems like no grocers who have made the move to online have set up analytics to properly measure and prove it isn’t happening,” Bryson said. “That would require an omnichannel view of the customer, i.e., what they are buying both online and in-store.”

However, Bryson said he disagrees with the notion that online sales can hurt customer loyalty. On the contrary, he pointed out that, once customers have just one positive experience with online or on-demand, many become repeat online shoppers with the same grocery location.

“When retailers do set up omnichannel analytics, they will see that the online shopper is the more valuable shopper, when viewed in aggregate of both online and offline,” Bryson said. 

The coming cavalry

Despite the obstacles that may stand in the way of success for grocers looking at cans of soup through a computer, Bryson told PYMNTS that he believes more players will soon enter the omnichannel grocery industry.

“It continues to be a surprise that more grocers aren’t moving faster into this space. However, we’ve learned it’s because no one has proved the business case for eCommerce yet,” Bryson said.

There’s reason to believe that soon could change, however. Experts project that, while the online grocery market may only represent 2 percent of eCommerce today, it will grow by more than $10 billion in revenue by 2020. Bryson also predicted a major increase in the amount of players in the omnichannel market, as more merchants embrace the growth in mobile and digital sales.

As more players enter the space and work to remove the obstacles to online supermarket shopping, it may not be too long before Americans increasingly add their grocery shopping list to the litany of items they have delivered directly to their door.

To download the November edition of the Vantiv Omnicommerce Tracker™, click the button below.

About The Tracker

The Vantiv Omnicommerce Tracker™, powered by PYMNTS.com, features industry-spanning research and insights that arm retailers with data to make smarter decisions for enabling omnichannel commerce.