While it was once thought that groceries might never be sold online, roughly a quarter of Americans buy at least some of their groceries online, most often in CPG categories. According to a recent survey, 7.7% of Americans did so within the last 30 days. The growth is expected to escalate, with grocery sales expected to climb 34% from 2016 to 2017, totaling around $71 billion. Projections currently see online grocery retail hitting more than $100 billion in revenue by 2025, and within the next ten years, 70% of Americans will do this shopping online, with 60% of those spending about a quarter of their grocery budget in online purchases.
It’s critical to understand the shopper that wants to buy their groceries online, and to understand a growing trend in their behavior: using the digital shopping cart as their shopping list.
Who These Shoppers Are
Right now, only 5% of Americans prefer to buy their groceries online, but about a third of U.S. consumers placed grocery orders once per month online. Unsurprisingly, the younger generations are responsible for most of the shift; one in ten Millennials and Gen X-ers leveraged online grocery retail in 2016, a considerable climb from roughly 8% and 7% respectively in 2014. Other surveys peg the number much higher; two-thirds of Millennials shop online weekly for groceries, while 84% of Gen X-ers do so at least once per month. Among shoppers who haven’t started to buy groceries online, Millennials are also the most likely generation to consider doing so. We can expect to see similar behavior from Gen Z, since they’re even more digitally savvy.
The emphasis isn’t entirely on saving money, though. Online grocery shoppers may be willing to pay a little more for what’s more important to them, at least right now — convenience. However, big box retailers like Amazon and Walmart help them double down on that convenience by letting them save money as well.
Cart As Shopping List
Since most grocery shoppers across generations are going to make a grocery list, whether it’s on a physical piece of paper or an app widget displayed on a smartphone screen, less than half of online grocery shoppers will make any kind of proper list. Instead, they turn to a new e-commerce habit. Many shoppers (90% across all retail categories) say they use online shopping carts to store items for a later purchase. When it comes to online grocery retail, shoppers are using this as a replacement for the traditional shopping list and add to it immediately whenever they discover something they want or need. The emphasis is on convenience, so as soon as they’re ready to make the purchase, the shopper can click the checkout button rather than fuss with transferring items from a list to their cart.
Brands That Are Winning
This revelation about how shoppers are using their carts is relatively new, and many retailers have yet to properly capitalize on it. A few brands are maximizing convenience and monopolizing the conversation in terms of online grocery retail. The top share of voice is divided pretty evenly between Amazon and Walmart, which makes sense given their recent attempts to upstage one another in a clicks-and-bricks innovation war. Right now, Amazon is leading the way thanks to its internet-of-things dominance; its subscribers can simply ask Alexa (Amazon’s personal assistant AI) to order a grocery item they need, or leverage Amazon Dash buttons to immediately restock CPG goods from wherever they are around the house. Walmart has recently partnered with Google to bring voice-activated shopping to the Google Home platform. Shoppers can now search for items in Walmart’s online shopping platform via Google Assistant and its smart speaker. Both Amazon and Walmart provide wish list options for any users that don’t want to just add groceries to their cart, although Amazon does provide a separate Prime Pantry list specifically for groceries.
Other shopping services are capitalizing on purchases on the go. Peapod, for example, provides an app for both Android and Apple that allows users to shop right from their mobile device. Whenever they want to add an item to their cart, they can do so immediately. Peapod coordinates with various grocers regionally, including Jewel, Kroger, Stop & Shop, and Safeway. On their own, major grocery chains are close to providing the same; although users may not be able to make their actual shopping purchase from their smartphone, they can put together a shopping list, and even scan product barcodes to immediately add them to a list.
Opportunities for Convenience
This new behavior offers grocery and CPG brands the opportunity to capitalize on intent and drive conversions, rather than relying on engagement to spur shoppers to remember what they want to purchase. Convenience is paramount, but is something that can be built into the shopper’s experience. For example:
- Engagement to spur conversion: Social media and other content can be a powerful driver for both interest and intent, so leverage some of the more advanced tools to help close the distance between becoming interested in a product or even a recipe and adding specific items to a cart. For CPG brands getting into direct-to-consumer sales, that means digital ads and content need to link to a purchase page. For retailers, that means heading directly to the page on your e-commerce site or the appropriate app or service. Take out as much friction as possible.
- Remind and retarget: Sometimes a cart of products is just waiting to be purchased, and sometimes it’s abandoned. Don’t make assumptions about your customer’s behavior. Instead, leverage as much personalization and segmentation as possible. Serve them ads to remind them about products they’re interested in, as well as any promotions for your brand or product. Send reminder emails at just the right time to spur conversion, but don’t overwhelm them. If your brand sends them an email every time they add an item but don’t check out, they’ll probably end up annoyed rather than prompted to make a purchase.
- Up-sell and cross-sell: Make product discovery as easy as possible to capture impulse buys, increase the number of items purchased, or increase the purchase total. Help shoppers identify something they might not have found when just browsing; the more personalized you can make this, the more effective your efforts will be.
Online grocery retail is a growing segment that brands and retailers alike should be capitalizing on. It’s causing shifts in behavior, like using carts as shopping lists, which in turn provide new opportunities to focus on shopper intent and drive it toward conversion. Tactics like retargeting, reminder marketing, cross-selling, and lowering the friction between marketing and adding items to the cart are ways to begin maximizing these new trends.