It feels like every other day there's a new piece of literature describing the potential for growth with online grocery. Heck, here at Chicory we're betting on this ourselves. Hearing stats like, "around the world, more than a third of online shoppers expect to buy groceries over the Internet in 2016—34% vs. 21% in 2015—according to a new AlphaWise survey from Morgan Stanley Research," we can't help but get excited.
It feels a little bit like we're standing, prepped, at the beginning of a race, though, and someone's refusing to fire the pistol. The potential is huge, yes, but at the same time, only 2% of profits in the grocery industry comes from online sales.
We often wonder why the adoption of online grocery drags, but our evidence for answering that question has historically been anecdotal. Which is why we loved reading about the results of a recent survey by Morgan Stanley.
The overwhelming response from consumers, when asked why they haven't used online grocery was that they like to physically visit stores and pick out items in person. As the researchers point out, "consumers once said the same about clothing, footwear and many other products that they now freely buy online." This finding has huge implications for CPG and grocery product campaign planning as we navigate how to measure digital ROI.
At Chicory, we're certainly concerned with powering online campaigns in order to beef up digital purchases or at the very least, target shoppers in new and interesting ways. But even beyond our own efforts, we see a call-to-action in these findings from Morgan Stanley.
As an industry, we need to educate our consumers and start to address the feelings of discomfort around our produce arriving at our door from online providers. How can we do that? Take a queue from the industries who came before us:
- Food and CPG companies should play around with the pop-up. Look at how companies like Birchbox or Warby Parker started online, but moved into brick-and-mortar experiences in order to fulfill all kinds of shopping experience preferences. Food advertisers should transition shoppers in the opposite direction, perhaps using pop-up shops where users could taste or play with products and then place an order to have products delivered to their doors.
- Consider "event" shopping as an opportunity to move online. When thinking about the biggest shopping day of the year, Black Friday, it's interesting to note that what once was a wake-up-and-wait-in-line-at-Best-Buy event has moved online in recent years. People want to shop smartly, but when it comes to big purchases that include lots of items, shopping online feels easier. As consumers warm up to online grocery, focus on big food shopping events and position online shopping as a solution to a problem. Great times to start would be Thanksgiving, Super Bowl or Fourth of July barbecues.
- Bulky items sell big online. It's the bulky pantry items that families tend to feel more at ease buying online instead of at the grocery store, again, according to the data from Morgan Stanley. Packaged foods, pet food and household products (paper towels, toilet paper) are all the most popular grocery items to be purchased online, while fresh foods present more of an uphill battle. See figure below. As shoppers transition to buying their food online, focus first on advertising those shelf-stable foods bought in bulk or in heavy packages--cases of alcohol, packs of instant oatmeal cups or 10-packs of spaghetti sauce.
Yes, there is tremendous opportunity in online grocery, but we still await the cultural shift toward ordering groceries online. It's on advertisers and tech companies like us to lead that shift with thoughtful tactics and campaigns.