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Will Online Grocery Click With Consumers? | WMI

Posted by Ann D'Adamo on Feb 17, 2017 8:30:00 AM
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Online food shopping has been relatively slow to catch on in the U.S., but that’s beginning to change. It’s predicted that by 2025, 20% of all grocery shopping will be done online, representing $100 billion in annual consumer sales, or the current revenue equivalent of approximately 3,900 grocery stores.

Amazon Poised for Growth

Amazon has been instrumental in setting our expectations for online shopping—order it today, have it delivered tomorrow (or sooner!)—and that level of convenience is starting to entice shoppers into buying more grocery items online. Amazon’s food delivery services, Prime Now and Prime Fresh, have started to expand its one-to-two-hour grocery delivery offering to more local markets. Currently, in the 30 markets in which Prime Now operates, only 10 include ordering options from local grocery stores, but partnerships with regional grocers and fulfilment centers are expected to grow as these services roll out. Other services, such as Fresh Direct, Instacart, Peapod, and jet are all competing in the online grocery delivery space, but Amazon’s ability to challenge them on price, logistics, and analytics, plus easy-to-use technology such as Dash replenishment buttons and the Alexa voice-activated assistant gives them the clear competitive edge.

Consumers See Benefits In Online Grocery

Almost a third of Millennials say they’ve purchased groceries online, with older Millennials making up the majority of online shoppers. For Millennials with families, the ability to order groceries from their tablet or smartphone and have them delivered directly to their home is both convenient and time saving. We know that Millennials are fundamentally thrifty, and online grocery shopping offers the ability to easily compare prices, but price isn’t the only consideration—researchers found Millennials were willing to pay a fee for the service, proving that for these consumers, convenience, not price, is the paramount consideration.

But it’s not just Millennials! One-in-four Baby Boomers are shopping on mobile devices and tablets. As this generation ages, they may lose mobility or simply prefer the convenience of having groceries delivered right to their front door. Like Millennials, price matters to Boomers, so the ability to compare prices will be appealing to them. Other factors, such as personalized shopping lists and the ability to automatically replenish frequently ordered items, simply make life easier for older Americans.

The Loyalty Question

With the ability to easily compare prices, will consumers stay loyal to brands they love? The strongest brands, and those best positioned to win in an online environment, are those with well-defined personalities that relate to consumers on an emotional level. Brands that remain relevant do so by fitting into their customer’s lifestyle, have a well-defined brand image, keep an open dialogue through social channels, and publicize practices that are important to their consumer (eco-friendly, fair business practices, partnering with charitable organizations).

New Approaches to Food and Beverage Marketing

As consumers grow more comfortable with the idea of ordering groceries online and see the benefits in convenience, selection, and price, brands will have to develop strategies that make them stand out online as much as they did on-shelf. Both online and off, brand will have to develop strong, well-defined brand images and personalities to compete. Learn how Women’s Marketing’s suite of marketing services can help your brand succeed in an increasingly competitive environment.

Sources: Internet Retailer, Online grocery sales top $48 billion worldwide, October 2016, Nielsen/FMI  Grocery is the next big industry being re-shaped by digital January 2017, Marketing Charts Millennials and Loyalty a Complicated Affair 

Filed Under: Food & Beverage