Online Grocery Shopping – Why it’s not working

Online grocery shopping

China arguably leads the world in online grocery shopping with some categories seeing more than 40% of sales online. When asked why this might be, a small group of Chinese online grocery shoppers offered a number of opinions: “It’s convenient,” said one, “I don’t have to drive to the store, I shop before I leave work and groceries are delivered soon after”. “It’s easier to get what I want,” said another, “in regular shops I often can’t find the right product”. A third said. “I hate going to regular stores, they’re dirty and uncomfortable, my mum used to shop in a market for us when we were kids, but that’s not for me”. For these shoppers, online grocery shopping offers a significantly better experience than they get in the real world.

Elsewhere though shoppers clearly don’t seem to agree. Rumor has it for instance that when Tesco launched online shopping in Malaysia, they only managed to secure 35 transactions a week. Even in the UK, arguably the world’s most developed e-commerce market, only 5% of grocery sales are online. Why is this? Not having completed an in-depth survey, I can only offer hypotheses, but I can suggest three reasons why I think many shoppers still prefer to buy groceries in the real world.

Online Grocery Shopping is not intuitive

Online sales have taken off in the entertainment industry because the product is so simple; if you like a song or a movie, you search for it, and there it is. There may be a few versions knocking around but it only takes a few seconds to find the one you’re looking for. Grocery products aren’t like that, categories might include hundreds of individual products, categorized into different segments, differentiated by brands and then further broken down into variants, pack types and pack sizes.

In the physical world, grocery shoppers have developed intuitive coping strategies to deal with this, filtering out the extraneous and focusing in on just the product they’re looking for. When the precise product isn’t there, they switch to a substitute. Equally shoppers in the real world are rarely as specific about what they want as they need to be in the online world: How often have you found yourself putting ‘beef’ or ‘veggies’ on your list knowing that you’ll choose what looks good when you get there?

Online grocery shopping is different, you’re required to know what you want and all but a few search systems are intuitive enough to help a lost shopper. As a result many shoppers may prefer to stay with the store they habitually visit rather than change.

Online grocery shopping is not trustworthy

I suspect that online grocery shoppers hold web-stores to a far higher standard than they do regular ones. In the real world, it’s not uncommon to find lines out-of-stock; one audit of Asda we did in the UK found 12% of lines off-sale. Real-world shoppers have learnt in many cases to cope with this reality and to substitute or go elsewhere.

However, I believe that online grocery shoppers have an automatic assumption of availability. I’m guessing this is born largely out of their experience of shopping for other products online: When you buy a track in ITunes, it’s delivered immediately; if you buy a book at Amazon, it’s dispatched in days. I’m guessing that since many online grocery shoppers’ first experience online was like this, they feel let down when the product they want isn’t available in the online grocery store.

Further, when grocery products that have been ordered online don’t turn up, shoppers get even more frustrated. I’m pretty sure that for many this sort of experience leads them back to doing things the old way.

Online grocery shopping isn’t ‘social’

My third hypothesis is that that many offline grocery shoppers who don’t make the switch online, choose to continue shopping in stores because ‘it gets them out of the house’. For many, going out to shop is a social occasion which can’t be easily replaced online.

In research we’ve done, shoppers often rate the availability of help and information third only to convenience and range when it comes to selecting a grocery store. For many shoppers, the absence of a personal contact, may frustrate those seeking a hard-to-find product let alone those seeking input or advice.

Making online grocery shopping work better

If any of these hypotheses were proven true, this would give some valuable insights to the grocery trade on how to elevate the performance of their online stores. Such insight might lead to more personalized and better curated online environments which satisfy the needs of shoppers better. Equally this might enable web-stores to improve their product availability in more targeted ways (and enhance their forecasting capability). Lastly, learning what turns shoppers off online grocery environments would help create more engaging customer service experiences.

It occurs to me, however that very little of this insight exists today, and if it does exist, it’s not being published. So perhaps it’s time we addressed this. If you have information that might shed light on why so few shoppers go online, or would like to share other hypotheses, please get in touch.

Image from Wikipedia.


Shopper Marketing 101 – Product Availability

Which would you buy?
Which would you buy?

With all the talk surrounding advances in shopper marketing, many marketers might be tempted to forget that the biggest single influencer of shopper behavior is product availability. Put it this way, if a shopper can’t find the product, she won’t buy the product and chances are, she’ll buy a substitute instead.

With the vast majority of purchases being made on the home shelf in stores and off the regular page online, ensuring your product is present and visible is the first responsibility of the shopper marketing team. This might sound like a glib statement but ensuring product availability is surprisingly tough to get right and astoundingly easy to get wrong.

Here’s a few simple rules every shopper marketer should bear in mind.

Make sure it’s ‘there’

Ok, I know this is really basic but a shopper can’t buy your product if it’s not for sale where they are shopping. This doesn’t mean that your product has to be everywhere – I’m not suggesting that anything less than 100% distribution is a failure. What I am urging, though, is that brands understand who their target shopper is, what he wants to buy and where he wants to buy it.

This means that range and distribution targets should be set with the target shopper in mind and not just based on the efficiency of any given route-to-market. In today’s grocery markets the tectonic plates of retail are shifting; big-box, one-stop shops are giving ground to online outlets, discounters and convenience stores. Waiting for these channels to become significant for your brand may make your brand insignificant as the shoppers who are flocking to these environments choose your competitors and not you.

Shopper marketers are stewards of a brand’s future and their challenge is to always ensure that there’s a product available to the brand’s shoppers, wherever they choose to shop.

Just because it’s ‘there’ doesn’t mean it’s ‘there’

Be super careful of relying on inventory reporting for peace of mind. The fact that a product might be showing up as being in distribution doesn’t necessarily mean that it’s available for purchase. As a sales guy years ago a lot of the time I wasted in stores was spent hunting through stock rooms trying to find that box of Twix that had been delivered but hadn’t made it to the shelf.

In online stores, shoppers expect to be able to receive everything they want at the same time, so if your product isn’t in-stock, even when it’s on the page, there’ll be a bunch of folks who choose the other brand that is there.

As a shopper marketer, the only time you can relax is when you know your product is available to buy, in the right place and in sufficient quantity to meet your shoppers’ demand. (I know that means, like, never!)

Just because it’s ‘there’ doesn’t mean that it’s fit for purchase

Have a look at the pic I posted above, now have a look again – which bottle would you buy? The one full to the brim or the one that only looks part full? I’m guessing you and I would come to the same conclusion – the one that’s full!

As shoppers we always want the best, so apparent product quality is a must. Damaged and dirty goods turn us off and whilst a committed shopper might look for a perfect pack, others may just as quickly switch to something else. The same holds true online, perhaps more so, if the product imagery doesn’t look outstanding, some shoppers will go elsewhere.

As a shopper marketer, doing your level best to nail the quality of your presentation in store is a great way to win shoppers for your brand.

Just because its ‘there’ doesn’t mean I can see it

Shops are busy places and shoppers are busy people, in the average superstore, shoppers will browse a category for 30 seconds – that’s 30 seconds to find your product amongst the other 200 or so products on sale. In surveys we’ve done, shoppers often cite not being able to find a product on shelf as the key reason why they switch brands. Scarily, in many of the cases, the product was on shelf, just not in a place where it was easy to find.

On a website, particularly one that sells grocery products, getting visibility is going to get harder: Here algorithms determine what shoppers see. As these algorithms get smarter, so the pressure on shopper marketers will increase. But for shopper marketers, obsessing about how visibility can be constantly improved is far more likely to pay greater dividends than the next big thematic activity.

So what does all this mean?

An awful lot of ‘shopper marketing’ initiatives seem to focus on the short-term delivery of great communications gimmicks or super, shiny, new promotions. Indeed one team I work with currently spends over 80% of their time working on promotions alone.  Interestingly though, as we’ve worked through a re-organization process, the team has learnt the true RoI their efforts and it’s not pretty.

Uncovering the true value of product availability by contrast has had a profound effect on way this team thinks and on the way they will organize themselves. Their new plan is to focus over half of their resources on continuous improvement of product availability. I think this is the mark of a true shopper marketing team; one that knows that marketing to shoppers requires the use of the full range arrows in their quiver – availability, communication and offer.

In our book, “The Shopper Marketing Revolution”, Mike Anthony and I explore what it takes to make a great shopper marketing team and we talk extensively about getting product availability right. Incidentally, the book is available to shoppers globally, just click here!

Is 2014 the year to invest in online retail channels?

online retail channelsA very Happy New Year! As many of us dust of the keyboard and make resolutions regarding our waistlines, thoughts turn to the priorities we might set for the coming year. If you’ve paid attention to the extensive coverage given to online sales over the last month, you may be seriously considering whether this year is the year to make significant investments in online retail channels.

Your decision will of course be based on how important you believe online retail will become in your market and category and at what rate its importance will grow. 2013 saw online sales reach the highest levels ever in markets around the world. There’s no doubt that as shoppers become more time poor and continue to struggle with suppressed incomes, many will be attracted to e-tailers offering lower prices and savings in time and transport costs. Yet in many markets, shoppers lack confidence in online retail offers: concerns abound about reliability and quality of products. Equally shoppers in many markets are still unable to access credible e-tail offers either locally or via well-established global players who refuse to deliver outside limited geographies.

How fast will online retail channels grow in 2014?

Depending on where you play and what categories you operate in, there are two potential pathways for the growth of online sales.

The first is that sales will grow exponentially: China for example has delivered 50% year on year growth in online retail sales in the last year (and 120% annually between 2003 and 2011). Whilst online retail sales are still only approximately 2.5% of total retail sales in the market, in some categories online represents a significant share of business. Some manufacturers’ online sales leap in the last few years to in excess of 8%. If online sales do grow rapidly, manufacturers could easily be caught out and those left napping could see their shares decline whilst their sales in traditional outlets suffer. Equally they may be caught in a double bind, as traditional retailers use price discounting to catch up, causing margins to tumble at the same time.

The alternative is that online will grow incrementally. In the US, sales online seem to be growing at a rate of between 9% per annum, albeit from a base of 8% of total retail sales. If sales grow at this rate, manufacturers will have more time to accommodate changes in their trade structure and the impact of these changes, whilst significant, will be far less dramatic.

In either scenario online retail has the potential to be a significant proportion of sales within 5 years, so changes in marketing strategies, organization structure and business process will become necessary for all.

Shoppers are the agents of change

Whatever happens, the agent of this change is neither the manufacturer nor the retailer however. 2013’s seasonal sales in Europe and the US show that shoppers will reach a tipping point where confidence levels reach a point were reticence to shop online is overcome. For anyone considering what to do now, the message is clear: Understand your shoppers better.

To really get to grips with what to do about online retail channels you need to know how your key target segments are likely to behave in the future. Research programs should consider:

  • Which shoppers are likely to remain offline in the future, their relative importance to your brands and what their expectations from retail stores are.
  • Which shoppers are already online, how important they are to your brands and what is needed to drive value from them.
  • Which shoppers are likely to move online, how they may deliver potential brand value and how you should approach them to gain maximum leverage.

Should you act this year?

For those pondering whether it’s worth making such an investment in research consider this: There are only two likely outcomes: online retail will become important very rapidly or online retail will become important slowly. Against these outcomes you have two choices; to act now or not to. So in deciding what to do; draw matrix: on the vertical axis put rapid growth of online retail at the top and put slow growth on the bottom. On the horizontal axis plot action on the right and inaction on the left.

In the top right quadrant you now have a space where change is rapid but you’ve acted and can anticipate this change. As a result you are competitively ahead of your peers, market share grows and you assure long-term stable growth. Immediately below is the situation where you’ve invested, but online retail doesn’t take off rapidly. At first blush this might seem like you’ve wasted money but if you’ve worked hard on understanding all shoppers and not just those who might go online, you will gain competitive advantage from the insights you now have about shoppers in offline retail and you can anticipate the future. In both cases, you gain a positive result.

Contrast this with the outcomes of inaction – say change happens but more slowly; your inaction may not affect today’s results but as online becomes slowly more important, you may incur greater cost in the future to catch up. The worst outcome of all however is you don’t act this year and there is rapid change. In this scenario, the market moves rapidly ahead of you leading to market share loss and extreme pressure on the topline and bottom line. You have to respond relatively, which means you incur not just catch-up costs but also suffer from talent shortages.

online retail channels

Of course this is just my analysis but I would recommend as you ponder the future that you think about what might happen in your category and your market in the same way. If you feel that action is an imperative, feel free to contact me to discuss your next steps.


How Much Has Digital Changed Marketing And Shopping Behavior?

It’s been nearly two years since Jim Lecinski at Google published ZMOT – Winning the Zero Moment of Truth. This week I met with friends at Google to talk about their new research into the way shoppers are using the internet here in Asia. Our conversation turned to how much has actually changed since Jim coined the term ZMOT and what that means for the modern marketer.

ZMOT – a new mental model and how it’s changed shopping behavior

The big insight in ZMOT is that the internet has dramatically changed the way we plan our purchases. In the past shopping happened almost exclusively in stores; today, for even the simplest purchases, many of us spend time learning more about the products we are considering buying, online. This is the new mental model that ZMOT introduced to the marketing community.

Shopping Behavior - ZMOTequation

As our ability to access larger volumes of information about the products and services we intend to buy has expanded, so has the influence of this information on our purchase behavior.

This creates the opportunity for deeper, more directed and ultimately more effective interactions between brands and their targets. If the way we choose a product has changed, the way we market that product must also change.

Everyone is shopping, online

Whilst not everyone is buying online, when someone is searching for information about a product’s ingredients; seeking a product review or checking out deals and offers, she is actively engaged in the process of shopping. All of these activities help shoppers to interpret what they need to buy more clearly, to establish how their needs as buyers might be best met and to define where they should go to make a purchase. These decisions dramatically shape a family’s consumption behavior.

What this means for marketers is that the internet creates a myriad new ways of influencing purchasing behavior, all of which can support the growth of their brand’s consumption. To make the most of these opportunities though, the way in which most marketers approach digital needs to change.

Help people buy, online

Given all the hype and hyperbole surrounding digital I can’t think of a brand that hasn’t done some work to build a presence online. What’s interesting is how much of this work has simply involved transferring consumer communication online. Don’t get me wrong, I’m not suggesting that consumer communication is unimportant – messages in media that create the desire to use a brand which fuels demand are essential. BUT, if people are using the internet to find information about which product to buy, cool messages that enhance brand awareness can only take them so far.

What people need when they are shopping is information that tells them why they should buy the brand and not just why they should ‘like’ the brand. This is where shopper behavior can be influenced. Many marketers are still leaving too much of this to chance, by failing to manage or respond effectively to product reviews or by allowing information about where best to buy a product to be driven by retailers.

Making the most of ZMOT

I believe there are three things that marketers should be prioritizing as they consider ramping up spending online:

  • Learn more – particularly about who is using digital resources to support their purchase decisions, how valuable they are to your brands and what is needed to capitalize this value.
  • Target more – develop more granular segmentation models so that you can target more specific niches of the shopping population and encourage purchase behaviors that are more likely to support your brand
  • Engage more – expand the focus of your approach to digital beyond education about the brand’s ideals to encompass specific messages that will help target shoppers to buy. This might include more active engagement in peer review environments but equally it might include driving shoppers towards specific retailers and increasingly creating the opportunity to buy immediately.

There’s a huge amount being written in this space currently so if you’d like to know more about this, I’d recommend you download the original ZMOT e-book from Google as a start point but also keep an eye out for the new Asian edition of this which should be available soon. You can also read more on the subject in The Shopper Marketing Revolution which I published with Mike Anthony recently.

Is Retail Dead?

I was recently invited to speak to a group of entrepreneurs in Singapore, and searching for a topic that might be of more general interest, I decided to ask the question of whether retail is dead? I broke my presentation into three parts: the case against retail; the case for retail; and the implications of the new reality of retail – you can access the slides here.

Why traditional retail might be dead

Given the massive volume of words written weekly on the subject of digital, e-commerce and mobile, you could easily be forgiven for thinking that the blogosphere has decided that bricks and mortar retail is dead. Here in Asia there is loads of evidence suggesting we love online shopping.  Asians want to shop online – a recent survey by Nielsen suggested that intent to shop online in the next three months ran at over 30% for apparel and travel and more than 25% intended to buy phones, food and beauty products online in the near future. In China, T-Malls’ recent Singles Day promotion overwhelmed couriers all over the country as more than US$3 billion dollars of sales were recorded in a single day.

Given the massive volume of words written weekly on the subject of digital, e-commerce and mobile, you could easily be forgiven for thinking that the blogosphere has decided that bricks and mortar retail is dead. Here in Asia there is loads of evidence suggesting we love online shopping.  Asians want to shop online – a recent survey by Nielsen suggested that intent to shop online in the next three months ran at over 30% for apparel and travel and more than 25% intended to buy phones, food and beauty products online in the near future. In China, T-Malls’ recent Singles Day promotion overwhelmed couriers all over the country as more than US$3 billion dollars of sales were recorded in a single day.

Is Retail Dead

With 44% of the world’s internet-connected population, and with the world’s largest and fastest growing middle class population, there’s no doubt that more and more Asians will shop online in the coming years. This is reshaping the Asian retail landscape, especially in China where brands like T-Mall, Yihaodian and 360Buy are vacuuming up larger shares of the market (and complicating brands’ e-retail strategies!). At a more micro-level opening an online retail site today is practically free, so more and more sole traders are moving to supply products this way. There is no doubt that this will hurt regular retailers – the demise of many retailers in US and Europe has proven this to an extent.

So IS retail as we know it dead?

You had better hope not! Retail is probably the biggest business on the planet; consider the following:

  • There are probably well over 65 million shops in the world
  • It is estimated that retail sales account for nearly 20% of global GDP
  • The world’s biggest retailers account for fully 7% of the total retail sales and have more than doubled in size in the last decade
  • Retail is the world’s largest private sector employer – Wal-Mart alone is the world’s 3rd largest employer after the US department of defense and China’s PLA and more than 3 million Americans are employed in independent retail alone.

It’s a stretch therefore to right-off this industry as being dead; especially when much shopping is done in physical stores. Forrester (the research company) reckon that 90% of all retail sales in the US are in regular stores and a tiny proportion of the world’s grocery sales are made online. In actual fact we love shopping in stores; here in Asia the volume of traffic in malls, hypermarkets and traditional wet markets is consistently high. In Asia grocery shopping online is tiny: a recent survey published by Bergent suggests that just 1% of Korean and Singaporean housewives shop for groceries online and that none do in Japan, Hong Kong or India.

So no, retail is not dead. But, it has changed!

A different way to shop

The biggest impact of the internet revolution on retailing is not so much where we shop but how we shop. It used to be possible to clearly define the aspects of the marketing mix that influence us as consumers of a product and those that affect our behavior as shoppers. Traditionally the former happened outside the shopping environment. But today, the use of connected devices runs through almost every aspect of our lives. This exposes us to millions of targeted messages that form and influence what we want to concern and how we will buy almost concurrently. Effectively we are always shopping!

The likely reality is that multichannel retail will become much more normal – a true combination of clicks and bricks. Some savvy retailers have already adopted this model: Debenhams, the UK-based department store has been tremendously successful in blending  a compelling in-store offer with an online one, and online players like Ebay have begun to capitalize on the love of retail space by using pop-up stores.

A new marketing model

With so many changes afoot, manufacturers could be caught napping and that could have some very negative impacts. This requires a change in the way we think about marketing. Today, marketers who have a superior understanding of the segments of consumers and the shoppers they are chasing get ahead of their competition. So these marketers have moved away from a singular focus on the consumer and now consider a more complete view of the world.

We call this broader view ‘Total Marketing’. This model looks at the relationships between consumers, shoppers and retailers to define the best way of driving growth efficiently. Our new book The Shopper Marketing Revolution explains why this new model is so important, introduces the key concepts that underpin it and provides a field guide to individuals who want to apply it. You can buy the The Shopper Marketing Revolution at Amazon  now.