Canadian Retailer - Summer 2016 - 17

The digital shopper

Rebirth of e-grocery?

There were several failed ventures into the online
grocery market in the late 1990s. And there are reasons
that explain why these ventures failed. For one, it was
too soon for grocers to make the move to online. Many
people didn't even have broadband, much less a handheld device that does everything a PC does. In addition,
the complex supply chain issues that are involved in online grocery had yet to be figured out.
Two decades on the playing field is far different.
People today are more comfortable with the concept of
using digital technology to facilitate the shopping experience, from using apps to browsing a store's webpage
to clicking a mouse to complete a transaction. One quarter of Nielsen's worldwide respondents indicated they
are already ordering grocery products online for home
delivery, and more than half (55 per cent) are willing to
use it in the future.
The growth of online consumer packaged goods (CPG)
sales has been driven in part by maturation of the consumers who grew up with digital technology (the Millennials and Generation Z).
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Cambria Jacbos, Vice President of Marketing at Door
to Door Organics, an online grocer serving 16 U.S. states
focused on local, organic, and artisanal products, has
firsthand experience of the comfort levels this young
demographic enjoys with e-commerce.
"Most of our customers are younger people who started
out purchasing groceries online while in college. When
they became parents, they were even more stressed for
time and increasingly interested in eating healthy food,"
she explains. "98 per cent of our customers are highly
educated with college degrees, with over $75,000 household income, aged 22-45 years of age. It's a demographic
used to shopping and communicating digitally; in fact,
20 per cent of our customers come from social media,
predominately Facebook."
In The Future of Grocery, Dodd points out some of
the different demographic groups that are impacting ecommerce and why it will be important in the coming
years to retailers everywhere: "Millennials are at the beginning of their careers and are starting to form households, while the oldest members of Generation Z will
soon be graduating college and joining the workforce.
These generations will shape our economy for decades
to come. Therefore, it is critical that retailers and manufacturers understand how these consumers are using
technology and include digital touch points along the
entire path to purchase."
Online grocery shopping is growing in popularity
largely because of the convenience it entails. Retailers
who implement technology-driven online grocery solutions to make consumers' shopping experiences-and
by extension, their lives-easier and more stress-free
will eventually earn a greater share of shoppers.
"Convenience is the main driver behind why our customers choose us," explains Sophie Klienert of Instacart, an e-grocer that partners with bricks-and-mortar
stores to deliver groceries directly to customers' doors-
essentially 21st century milkmen. Selling convenience
has been a successful model. Instacart is in 15 cities and
experienced sales of $100 million last year. "Some of our
customers are harried household moms, while others
are busy young professionals. We also have children
ordering online for their elderly parents, and office managers buying for their businesses. In each case, shopping was a chore, so they are willing to pay someone
else to do it on their behalf."
Interestingly, virtual baskets don't typically mirror
physical ones. In North America, for example, the mix
of online product sales is roughly 60 per cent nonfood
to 40 per cent food, the exact inverse of what we see instore. This indicates that the offering on online shopping platforms will differ from the offering in-store,
suggesting interesting merchandising opportunities to
attract the connected consumer.

SUMMER 2016 | CANADIAN RETAILER

| 17

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Table of Contents for the Digital Edition of Canadian Retailer - Summer 2016