How To Get Off The Path Of Least Resistance And Into The Fast Lane Of Online Grocery

Innovation How To Get Off The Path Of Least Resistance And Into The Fast Lane Of Online Grocery Barry Clogan Forbes Councils Member Forbes Technology Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) Jun 16, 2022, 08:15am EDT | Share to Facebook Share to Twitter Share to Linkedin Barry Clogan, Chief Product Officer at Wynshop .

getty “It was a good idea. . .

at the time. ” That seems to be how a lot of folks in the grocery industry have come to feel about outsourcing their online shopping channel. Prior to Covid, only the largest grocers like Walmart and Kroger could justify investing the resources that were needed to prioritize digital grocery sales.

Almost everyone else took the path of least resistance, delegating their online businesses to third-party marketplaces like Instacart and Shipt. Sure, that meant giving up a share of margin, but online grocery shopping accounted for less than 5% of all grocery sales in America. Most shoppers didn’t want it, delivery times were too long, and it just wasn’t a big deal.

The path of least resistance allowed grocers to offer an online solution to the few while continuing to focus on business as usual. The proverbial chickens have come home to roost. Of course, all of the above sounds almost surreal to think about today.

As much as 15% of total grocery sales are now happening online. Delivery times are as short as 15 minutes. And grocers have realized that “maybe it is a big deal, after all.

” MORE FOR YOU Google Issues Warning For 2 Billion Chrome Users Forget The MacBook Pro, Apple Has Bigger Plans Google Discounts Pixel 6, Nest & Pixel Buds In Limited-Time Sale Event Grocers that outsource their e-commerce operations find themselves losing both customers and profits. Third-party marketplaces make it easy for grocers to sell to their existing customers online, but they also make it easy for those customers to try out the competition. Meanwhile, the pain of sharing already-thin margins with marketplace partners has become acute, as the digital channel’s share of sales volume has increased.

But the path of least resistance contains one more liability that grocers are beginning to understand. By outsourcing their digital strategies, grocers sacrificed passage through the digital learning curve that’s necessary to be successful in the current omnichannel environment. Very few internal resources were needed, and the only real measure of success was sales volume—“up and to the right.

” Check! Maybe that was just a bit too easy. The path of least resistance made for a rapid on-ramp to the e-commerce world, but it ultimately made it more difficult for grocers to get into the fast lane. Grocers are now switching gears.

More and more grocers are now working to bring at least some of their online operations in-house. As they do that, many find themselves facing challenging questions like, “Where do we start?” “Who do we have that can do this?” and “How do we measure success?” Some grocers don’t even know who their online customers are—or how to find them online. For grocers getting off the path of least resistance, winning requires the adoption of new metrics, an injection of digital skills and an understanding of new levers to profitability.

All of that takes time to permeate the culture of grocery organizations, which are still deeply rooted in a brick-and-mortar tradition. Despite the steep haircut to its valuation as of late, Instacart’s share of the online grocery market is estimated at as high as 25% . It has had years to develop expertise in marketing, picking and delivery.

Getting off the path of least resistance requires a roadmap. I’m what you might call an “early adopter” in the online grocery space, and I have a lot of conversations around this problem, so on that basis, here’s my advice to grocers about how to get back on track. 1.

Begin with a baseline: From regular weekly shoppers to dot-com dabblers or monthly top-ups, grocery shoppers are not all alike. Rather than trying to be everything to everybody on day one, focus your initial priorities on a single baseline customer proposition that you can later build upon. For example, young families are typically easier to acquire and have larger, more consistent and more profitable baskets than other segments.

Optimize your baseline for this segment first. You will then be in a much better position to develop the additional digital capabilities needed to attract other cohorts. 2.

Mind your metrics: Offering multiple channels makes you more relevant and convenient to customers than your single-channel competitors. But to make sure that the organization is with you on this, you must clearly define your metrics and targets and pay maniacal attention to them. In your first year, you might focus on customer acquisition, for instance, and then work to improve efficiency and customer experience in year two.

Decide in advance which metrics matter, and make sure you are tracking the data you need to demonstrate progress. 3. Pick your partners: To take online operations in-house, you need vendor partners who can provide your core software platform, last-mile delivery, personalization, digital coupons, product content, media monetization, payment processing and more.

While there are upsides to owning your online operation, developing it all from scratch is a fool’s errand. You can begin by focusing on four core competencies: quality product data, efficient picking and delivery, merchandising and promotion, and targeted media placements. Taking the path of least resistance can be a smart strategy—a way to conserve resources that might be better spent elsewhere.

For the omnichannel reality that has emerged, however, the time has come for grocers to up their digital game. The only way that grocers can beat their own path to profitability, protect their customer relationships, and control their own destinies is to cultivate the organizational culture and digital capabilities required by online retail. As for those who remain on the path of least resistance, I predict that they will soon find themselves too far off the road to success to ever catch up.

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