Grocery shopping is a routine task; it is generated from need, and not desire, or luxury for that matter. We are not talking about planning a vacation or dining in a fancy, posh restaurant; we are talking about something that needs to be done on a routine basis. And yet, online penetration of grocery shopping lags far behind other sectors.
That definitely makes one wonder, when the majority of other eCommerce sectors are doing great, what’s the reason behind eGrocery segment not booming enough?
It is due to the following challenges, which also represent the growth opportunities in the sector:
Perishable items require more investments on storage & delivery infrastructure (refrigeration). Special warehouses, delivery containers and specialized delivery vans must be there to ensure perishables are delivered fresh. All this requires a lot of capital.
Solution: Just-in-time supply system integrated with state-of-the-art inventory management API can minimize inventory costs. Apart from that, teaming up with an efficient delivery service provider that has the right vehicles to ensure customer satisfaction is a good idea from economic and operational perspectives.
Customers are reluctant to pay for convenience charges and want to get faster delivery along with quality assurance. Catering to this particular need can actually turn out as a financial nightmare for eGrocery retailers.
Solution: Implement an asset-light business model. Instead of acquiring your own fleet of vehicles and staff to carry out the deliveries for you, hire a logistics company. That will cost you less than the cost of vehicles and salaries combined. While signing the contract agreement with the delivery service provider, make sure you mention that between your office gate and customer’s doorstep, the goods to be delivered are the service provider’s responsibility.
It’s hard to break the threshold called hyper-local segments with one delivery system, especially when the customers expect same-hour delivery. Product quality, time, and delivery cost – all these critical factors impose a huge challenge for an efficient delivery system.
Solution: As the use of online marketplaces for groceries is gaining momentum, it is indeed a challenge for traditional grocery vendors to identify prevalent opportunities in grocery eCommerce and make the most of it. A plethora of approaches is being devised and implemented by the admin of the grocery eCommerce marketplace to accelerate the rate of successful online grocery deliveries.
Below mentioned are some common delivery challenges that online grocery marketplaces come across and their respective solutions:
Direct Delivery: In this delivery model, potential consumers place orders for grocery delivery through the grocery marketplace. The order details are received by the fulfillment center where the pick-up, packaging, and shipping functions are performed. Next, the orders are delivered using the services of the delivery partners.
Click-and-Pickup: Using the click-and-pickup method, customers can place orders for groceries via an online grocery marketplace and schedule self-pickup. The customer can choose a specific date and time for self-pickup meanwhile, the store executive can prepare the order and notify the consumers through the marketplace whenever the order is ready.
Partnered Delivery: This model is a combination of both, the self-pickup delivery model and the direct delivery model. After placing an order for groceries, the customer will select a time and date slot for getting the order delivered. Customers can select a particular store for this purpose. The owner of the grocery eCommerce website will arrange for a delivery partner who will be responsible for fulfilling the delivery.
Micro Fulfillment Centres: Customers will place an order on the grocery eCommerce website and select a date for getting the order delivered. The website owner can partner with Micro Fulfillment Centres instead of making self-pickups to complete deliveries. When the order is placed by the customers, the MFCs will also be notified as per the customer’s postal code. The MFC will be responsible for getting the order processed and picked.
Solutions: Partnering with MFCs can be advantageous for the grocery eCommerce marketplace as additional labor does not have to be employed. On associating with MFCs, effective inventory management can be practiced with the help of reporting and analytics stats.
Regardless of the number of online grocery businesses opening up, and the convenience provided by online shopping, people still prefer buying grocery items from a physical store. The graph below clearly reflects that consumer behavior.
The stats are from the US, but just one glance at it and you will realize this preference of picking their own food is more common than anything else in the world. And that’s because of the human nature; we just want to take a whiff of that melon; we want to hold a potato in our hand before being sure of outing it in the basket.
Solutions: Merging the online & offline grocery shopping experience is a good idea in this regard. Here are some ways to improve customer experience while keeping your expenses low:
The above two models save the delivery cost. Now, let’s talk about two alternates that reduce the operational cost while improving customer experience:
Pre-orders & curb-side pickups are among other interesting techniques to enhance customer experience. In fact, they are already a hit among customers in many parts of the world. To implement, simply offer a feature to pre-order groceries and schedule a delivery time or select a pre-decided pick-up spot. It saves customer’s time and saves you last-mile delivery expenses.
The online grocery industry is still in its nascent stage and has just started to pick up some pace. It is certain that the sector will become more efficient & profitable with time as new technological advancements will come along.
No doubt the market will remain challenging for the current generation of online grocery retailers. But grocery businesses that will stick to adding more value, will also garner the advantage of being the early bird, since they already have captured the market while it continues to become mainstream with new technology.
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