Which Online Grocery Service is the Best
After reading countless articles about online grocery shopping, you might be thinking that everybody is buying their bread and milk online. It also looks like Amazon, Walmart, and Kroger are in a race to win as much of that market as possible, and fast. But the reality is not yet as rosy for the online grocery retailers.
People are still cautious and testing the waters reluctantly, especially when many customers complain about higher prices online and late or rude delivery personnel.
Currently only 3% of groceries are bought online in the US. American consumers are a lot more conservative than some European and Asian counterparts, especially in UK and South Korea, where 15% off groceries are bought online.
Last year consulting group Brian & Co and Google did a survey of over 8,000 US shoppers and found out that only about a quarter of them tried online grocery buying. Only 26% off those surveyed people stated that they are buying groceries online more than once a month. This is a mere 6% of total population. The study concluded that most Americans are still making a few trips per week to their favorite physical grocery stores.
Many industry experts believe that just like with everything else new, this trend will explode in the future. Early adopters are starting to catch on to that and later the majority of population is very likely to follow.
Currently though grocers and delivery providers are still thinking of innovative ways to attract more people. Albertsons and Ahold Delhaize struggle with this problem just as much as Instacart and FreshDirect do. While not seeing much development yet, most companies are afraid to be overpowered by the likes of Amazon and thus invest into innovative delivery methods without any immediate payoffs.
To stay competitive, retailers follow one another and hope for the best in the future. They will try whatever new trend is likely to bring new customers and more cash, and online shopping definitely has that potential. If consumers weren’t responding, nobody would be throwing so much investment to improve online delivery options.
However, some convincing is still needed in this sector.
People still want to touch their fruit and their veggies when buying them and nobody figured how to offer that yet. This is why packaged non-perishable goods, such as chips and fitness bars are still the most popular items purchased online. There are also many flaws with the delivery that still need to be addressed, such as out of stock produce and late drivers.
42% of people said that grocery buying online saved them time, according to the same Brian & Co survey. A chance of bad experience is quite high and that one bad time might ruin the novelty forever. Retailers really need to be on point the very first time because 75% of surveyed people said they continue buying from the very store they bought from the first time.
Pricing is another issue that has yet to be solved. There are two ways retailers inform their consumers about the prices online. First, the prices are exactly the same as in stores and the delivery fees are clearly marked and transparent. Another way is hiking up the prices online to offset the delivery expenses without specifying them clearly. This second strategy scares many potential shoppers because they prefer to see lower prices in the stores and are afraid to overpay.
The grocery industry in the US has become a lot more competitive since Amazon bought Whole Foods in 2017. Everybody is very serious about not getting left behind in this arms race.
Walmart is definitely stepping up the game with 1,600 new locations offering grocery delivery before the end of 2020. Drivers from Deliv, DoorDash, and Roadie work to deliver groceries right to consumer homes. Smaller local delivery companies are getting hired to service city markets.
Even Target is beginning to pay more attention to its grocery department and delivery. It bought a delivery platform Shipt to accommodate growing demand for same-day delivery at certain markets. The delivery by Shipt is available for $99 yearly membership fee. Shipped also works with Costco and Publix. Needless to say, Shipt is doing good and growing fast.
Kroger, together with its daughter companies Harris Teeter and Fred Meyer, offer grocery delivery from over 2,000 stores nationwide. There are no current plans to expand this department though – looks like Kroger is approaching this whole thing with caution.
Retailers should remain watchful and flexible to support in-store and online shoppers to get benefits from both. Despite this recommendation, some smaller retailers are staying away from online delivery as they don’t see it as very profitable yet. Trader Joe’s decided to stop online grocery delivery in New York City all together as they believe that improved customer service in-stores will yield better results.
One thing is certain – as technology and delivery service continue to improve, more and more people will turn to grocery delivery, especially younger generation. Those retailers that understand and prepare for it will survive and thrive.