Mention an online retailer and most people think of giants like Amazon or eBay. In most cases, grocers don’t come to mind quickly. That’s not surprising when you consider that grocers have been slower to incorporate e-commerce channels than other industries. In fact, online grocery sales are only about one percent of the $631 billion U.S. grocery market, making this category one of the least penetrated for online sales, according to the global agency Fitch Ratings.
Despite the slow start, the online grocery industry isn’t dead. In fact, it sits at the center of several mega trends that we believe will drive this market to grow quickly in the coming years and never look back:
The demographics are there: Generation Y (generally those born in the early 1980s – early 2000s) are more comfortable with technology as well as the idea of online grocery shopping compared to previous generations. As Gen Y continues to mature and enters the age when they will begin buying groceries for themselves, the habit barrier that has slowed penetration into earlier generations may begin to erode.
The convenience factor is huge: For those of us older than Gen Y, the simple need to have a better work-life balance will drive many of us to experiment with online grocery shopping. As our days become full of work, family, activities and other responsibilities, “outsourcing” our grocery shopping to some degree is becoming more and more attractive.
More Americans have Internet access: Almost two-thirds of Americans have broadband Internet access, according to the Pew Internet Project. This easy access to the web, combined with our society’s continuous shift to living in urban areas, will only increase people’s access to online grocers and online grocers’ access to a broader customer base.
Not only will these trends set the stage for growth in the online grocery business, but grocers also have more adaptable supply chain software tools at their disposal from HighJump Software and other solution providers to take advantage of these trends. For instance, a large supermarket chain in the eastern U.S. with locations in seven states used a warehouse management system in several of its stores to manage its click-and-collect service to be able to provide fast, in-store fulfillment for customers’ online orders. With this same system, this grocery retailer was able to manage work queues to help ensure on-time accuracy, efficiently direct order fillers through the store, order staging management, and provide tools for exception management and hand-off to the customers in the pick-up process. The WMS integrated seamlessly with the point-of-sale system, printing systems and web systems. This integration drove faster fulfillment processes that led to an enhanced online customer experience, while driving efficiencies that helped the bottom line.
Online grocers may be having a slow start, but all signs point to significant growth in the coming years. The ability to remain flexible and prepared for the shift will ensure a supply chain that is ready to meet the needs of customers today, changing demands in the future and bold business goals.
Roger Falkenstein is a territory manager with HighJump Software with over 30 years of industry experience. He has been leading the grocery e-commerce fulfillment initiatives at HighJump for the past several years with a growing list of customers in this market niche. If you would like to contact or discuss this subject further with the author you are welcome to email Roger at Roger.Falkenstein@highjump.com
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