Grocery shopping’s e-commerce boom

There’s growth ahead for online grocery shopping, which creates opportunities for brands. But they need the right strategies in place to protect and grow their market share.

Amazon’s recent launch of its AmazonFresh online supermarket in London is the first international launch of this same-day delivery service, which has been available in the US over the past five years. Lee Smith, “global head of shopper” at research firm TNS, says the launch confirms that the next explosion in e-commerce growth will come from groceries and other FMCG categories. And while shopper marketers have been aware of this trend on the horizon, many brands are less prepared for it than they should be.

Until recently, online shopping has been dominated by careful purchases of things that are expensive, personal or important – think handbags, holidays or mobile phones. The lengthy consumer journeys involved in such purchases allow brands to map and influence the “moments of truth” along the way.

Grocery shopping is a different experience altogether and the moments of truth are more subtle. Often the choice of retailer takes priority and it immediately defines the mission and context in which shoppers choose the categories and products they require. This means that brands within retailer websites have limited freedom in the way they can engage and influence shoppers. In this sense, the environment is not much different from offline shopper marketing.

Smith points out that in an offline environment, the most successful FMCG brands are those that have shopper marketing strategies centred on helping retailers speed up the shopping process and reduce frustration, which encourages consumers to spend more by helping them to find what they’re looking for. However, doing this in an online environment is a challenge if you’re trying to apply the same principles that work in the physical world.

When FMCG spending shifts online, says Smith, the capability gap between online and offline shopper marketing has the potential to overturn the established brand order. In China, for example, multinational brands are finding themselves superseded online by smaller start-up brands that simply play the online merchandising game better than they do.

It’s a warning that brands need to protect their market share online by developing strategies that work as well as their offline approaches. Purchasing decisions for FMCG items are made differently to other online purchases and brands need to work with shopper behaviour to come up with winning digital strategies.

TNS research has revealed that online and offline grocery shoppers essentially share the same motivations – saving time, money and energy. And the best way to do this when you need to buy a lot of different items is to visit a store that gives you all these options in one place. Shoppers will first choose a retailer they like that allows them to choose according to their priorities. This is where the real opportunity lies for both brands and retailers – providing an experience that divorces the pleasant process of finding and choosing from the unpleasant one of searching for items, and that results in consumers ultimately spending more money.

According to Smith, now is the time for retailers to build a better online shopping experience. While many things will change once grocery shopping moves online, the fundamentals of shopper behaviour will remain the same. Brands must find the right balance between the shopper currencies of time, money and energy, working product by product, category by category, retailer by retailer. This, she says, is actually the same way shopper marketing has always been done and that online or offline, the brands that make it easy for shoppers to buy are the ones that will prosper.

The big take-out: Grocery shopping will provide the next explosion of growth in the e-commerce environment and brands need to develop strategies to protect and grow their online market share.