Online Grocery’s Convenience Gap: The Digital Difficulties
In our last post we talked about the tepid growth of online grocery. For those immersed in the industry it’s clear the ceiling of grocery ecomm is high. The flywheel of online grocery has been set in motion, and as each quarter goes by the machine gets increasingly efficient, consumer engagement grows, and we see forward progress. The contributions and innovation come from a myriad of partners: retailers, CPGs, tech companies, investors, and logisticians. We’ve collectively built on the foundation, launch and learn from experiments, and make continual experience improvements.
But what else can we do? What is the magical grease that we can add to the flywheel so we don’t have to push so hard? Spoiler: there is no silver bullet. But if you dig into research and consumer studies, an overarching theme emerges: the convenience barrer. Only 42%1 of consumers who were newbies to online grocery stated that it saved them time. The success of online grocery is pinned to simplifying consumers’ lives. If almost 6 out of 10 newbies didn’t find it convenient, we have some work to do. The evidence is pretty compelling that convenience is the grease we need to reduce the experience friction. Broadly speaking, convenience can be cut into two halves: the physical (availability, curbside/delivery options, delivery times, pick times, substitutions, fees, etc) and the digital (the experience, information flow, connecting to a personalized digital shelf, etc). Today we wanted to focus on what we think are some key digital convenience opportunities. We’d love to hear your feedback on what other opportunities you feel are out there.
“The hardest part is starting. Once you get that out of the way, you’ll find the rest of the journey much easier.” -Simon Sinek
Just like anything new, getting on the bandwagon can be tough. It’s a new environment, with new options, and you generally need to retrain your brain in that new paradigm until you get in the groove. You’re shifting from 3D to 2D, the aisles are organized differently, you don’t see promotions the same way, you can’t discover and roam like you do in store, and a myriad of other changes. Those are all mini-opportunities in and of themselves that we are tuning online, but inevitably consumers will have to go through some change. We can build the nicest on-ramp to online grocery, but it will still feel uphill. The good news is that if we can tempt consumers to keep trying, their perception of convenience accelerates. For consumers who have shopped online 3 times, 60%+1 of them agree that it saves them time–quite a jump from the 42%1 quoted by 1st timers. For those who evolve into masters of online grocery (10+ times) that rises to ~70%.1 There is a change curve we need to address, but once consumers are past that, the convenience keeps them coming back for more and eventually it will be something they can’t live without.
Inspiration to cart.
An often overlooked pinch-point is how consumers connect their food inspiration into their digital cart. List building for consumers remains a personal, convoluted, and extremely manual exercise: 94%2 of US grocery shoppers who own a mobile phone still use an unconnected grocery list. A mix of offline and online inspiration methods further complicate matters. This complexity and lack of connection suppresses convenience. Think of grocery e-commerce as a new electric car, and digital carts as the batteries that power it. You still need to efficiently supply the carts/batteries otherwise you starve the system. How we feed those digital carts today isn’t consistent, and is often archaic. It would be the electric car equivalent to not addressing the charging network. Today for the most part we ask consumers to feed their own digital carts, but solutions that automate, streamline and supply those carts is instrumental. Purposefully linking content to cart—whether that inspiration is coming from a banner ad, Pinterest, a recipe site, or your digital grocery list where your common basket of staples live–is an opportunity. Brands, content providers, and developers need to make it mind-numbingly easy to connect food inspiration directly into a digital cart or onto a smarter list.
The diversity of behavior.
Brick and mortar grocery behaviors have been well grooved over the last 100 years, but those deep ruts are now evolving. We know that the ‘where’ (brick & mortar vs digital mix) of grocery shopping is already rapidly changing. The ‘who’ (demographics), ‘where’ (retailers), and ‘what’ (product mix) will likely evolve as well and is a market opportunity for brands and retailers to invest in.
The more complicated layer is in the ‘why’ (behaviors), and how we design against those habits. One of the golden rules of product design is deeply listening to consumers in order to understand their needs and behaviors. That gets difficult when the product in this case is an entire ecosystem of online grocery infrastructure, and the persona is 250 million Americans3. A few data points that illustrate the diversity regard consumer motivations for multi-retailer purchases: 75%2 quote price as being a motivator, while 63%2 pointed to product availability as also being a driver. Very likely that is not black and white—some skus may be inelastic while others are very elastic. Another interesting contrast showing both changing behavior and lack of digital integration: 65%2 of Americans have tried online grocery in the last 60 days, while 67%2 of that same population continue to use paper-based Grocery Lists. Simultaneously New School and Old School. Whether it’s your comfort level with mobile, what you look for in products and retailers, dietary motivations, or where you go to get your meal inspirations–the diversity of grocery habits and behaviors cannot be overstated.
In order to assist in elevating the convenience of online grocery, we cannot assume a clean, nicely packaged product persona to design solutions against. Artfully allowing for those habits like local retailer choice, visibility to price, diversity in how you find your meal inspiration, and how you add it to your list cannot be tossed to the wayside as features–they are requirements in the fight for digital convenience.
At the end of the day the challenge with online grocery is multifaceted: it’s a supply chain and fulfillment problem (Scale! Faster! More efficiently!), on top of a geographic problem (largely fulfilled by 10,000+ stores4, dozens of retail banners, all w/ unique inventory & pricing), on top of a behavioral problem (diverse preferences, motivations, and willingness to change). The flywheel is moving, we just need to add grease to a few places.
What are some other ripe online grocery opportunity areas that stand out to you? Join the conversation below, the Basketful team would love to hear your perspective.
1Bain/Google, Feb 2019
2Basketful Dec 2019 US Grocery Consumer Panel
3United States Census, July 2019, Persons 18+
4Basketful Food Engine, Jan 2020