CEO and Co-Founder of Chicory, an NYC-based tech firm and the leading digital shopper marketing platform for CPG and grocery brands.
As grocery retailers race to build out their ecommerce capabilities to accommodate a flood of new consumers buying groceries online, retailer data has become even more valuable to both the retailers themselves and CPG and grocery brands.
Historically, location and convenience are the deciding factors for the grocery stores that consumers choose to regularly shop. That means a strategy like Walmart’s, which places a store within 10 miles of 90% of the nation’s population and is based on convenience and price, works.
But there’s also a reason that Walmart and other retailers like Kroger, which continues to invest in its grocery ecommerce businesses, still distantly chase Amazon and its online business. While consumers may have their preferred brick-and-mortar retailers (where they shop more often to a significant degree), it’s a land grab right now for online grocery shoppers, despite the gains made as consumers shifted online amid the pandemic.
Consumers aren’t yet loyal to any online grocery providers, unlike their preferred brick-and-mortars because online grocery experiences are still so new to most consumers. Up until six months ago, online grocery accounted for $4 billion in sales, and in June, that figure surged to $7.2 billion.
Now is the ideal time to work on not just gaining new shoppers but building loyalty by making the shopping experience seamless and creating better user experiences. This is why Amazon consistently has taken the cake in the online grocery wars. Amazon invests in one-click shopping experiences, uses its UX to encourage Amazon users to sign up for an AmazonFresh account and seamlessly welcomes them into an online grocery experience when a shopper searches for a grocery item within the Amazon search bar. Amazon’s grocery UX doesn’t greet shoppers with several login screens, account setups or requests for loyalty card numbers because that kind of data can come later. Instead, it tries to make the best shopping experience possible and use behavioral signals to build its intelligence.
Let’s not be reminded of how Covid-19 caused consumers to overload most online grocery retailers, with some resorting to implementing waiting lists to shop online.
Conversely, most other online grocery retailers remain focused on collecting shopper data and login information, as they typically do using loyalty cards in brick and mortar. While this is important, it shouldn’t be the only priority, nor the first welcome a shopper receives when entering the online shopping experience. Brick-and-mortar stores and ecommerce operate totally differently, and as such, retailers should employ vastly different strategies for gaining shoppers and loyalty on their online platforms compared to brick-and-mortar locations.
The brick-and-mortar experience is as seamless as it can be after decades of refining — coupons on apps to use in-store, loyalty cards with exclusive discounts, produce right past the entrance, bakery just beyond, many center-store aisles and impulse buys at checkout. Clearly, grocery retailers have the in-store shopping experience down to a science. But traditional retailers continue to try and recreate their in-store success online rather than think like ecommerce giants or digital-first retailers.
Rather than worrying about collecting data in order to make the future experience more personalized and seamless for the consumer, online grocery retailers should be focusing on the current opportunity of acquiring new customers in an industry that’s just beginning to surge.
To do so, retailers should be looking at the success of Amazon and Instacart. They, along with Walmart, which has prioritized user experience in recent months, win the war because shoppers experience far less friction when it comes time to shop. Amazon’s search engine has frequently been cited as the best and most advanced for product discovery and purchase, Instacart recently overtook Walmart in the online grocery market and Walmart frequently invests in innovative digital partnerships.
Consumers become shoppers of these companies in single clicks because of seamless and straightforward online shopping experiences. Then, retailers leverage the collected data that they need to refine the shopping experience like homepage suggestions, recommended categories and targeted ads to build loyalty over time.
Unlike Amazon, Instacart and Walmart, who think like tech companies and invest in UX, grocery retailers who are just beginning to explore ecommerce are still used to working with this in reverse. It’s easier to become an online customer but much harder to gain loyalty. Until online grocery retailers realize this and think about how the first-time customer shops on their platforms, they’ll continue to be overtaken by retailers like Amazon, Instacart and Walmart, who have refined their ecommerce experiences.