by Adrien Nussenbaum/co-founder and U.S. CEO, Mirakl
Grocery retailing is being profoundly transformed. Within a decade, grocery shopping as we remember it will be unrecognizable. Amazon’s acquisition of Whole Foods in 2017 marked a milestone in the evolution of the grocery store, bringing an e-commerce first, technology-driven approach to a sector noted for its digital latency. The Food Marketing Institute and Nielson together estimate that 70 percent of consumers will buy at least some groceries online in the next five to seven years. In fact, online grocery sales are predicted to reach $100 billion by 2022 in North America alone.
Already, more than half of the world’s food retailers have begun preparations to sell their goods online. From Amazon Go to Instacart, HelloFresh to Peapod, we’re seeing a surge in on-demand, digital-first services designed to make food shopping more convenient for consumers. The shift from offline to online in the grocery sector is gaining momentum at a rapid pace.
As more consumers experiment with, or completely switch to, online grocery shopping, ensuring availability of a wide range of products over the web should be at the forefront of retailers’ minds. This is the time for grocers to make sure they have a large stake in the consumer’s mind. Brand loyalty is strongest in grocery, but mass merchants are starting to take mind and market share with advanced digital grocery initiatives. How are grocers going to adapt to offer all that customers want online?
One method in providing customers with an increased product assortment and greater customer satisfaction is the marketplace model. While the grocery industry overall grew one percent year over year, Amazon’s grocery business grew 59 percent year over year.
Growing marketplace mindset
Marketplace collaborations offer a great route to success for many retailers, and as such, many around the world are enhancing their platform infrastructures and redefining their product strategies. Using this model, they are able to grow their online grocery business through a larger product assortment of items many grocers don’t have in-store, helping to increase market share.
In South Korea, one of the most digitally mature e-grocery markets in the world, superchain E-Mart, sought to eradicate customer pain points and entice new shoppers to their stores while ensuring their offering was seamlessly omnichannel. To achieve these ends, E-Mart built a marketplace platform encompassing its many grocery formats.
In North America, Alberstons’, who currently operates grocery stores in 35 states under 20 banners including Safeway, Jewel-Osco, Shaw’s and Vons, is launching its own grocery marketplace to take its assortment to the next level. This online marketplace creates an endless shopping aisle that offers customers access to a wide assortment of hard-to-find products from the most experienced sellers and allows shoppers to quickly discover new items and trends that suit their tastes and lifestyles. These purchases are made directly from manufacturers and shipped to the customer for exceptional convenience.
Kroger also recently announced that they’re able to enter the Chinese market via becoming a marketplace seller on Alibaba’s Tmall.com. It’s clear that a marketplace strategy is at the heart of many grocers’ long-term planning to protect and gain market share.
Maximizing grocery marketplaces by including service providers
Grocers should launch their own online marketplaces to offer an endless aisle and access to unique products, but it shouldn’t stop there. Bringing service providers into the online experience—whether it’s personal shoppers, in-home chefs, access to cooking classes or any number food and non-food related services—is a significant opportunity for grocers to differentiate. It’s already happening with Instacart partnerships and on Amazon’s platform—why not think beyond food delivery?
In a world where convenience is king, it’s time for grocers to play digital catch up and take advantage of the marketplace model.