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 Behavior: The allure of traditional markets

Traditional Market Singapore
A better place to shop?

Shopper Behavior around the world is rapidly changing and yet, even in the world’s most developed economies, shoppers continue to use traditional markets. Why is this and what can be learnt from this to improve more

Going to the market: a consistent shopper behavior everywhere

From Bangkok’s wet markets, to LA’s farmers markets, traditional market places have endured the rise of the supermarket, the advent of the hypermarket and even the onslaught of internet shopping. In Hong Kong for instance nearly 80% of fresh foods are bought in markets, despite the presence  of a sophisticated and highly consolidated supermarket sector. In Europe, market day continues to draw people into the center of towns on a weekly basis. And here in Singapore, as a family we prefer to shop at our local market instead of battling through crowded, poorly stocked and over-priced supermarket alternatives. It appears that all around the world, many shoppers love their markets.

Why going to the market is an important part of shopper behavior

Traditional markets suit many shoppers because they meet a three common needs that more ‘modern’ retail environments struggle to satisfy:

The need for “Curation”

Stall holders are curators of product: in most cases the product is bought by the holder themselves. Because stall holders’ livelihoods depend on repeat business, they have a greater duty of care in product selection. As a result, shoppers often find that market stall operators know more about the products they sell and are able to direct shoppers’ in their choices.

The need for “Personalization”

Most of us enjoy great customer service and that only really comes from being recognized. For me, recognition is more than just knowing my name though, its about knowing my family, understanding our values and helping us achieve our goals.  This is pretty difficult to achieve if you are a major corporation. But the stall holders we buy from know us; they know our preferences and they know why we want certain things when we visit because we talk to each other. As a result the service we get is highly personalized.

The need for “Scarcity”

It seems ironic to suggest that we prize scarcity as shoppers when one of the problems shoppers in big stores complain about most is out-of-stocks. And yet we seem to enjoy the experience of being one of the few who are able to get the freshest products in the morning. For this reason markets are often busiest the second they open as shoppers rush to get the best stuff.

Shopper needs drive shopper behavior

In our book, “The Shopper Marketing Revolution“, Mike Anthony and I explain how shoppers’ needs drive outlet choice and therefore have a massive influence over the final product that people buy. Traditional markets satisfy more than just the humdrum needs of “great products at low prices” (here in Singapore it’s actually considerably cheaper to buy great fresh foods in a market than in the country’s badly managed chain stores). They deliver on an emotional level too, drawing loyal shoppers back time after time even if they might not offer all the conveniences of a super-store.

Many retailers have sought to emulate the environment of a traditional market and whilst some have succeeded, many have failed. In the main, these retailers have failed to recognize that a market is not just a physical environment, it’s also an emotional one. Real-world retailers will benefit from investing more in service standards, product selection and communication if they wish to maintain relationships with shoppers. This is especially online retailers potentially have an advantage – its far easier to curate and personalize if you have a sophisticated algorithm to support you. The challenge online however is to make the relationship with shoppers more real, as Zappos.com was able to as it broke open the shoe retail market.

Brands have a different challenge: how to ensure that you understand your shoppers’s needs and that your products are in the outlets shoppers’ choose. An in-depth understanding of shopper behavior helps marketers choose where to site their products and to secure the best execution. Understanding the shopper behavior that drives channel choice is therefore a critical input into defining which retail channels to prioritize. 

If you’d like to know more about channels, Mike and I have just published a new ebook  on the subject along with our colleagues at engage. You can download a copy here for free!

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.