Walmart, Amazon, Kroger, Safeway, Peapod, FreshDirect...the list of companies venturing into the next frontier of eCommerce goes on and on. That frontier? Online grocery.
It is projected that by the end of 2017, online grocery will be a $9.4B industry. That number pales in comparison to the whole $600B grocery industry, but even a fraction of grocery spend moving online can have a major impact on how CPG and food companies navigate digital waters.
Here are a few of the major effects that we expect (and hope) to see in the coming years:
Traditional food manufacturers don't do direct-to-consumer delivery and leave sales up to the retailers. Yet, because of the need to have an online presence, food manufacturers put in a lot of effort to drive consumers to their site. But to what avail? Unlike a traditional eCommerce company, food brands can't get the consumer to buy their products then and there.
With online grocery, manufacturers can now work more closely with retailers. Because many of the major retailers now have online ordering capabilities, manufacturers can funnel those hard-earned eye balls to places where they can actually convert those users.
The solutions that exist today aren't ideal. But we believe in the next couple of years that there will be a company that comes along and becomes the defacto solution for the online storefront.
Shopper marketing is advertising done by manufacturers that most often involves specific retailers. Traditionally, shopper marketing focused on in-store initiatives like that big Trident stand you see next to the cash register.
With online grocery, retailers and agencies can now work more closely together to create digital campaigns that revolve around a specific retailer. One of the interesting things that we see being played around with today, and that we have started testing, are digital campaigns that directly add the advertised product directly into a consumer's cart.
As online grocery becomes more prevalent, we believe that more and more brick and mortar shopper budgets will start to move online.
Food is one of the largest industries in the world. Just take a look at the number of grocery sales there are in the US. But it's not just about retailers and brands. There are publishers that own recipe sites, food blogs, nutritionists, dietitians, restaurants, etc. Each of these touch points with consumers can be turned into an opportunity to drive eCommerce sales.
Here at Chicory, we focus on the recipe-centric aspect of these partnerships because we believe that combining the inspirational power of recipes with convenient delivery can change the game. But there's still a ton of room to explore. How will publishers differentiate themselves or restaurants become more digitized? We can't wait to see all of the many roads businesses will build.
This could potentially be the biggest game changer of all.
One of the biggest problems that food manufacturers have faced with moving marketing budgets online has been understanding return on investment. This is, again, largely due to the disconnect between online interaction and in-store purchases. Because "real world" actions aren't recorded and tied back to a specific digital interaction, it's almost impossible to understand if that dollar spent led to more than a dollar in return.
The caveat here is that online grocery is still small and the majority of grocery sales are still done in-store. This means that trying to measure ROI directly through eCommerce can be misleading because that display ad could have influenced a customer who bought in-store.
That said, as this industry increases, having even a semblance of ROI will help to lead to attribution studies and sales lift modeling that can bring us closer to getting true ROI.
Online grocery is a fascinating space and we have had the pleasure of working with the top minds pushing the frontier. We'd love to talk. Leave your thoughts in the comments or shoot me a note, using the form below.