Strategy

Challenges faced by online grocery and ways to overcome them

Daniela Jurado
Daniela Jurado December 23, 2021
Challenges faced by online grocery and ways to overcome them

Situations such as arriving home tired and carrying shopping bags, leaving work late and finding the fridge empty are no longer a problem for consumers due to online grocery.  

Historically, grocery has been one of the slowest industries to undergo a digital transformation, mainly because of its great challenges when implementing ecommerce. Currently, companies with long-lasting products such as apparel or electronics are already going through another phase of digitization. At the same time, those selling groceries are still strongly tied to the physical channel, either exclusively or as a priority.  

Next, we will take a look at the main reasons for this late acceleration and see how grocery retailers can have a successful online operation.

Challenges for an online grocery operation 

1. Internal prioritization of the project

The first challenge we face in the transformation of the grocery industry is the bureaucracy and low level of prioritization within the company that digitalization teams have to deal with.  It is key to know how to sell this idea internally and integrate and prioritize the project from the organization’s highest to the lowest levels.

If you look at the project’s scope from afar, its complexity may scare the management team, postponing the decision even more. That is why we always suggest you set an MVP as the first step of a successful project, which is not a huge step in terms of cost or experience. Then, the project can be extended to new categories or levels as soon as the first data is available on consumer preference and sales. 

In this way, the best scenarios can be tested before investing heavily in major internal changes.

2. Achieving customer loyalty

The second challenge is customer loyalty. Since we are talking about groceries, we find ourselves in a scenario in which it is not easy to differentiate one supplier from another. If you are on the street and want to buy a bottle of water because you are running out of it at home, you will probably go to the first store selling that product.  

In this scenario, the grocery store has to consider: how can I make consumers remember my store’s offers since they can find the same bottle of water in other stores? 

There are many ways to retain consumers who engage in online grocery shopping. One example and success story is Ametller Origen’s loyalty program. Today, with its loyalty card, 70-80% of customers actively use the card in any channel, whether digital or physical. 

3. Technology suitable for all scenarios

The last challenge is at the technology level. The grocery industry experiences huge peaks in traffic, usually at celebrations and meals.

In addition, the recent pandemic taught us that any online store manager cannot be 100% confident about the current infrastructure because you never know what might happen tomorrow. So, looking at an uncertain future, companies must ensure that their structures are technologically prepared to offer the same quality and stability, regardless of how many people visit their online store. 

In this process, it is necessary to de-mystify that only internal structures can solve an unexpected change in demand and look at the great advantages that an external technology provider can bring under a SaaS model.

Technology as key to grocery digitalization

A good technological tool has to put the consumer at the center of the priorities, especially when it comes to grocery. If we think about what consumers look for when they visit an online grocery store, what they want first and foremost is convenience. So, as a consumer, what does the grocery store and technology have to offer me to make me buy or repurchase online?

Speed, convenience and simple shopping

Customers look for convenience and to save time, and technology has to make searching for products simple by offering filters and streamline how to add products to the cart. Perhaps, in the same search results, the website could already have an “add to cart” option, or even have a “buy again” option. Using order history, the customer can repurchase the items in a cart from a previous order once again or regularly as if it were a subscription purchase

A fast and optimized ecommerce also improves the checkout process, and customers don’t need to enter their data every time they want to finish their purchase. These capabilities can be decisive when a user places an order in an online store.

Post-purchase service

How can you prevent customers from having an unpleasant surprise when they receive their groceries at home and find that some products are missing? Some fresh produce, such as fruit or vegetables, for example?

To avoid this, technology must have options for simple and automated contact with the customer in case of stock-outs, either to give them the option of replacing one product with another or to allow them to say that they do not want anything instead. Every contact impacts the famous Net Promoter Score (NPS), and the ultimate goal of customer relations should be to improve customer satisfaction.

Next steps towards digitization

User experience 

Shopping and browsing experiences will become much more valuable from now on. One possible improvement would be, for example, to make it possible for customers to interact more with each other during the shopping journey so that the user can share a shopping cart with someone else. Each one adds products to the cart and they split the payment, at the end. In general, features that increase the level of interaction and the level of customer experience will be explored.

Omnichannel

Recently, an additional component to omnichannel has emerged, which is the famous phygital. It is the relationship between the digital, the physical and how a digital component is added to the brick-and-mortar store. 

The question is how to integrate the entire operation for customers to have a single and consistent experience in whatever channel they interact with the brand. By using the physical infrastructure as part of the whole, you get the benefits of convenience, such as an extended catalog, reduced delivery times and operational efficiencies.

Delivery time

Competition is greatest when it comes to home delivery time. Same-day delivery is already a reality in many countries but has not yet sufficiently penetrated the European market. Grocery delivery within hours is a challenge for the grocery industry, and even more so for fresh products. 

The most advanced stores already use drones to guarantee the minimum delivery time. Most physical stores already have delivery options such as ship-from-store and pick-up in-store to ensure that the customer receives it from or at the closest store.

Sustainability

Any company that wants to find its place in the medium- or long-term grocery market must have a sustainability strategy and plan. Finding ways to preserve the environment and reduce the carbon footprint as much as possible are cross-cutting objectives that affect all organizational levels and, at the same time, the end-customer.

Offering recycled bags, sustainable packaging and in-store recycling options are some of the actions that are already being implemented and have become critical for a greener future.

The digital grocery store of the future

Online stores in the coming years are going to be much more consumer-centric. Customer search and navigation will dictate the changes in digital grocery. The role of technology will be crucial, as it will have to be up to date to implement and integrate innovations posed by increasingly strong competition and, at the same time, be prepared for rapid changes in product demands.

Speed, convenience, new features and loyalty to your trusted store. The future consumer is increasingly demanding, and your online grocery store’s products and services must always live up to their expectations.

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