Online Grocery Shopping and OSA – The New Reality
Trends in Online Grocery Shopping
These days it is hard to beat the convenience of online shopping. There are endless options to browse, you place an order, and a box arrives on your doorstep a day later. It should come as no surprise that eCommerce increased to 12% of all retail sales in 2019 and will continue claiming market share this year.
When it comes to the grocery industry, however, it’s a different story. Online shopping currently accounts for only 2% to 3% of total sales. In a way, it makes sense; even two-day shipping isn’t fast enough for most perishable items. At the same time, many consumers have been hesitant to trust someone else to select fresh produce for them. I mean, who likes bruised apples?
But this is beginning to change. You’ve probably heard of same-day grocery delivery services like Instacart, DoorDash, and Shipt. And now, many stores are trying to keep up by rolling out Click and Collect programs that prepare your order for curbside pickup. These services are getting better at what they do, and consumers are noticing.
In fact, online grocery sales doubled between 2016 and 2018, and now close to 10% of consumers are regularly filling their pantries online. That number is only going to increase, and the potential market is enormous. Some estimates anticipate that online orders will account for 20% of total grocery sales by 2025, representing over 100 billion dollars.
The Impact of Grocery Delivery Services on In-Store Consumers
One of the unintended consequences of Click and Collect and grocery delivery services is their impact on consumers who continue to shop in stores. At peak times, dozens of professional shoppers and store employees scavenge the isles competing to find the best products as quickly as possible – and this can be a very disruptive experience for ordinary shoppers.
I observed this first hand at a store near Austin a few months ago. It was mid-afternoon, and I was shocked by the activity level and the number of gig-economy shoppers picking items, as well as the size of staging in front of the store for loading products into vehicles for pickup or delivery.
The volume of products purchased in that window of time was significant, and the impact on Out of Stocks was visible and alarming. Holes on the shelves were very evident, leading to lost sales of the consumer’s first choice. Some gig shoppers were placing calls to their customers to select alternative products, further clogging the path for everyday shoppers just trying to buy dinner.
Not only were average shoppers inconvenienced by the increased traffic and the need to compete with professionals, but the impacted On-Shelf Availability (OSA) was also forcing them to make substitute choices.
How do You Keep Track of OSA in a Shifting Market?
While sold-out items can be an inconvenience for consumers, they are a nightmare for CPG suppliers. If your products were among the many Out of Stock that afternoon, your sales would have been negatively impacted. Even worse, your customers would have been introduced to competitor’s products.
Grocery delivery services already employ tens of thousands of part-time professional shoppers. That number is only going to grow as online grocery shopping continues to catch on in the coming years. So how can your organization prepare for this shift in the market?
You need to take a proactive stance and invest in helping your retailers help themselves. RW3 can help. We identify stores where OSA is an issue, and with the right resources, tools, and expertise we provide the data you need to develop an informed strategy that works.
Don’t wait for this trend to take you by surprise. Let’s have a conversation about how your organization can stay in front of the competition. Just send me a message at email@example.com, or give me a call at (925) 984-3009 to learn more.
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