In 2017, online grocery sales exceeded the $31 billion mark. That number represents a 27% increase over 2016 and double that of 2015 – staggering growth in a short period of time for a fledgling industry. While the $31 billion accounts for only 3% of the total grocery market, the growth is hard to ignore. After all, the web-based grocery market is growing at a rate nearly ten times that of the overall grocery industry. And, that disparity should only continue to grow as stores add same-day pickup for online orders and online merchants ramp up same-day delivery.
Need further convincing? Just take a look at what’s happening in front of your very eyes. From acquisitions by Amazon, Target, and Kroger to the addition of pick-up options by Walmart and Meijer (among others), this slice of the grocery industry is shaping up to be a major battleground for those who are lured by its growth potential and fearful of being left behind. To win, though, it’ll take more than just financial commitment from these competitors.
Loyalty is No Given in Grocery
While consumers are beginning to warm up to new methods of getting their groceries, customer retention is an issue to monitor. Despite the fact that these consumers don’t spread their spending around – 80% use just one online grocery service in a given month – more than 30% of monthly users claim they are unlikely to use their most recently shopped service. Translation? These shoppers are willing to move on to another option if your service falls short. With that, experiential marketing can be a great way to combat the loyalty crisis. In fact, EventTrack found that almost three quarters of consumers say they are more likely to buy a brand after engaging in a brand experience.
Room for Improvement
Whether it’s an order from Amazon or the local supermarket, online grocery shoppers are not finding everything they want to buy. Sometimes, it’s because the product isn’t carried. Other times, it’s because the item is offered in-store, but not online. And, many times, it’s because the item just can’t be located through all the clutter. Ultimately, though, the result is that 20% of shoppers can’t find everything they set out to buy. To make it worse, 12% of shoppers don’t even receive everything they ordered. Even Amazon, seemingly the pinnacle of customer service, misses the mark 5% of the time. Going forward, online grocery providers will not only have to improve their services, but also put a greater effort behind educating customers on the nuances of their platform. By turning to experiential marketing, they can inform consumers about their offerings and demonstrate first-hand how the service fits into their lives.
Amazon Looms Large
Though Amazon already sells groceries to 54% of households that buy groceries online, it stands to gain so much more. How? Through the purchase of Whole Foods and by leveraging its flagship program, Amazon Prime. By linking its grocery services to Prime, the e-commerce giant is able to tap into – and offer discounts to – more than half of the US households that use the internet. The scary part? There is so much room to grow. Though 77% of US households purchased a product from Amazon in the last month, only 11% purchased groceries. In order to survive, competitors must offer a service that is simply superior to that of Amazon.
As the online grocery market continues to develop, brands will need to work harder to stand out from the crowd. Contact us today to learn how you can attract and retain consumers by tapping into the power of experiential marketing.
Sources: Brick Meets Click: How the online grocery market is shifting 2018; Internet Retailer: 2018 Online Food Report