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!

Why I am an online shopper, why my mother isn’t and what you can learn from this

online shopper

I’ve just spent a long weekend in the UK. Not a big thing if you live in the US or Europe but a big stretch if you live in Asia! In advance of my trip my wife and I decided to take advantage of lower delivery fees to stock up on a few items that seem to cost twice as much in Singapore than elsewhere. After an hour of frenetic shopping we’d bought shoes and sports gear for the kids, tea bags and dishwasher tablets for friends in Thailand and (naturally) a horse riding helmet. In all we hit 6 websites including Amazon, Sainsbury, Boots, Sports Direct and two or three lesser known traders.

Upon my arrival on Saturday my mom expressed her amazement that so much stuff was waiting for me and indeed that a “very nice man” from Sainsbury had turned up to deliver tea bags. “Why,” she asked, “didn’t you get me to buy all this?” My mother’s bemusement at my behavior and the debate it provoked helps to illustrate how we have totally different needs as shoppers and what this might mean for the future of online and offline retail.

An online shopper’s needs

Let’s start with me. I guess that I’m a fairly typical online shopper – connected and brand aware but time poor. When I’m shopping, I’m looking to buy quickly and easily without compromising limited personal time. Like most shoppers I’m also anxious to ensure I get value from the stores I use.

Buying online suits me. I can shop at a pace that suits me, I don’t have to complete a purchase in one time segment; as long as I can meet a desired delivery slot, I can add to my order or change the products I buy when I choose. I can use ‘dead time’ to shop; adding to my shopping list when I’m stuck in traffic or between meetings. I don’t have to be ‘somewhere’ to buy because I can use my smartphone. And, I’m happy to exchange the time it would take to shop in the real world for the extra dollars I might pay for delivery services.

In all online shopping works for me because it meets my needs as a shopper.

An offline shopper’s needs

Now let’s think about my mom. She’s also connected and brand aware. Sure she belongs to a different generation, lives in a different environment and so on but if you look at many of the consumer brands we use, we have very similar preferences.

Where we differ hugely is in the way we shop. For my mother, shopping is a more leisurely activity. It’s an opportunity to leave the home and engage with other people. She’s happy to exchange her time for service and interaction. She enjoys exploring stores and her store choice reflects her preference for a pleasant shopping environment. As she ages, she believes that all these aspects of shopping will be become more important to her, not less.

Visiting real stores works better for her because they meet her needs as a shopper.

Different shoppers, different needs

If we were to look at a few of the brands we both use you might be lead to believe that as consumers my mom and I are relatively similar. But as shoppers it’s crystal clear that we have very different needs. This serves to show that brands do not have one type of shopper, but many. These shoppers have different needs, which drive different behaviors. My mom and I shop in different spaces, value different things when we are shopping, so applying the same marketing techniques to encourage us to buy is unlikely to work.

Too much of what I read about shopper marketing ignores this fundamental truth and too little of the activity I see recognises the opportunities. Successful shopper marketing ought to segment shoppers in ways that describe not just the consumption needs they serve but also their shopping behaviors. Marketers should prioritize which shopper segments are most important to their brands and learn how to influence each group of shoppers effectively, whether they are in the real world or online.

For some this will mean a major re-think and many will find the idea of marketing to multiple segments a stretch. However, those brands which embrace the challenge are likely to retain loyal consumers long into the future.

If you want to learn more about how to rise to the challenge, you might consider reading “The Shopper Marketing Revolution,” which gives marketers a step-by-step guide to bringing shopper thinking into the way they work.

Growth of online shoppers in emerging markets: How ready are you?

Again China has blown online shopping records out of the water. US$ 5.75 billion in one day! That’s nearly three times greater than all online sales on Cyber Monday in the US last year. Here’s the kicker though – it was all via one portal – T-Mall.

Shoppers In Emerging MarketsChina’s huge online market shows the potential for shoppers in emerging markets to leapfrog traditional retail environments and jump straight in to online shopping. Why wait for your favorite brand to open a store near you, or for your uncle to travel to the States when you can get the product via your mobile?

What does this mean for retailers?

  1. Global presence does not always depend on the number of physical stores you have, it depends on how accessible your online offer is: For years ‘global’ retailers have expanded by putting pins on the map. Tomorrow’s winners will not need to invest in bricks and mortar, but will expand virtually.
  2. Your brand is more important to you now than your supply chain: Walmart has grown over the last 5 decades by virtue of its super-efficient supply chain, which has created massive returns on working capital. The retailers of the future will need strong brands to attract shoppers to them online. Amazon achieved this by building trust and a keen pricing model; Zappo’s simply blew their shoppers’ minds with the level of customer service they offered, in both cases the brand pulled people towards the site.
  3. Don’t wait for markets: They are waiting for you: Too many retailers are waiting for emerging markets to reach certain thresholds in development before entry. This closes down the opportunity to service the market that already exists –the hundreds of millions of internet-connected middle class shoppers all over the developing world.

What does this mean for manufacturers?

  1. Online is mainstream: Too many companies push the whole issue of ‘online’ into a small team in marketing and e-commerce and is often dismissed as irrelevant by sales directors. The reality is that treating online as a niche or a specialism will lead to major organizational issues when it dominates marketing and sales – make it a mainstream activity now and capitalize on the growth opportunity.
  2. E-commerce is not based in the US: Too many businesses focus their e-commerce attention in developed economies like the US. This is a mistake! There is more to be gained from building massive competence in the economies and  shoppers in emerging markets, particularly those in Asia.
  3. Don’t wait for retail: Waiting for WalMart to capitalize on opportunities in emerging markets is likely to leave the door open to your competitors globally and locally. Many markets could be tapped rapidly by constructing a branded online offer.

At engage, we help various clients with their strategy for penetrating emerging markets, both through online and offline channels. If this is an area you are struggling with, please feel free to contact me for help!