The COVID Effect: Grocery Ecommerce is Here to Stay

Social distancing hasn’t only forced online grocery on retailers’ hands; it has also pushed individuals out of their comfort zones to adopt new buying behaviors. More and more people are now discovering their favorite brand apps and websites for the very first time. And if these remote services are adequately fulfilling user needs, that “discovery” quickly turns into a “reliance.”

In other words, necessity initially brought customers to the grocery app, but the convenience of online buying will keep them engaged in the long-run. Grocery eCommerce is expected to endure well beyond the pandemic. Research from Cushman & Wakefield found the number of online grocery users in the U.S. to have doubled as early as March of this year. At the peak of the pandemic, consultants at Bain & Co. even estimated that online grocery revenue increased by a factor of five. Adobe’s Digital Economy Index likewise witnessed a 110-percent uptick in daily grocery sales during Q2.

No matter whose data you look at, it’s evident that the old “normal” of the grocery industry is now history.

The implications of this new reality are twofold. The glass-half-full mindset is that now is the perfect time to tinker with and modernize your business processes. The reason being: the general public is extremely conscious of the difficulties currently facing retailers. This sympathy, particularly towards local businesses, is at an all-time high.

But it would be irresponsible to ignore the glass-half-empty: For all the opportunity and upside that this unique period brings, adjusting accordingly is a tricky prospect (to say the least). Just consider all the new hurdles retailers have to jump over.

Wake up call: Grocers that don’t have an online presence may go extinct

This new standard for retail operations has logistical implications up and down the grocery supply chain. And even our largest brands have taken drastic measures to keep up; Walmart hired 150,000+ new employees for this very purpose.

And if some brand has yet to cultivate an online presence, you can bet that’s about to change. Retailers that fail to shift attention and resources to meet online grocery needs will go extinct. But their challenge isn’t limited to shifting gears; it’s now a question of seamless website and app navigation. Of user-friendly interfaces. Of mitigating customer doubts and incentivizing their virtual engagement.

With U.S. Ecommerce spiking at an unprecedented rate (i.e. up ~50 percent in April), endless questions and worries abound. Thankfully for grocery retailers, the answers to many of these questions are becoming quite apparent.

What a successful retail model looks like through COVID and beyond

The past three months of our COVID reality have forced grocery eCommerce into an intense phase of experimentation. Here are some of the most promising returns:

Omnichannel Strategy

As physical locations change and apps/online services expand, business strategies will have to better encapsulate each channel. This means committing to consistently high user experience and syncing that experience across channels. No matter how a user is accessing your service, they should be met with the same brand image, the same feeling of control, and as minimal a learning curve as possible.

Competitive Pricing

You need to simultaneously consider your competitors and your customers. The former are shifting their operational processes to gain a competitive advantage while the latter are becoming increasingly sensitive to prices (thanks to a tanking economy and rampant job loss). Keeping an eye on both parties while ensuring your margins stay in the green is where grocery price comparison software comes into play. It’s your most powerful tool in monitoring fluctuating industry trends and responding in real-time.

Smart Assortments & Merchandising

This includes all the ins and outs of presenting and organizing your goods. For example, an intuitive online catalog or search function. Or, perhaps eye-catching offers, bundles, and check-out options that boost your returns on each purchase. This also entails product specifications: The commerce experts at Vaimo aptly recognize that different buyers seek bananas of varying ripeness depending on their needs. Unlike at a physical store, your app needs some way to distinguish between green and yellow bananas. Retailers further need to install hygienic product-handling practices as well as new stocking methods that optimize an assortment’s freshness and margins.

Delivery Systems and Fulfillment Centers

We’ve mentioned curbside pick-up, but let’s double down on our new grocery supply chain. Since click-and-collect and contactless delivery options are now the norms, they need to operate as naturally as your in-store counter used to.

Simplifying the delivery process is also where the concept of fulfillment spaces comes into play. Namely, we’re seeing an emergence in Micro-Fulfillment Centers – automated, hyper-efficient mini-warehouses located in customer hubs. These MFCs are expertly reducing the time and distance between high-value orders and their buyers. Retailers then need to understand what delivery channel works best for their businesses – whether to partner with a third-party service like Instacart, Uber Eats, or Deliveroo or create an autonomous in-store solution.

Multi-channel Inventory Management

Decentralizing inventory management and diversifying supply chains will be crucial in a post-COVID world, to be operationally efficient. Retailers need to customize their storage facilities for delivery, pick-up, and in-store activity. In doing so, they need to keep in mind the requirements of perishable items and distinct product categories to minimize waste and improve inventory turns. Investing in an inventory management solution will not only help retailers automate their workflows and keep stock of inventory across locations, in real-time, but will reduce the time spent on inventory management and improve sales and business performance.

As we continue to experiment and track retail patterns, the more these solutions will prominently emerge. But here’s the zoomed-out take on these solutions: They’re not about having the latest, flashiest gadgets at your disposal. They’re about having a cohesive, holistic strategy that incorporates intelligent technologies and constantly looks toward the future. That is what preparing for the online grocery boom requires.

By leveraging digital-first, AI-driven retail solutions, your company will be well-positioned to capitalize on the imminent growth in grocery e-commerce. If you’d like to know more, talk to us today.