Opportunities and Innovation in Grocery retail E-commerce in 2020

Saturday,  May 29, 2021

-- Rukmani Vinay Dasarapu.
Website url: https://www.k-digibiz.com/

During the pandemic, grocery E-commerce sales have accelerated at an unprecedented level, it has changed the game, impacting the supermarket retailers forever.   

Opportunities: 

Many customers find it safer and convenient to purchase online than to pick groceries from their neighbourhood stores, especially with contactless deliveries offered by most E-commerce.

In India retailers like JioMart,
Spencers, etc,. have stepped into the World of Online Grocery, challenging seasoned players like Amazon, BigBasket, Grofers, etc,. 

 

All of them are competing neck to neck promising free home delivery, a higher and better range of quality of items, combined with the best discounts to lure customers.
Refer to [Figure I], to see the market share of online grocery across India, and [Figure II], for the global online share in 2019. 

This market is bound to grow further as online is the most preferred mode of shopping. In a recent study, Grandviewresearch.com predicted promising growth for the US grocery retail market  - refer to [Figure III] to see the trends. 

Three modes of digital grocery:

E-commerce has evolved from its nascent years and has adapted to customer and business needs.

Today we have three popular modes to select from:

1. Pure E-Commerce - ship-to-home.
   In this model customers search, find, and finalize their items online; purchase it either through a digital transaction or COD (cash /card on delivery), the online store takes care of the shipping, tracking, and home delivery. Amazon, Walmart, Flipkart, etc,.are popular players in this mode.
   
2. Buy online pick up in-store (BOPIS) here the customer discovers the item and purchases it online, however instead of having it delivered home he collects it from a convent store or delivery outlet.
   
3. ‘Last mile, where a shopper finds and purchases a product online, but intermediaries like Instacart, DoorDash, Dunzo, Shipt, etc, is responsible for in-home delivery, there is an additional delivery cost in this model.

Challenges

With the growing market, there is a surge in demand, this has led to significant waiting time for getting delivery slots and has caused also delayed delivery. To meet customer demands most E-commerce retailers are hiring more and more people.

Grocery E-commerce has historically been a tough business to crack into due to multiple issues —

• Grocery items have a low shelf life, which means they are easily perishable if they are not maintained in the correct temperatures; 
• products come in various shapes and sizes;
• managing inventories, suppliers and logistics is a hurricane task. 
• To top these vows online grocery stores have fewer margins when compared to other E-commerce categories, hence it is less profitable.

Innovation:

Covid-19 pandemic has attracted customers to online grocery stores. Businesses are carefully planning and thinking of ways to overcome existing challenges to make it more and more profitable. Exploring ways to help them survive and grow in this space.

Amazon has already pioneered in using robotics and AI to customize their customer and product management.

Automation can effectively close gaps in managing huge data, inventories, help in tracking orders, create a customised marketing, and create a positive customer experience. 

Grocers like any other new-age businesses are looking at innovative ways to engage and convert customers through their digital platforms. 

• Like creating interfaces that are specific to individual customer needs and trends - suggesting products based on previous buys, offering upfront discounts and deals are just a few examples. 
  
• Creating customer-centric content, by sharing reviews, testimonials, posts on their official social media handles is another way to engage and build a loyal customer base. 
  
• Engaging with customers directly by replying to their public posts has helped resolve customer issues quicker and in building brand credibility.  
  
• Offering the option to ask for suggestions from an expert,
  and reading user reviews published on their websites has made it easier for customers to choose the correct product online.

Many technologies are being tested that will be used by other players to take the E-commerce business in general and grocery sales specific to new heights. Augmented or Virtual Reality enhances the user's experience of an area that is still being explored. Grocers are not leaving any stone unturned to explore and succeed in their endeavour.