The advantages of online groceries

Contactless shopping at supermarkets has exploded during Covid-19. Especially seniors has discovered this new way of shopping. But will this be permanent? And why should we stick with it? Online shopping in supermarkets is at the end a win-win situation for both consumers and supermarkets.

Why online groceries hit the market late

Amazon started as an online book store. This makes sense as you can’t judge a book by its cover. It’s also impossible to read large parts in the shop. Though some do it.

Books were a good product category to sell online. They are easy to send, don’t break fast and don’t spoil. The last thing that makes a book easy to buy online, is that you only buy one or two items at the time.

Other products that soon got big online market shares were ticket sales and travels. Both have similar treats as books. You buy only one or two items at once. And you experience it when arrive at the destination.

Last years we increasingly see people buy products online without seeing or trying them first. Think of shoes and electronics. And sometimes it’s still the case that we first go to the shop and buy them cheaper online afterwards.

Nowadays more and more people are also shopping their groceries online. This is a completely other type of shopping. Unlike other shops we mostly have supermarkets in our neighborhood. This makes the threshold low. Secondly, we like to see fresh products before we buy them. Also, we wander to the store to get new ideas.

And last, but not least we usually don’t buy one product, but many. Products that also depend on each other to make a meal.

I want toiletpaper

10 Reasons to visit an online supermarket

It takes more to convince people to buy their groceries online than just avoiding contact. Why should people still order online even after Covid-19?

10 reasons:

1. You don’t have to give up some of your precious time on Saturday just to buy some food.
2. You shop more rationally. Online you get less attracted to buy snacks and other unhealthy food.
3. You can check the pantry and fridge so you don’t buy unnecessary things.
4. You don’t have to carry heavy bags as most online supermarkets deliver it to your kitchen.
5. You can buy meals/recipe instead of individual products.
6. You easily buy the things that you buy every week, as you can save favorite products or check most bought products.
7. You don’t have to stand in line and hear the cashier with unwanted offers.
8. You can avoid crowds and parking queues, while saving gas and parking tickets.
9. You have more choice as online stores mostly have a larger assortment than your store nearby.
10. You get more insights on your spending.

So online shopping saves you money and time, while it’s still easier to make choices. Probably in the coming years supermarkets will track customer behavior online to let people make the same irrational choices online as they do in the supermarket. For now this is still limited online. Supermarkets want to give good customer service to a get a market share.

Micro Fullfilment at Albertsons

An additional chain

Supermarkets as self-service stores exist for more than 100 hundred years. The total supply-chain is optimized to bring goods from suppliers through fulfillment centers to supermarkets.

Online shopping has considerably changed the supply chain. Instead of self-service store, the supermarket must be replaced by home fulfillment centers. Finally, the groceries have to be brought to everyone’s house. So, what’s in it for them?

Traditionally the supermarket was the end station for all products. Consumers gathered it and brought it to their home. Now there is an extra chain to the supply chain. A chain that not only needs to gather the goods, but also needs to deliver it to every household. This famous last mile is costly.

And not only fulfillment and logistics, also a lot of investments need to be done in IT. Consider for example product information that’s on every package. Now you need this information on the supermarket's website. These facts made many supermarkets reluctant to invest a lot here.

I worked between 2007 and 2017 for a supermarket at the IT department. The first steps we made were cautious. It was 2007. The fulfillment was done in the supermarket self. In this first year only at one supermarket. Customers could call to make an order.

The annual turnover was around 60 thousand euro for a whole year. Just to put this in perspective: There are enough supermarkets that make sales of several millions per week (The whole revenue of the supermarket was around 3 billion Euro at the time). So online was peanuts.

What’s the benefit for the supermarket

10 years later the online revenue grew and passed easily 60 thousands euro a day. After I left, online sell has grown fast. During the pandemic the market exploded.

Is this still only expensive for supermarkets? Has online shopping for supermarkets no advantages? Is it only beneficial for consumers and do supermarkets don’t want to lose market share? No, not alone for consumers, also for supermarkets there are a lot of advantages. The first is already mentioned. It’s much easier to follow the customer journey. And data is the new gold.

Not only on the front-end, also the supply chain can be more automated. Some supermarkets still have delivery charges or charge slightly higher prices for their products. In the end prices will get lower online as e-fulfillment centers are robotized.

Supermarket will also save great on consumer stores. Stores are mostly located on expensive properties with parking area. Fulfillment can get a location on some industrial area. The centers also don’t have to look good as the stores do. The products don’t need to be priced. Less or no people like managers, compartment fillers, cashier and truck drivers are needed. Also, things like cash registers, cash, camera’s, internet, lightning aren’t needed.

In the end

In the end we are a creature of habit, so brick supermarkets will stay there for a while. As soon people realize that online shopping is more than avoiding the store, but that it’s actually cheaper, they will walk through the supermarket and then go back home to buy again online. Just like we buy shoes.