Despite the increasing presence of the online grocery industry, there are still plenty of marketers who have their doubts and hesitations. In some ways, this is completely fair: after all, few things are certain in the ever-changing digital landscape.
The tipping point is imminent.
Too many food and beverage brands are putting their digital presence on the back burner and as a result, they underestimate not only the immediate opportunities available, but also the speed in which the online grocery industry is growing.
Consider these facts:
- A 2017 Food Marketing Institute (FMI) survey found that 43% of millennials now buy groceries online, up 56% since 2015.
- From 2012 to 2017, on average online grocery sales grew 10.1% annually while supermarkets and grocery stores only grew 1.0%.
- FMI and Nielsen jointly predict that by 2025, consumer spend on online grocery shopping could reach $100 billion, meaning the share of online grocery spending could reach 20%.
Brands that embrace e-commerce now can establish a valuable first-mover advantage, but the shift to “price-to-play” will likely happen much faster than most businesses are ready for.
If you can’t beat ’em, join ’em.
When it comes to marketing, sometimes the best approach is not looking for ways around an issue, but facing it head on and adapting. And this is no less true for online grocery: dismissing it as a trend is narrow-minded; the reality is it’s a transformative shift in the way people buy food.
The question marketers should be asking themselves is: How can I reach customers at every marketing point—online, in-store and beyond?
Marketers that answer this question will future-proof their business by making e-commerce part of their bottom line. As a result, while they can expect continued success, their competitors will be fighting an uphill battle.
It’s bigger than the Amazon–Whole Foods deal.
Amazon’s announcement of their plan to acquire Whole Foods last June launched industry-wide amazement at the company’s impending dominance, and the media was quick to point out how terrified grocery stores should be. However, such reports often failed to note that brick-and-mortar retailers started panicking a while ago.
The truth is online grocers have eroded their market share for years. Give props to Amazon, but we can’t ignore fellow disrupters like PeaPod, Instacart and GoPuff, rising challengers like Brandless and Shipt as well as multi-channel giants like Wal-Mart.
The volume of online grocery retailers can seem overwhelming, and many food and beverage brands will be tempted to scatter their resources. Other brands will likely bet everything on Amazon, which is sure to be the most competitive marketplace.
To these brands, we say this: do your research, find the channel that best fits your needs and then make it count. Afterwards, gather insights and move on to the next opportunity.
E-commerce adoption may permanently change the marketing mix of consumer packaged goods (CPG) brands.
For years, grocery shoppers’ path-to-purchase had started with digital. With the rise of online grocery, it’s ending there now, too. This shift gives rise to various inquiries:
- How will free standing insert (FSI) and point-of-sale performance be impacted?
- How do we create shopper marketing that performs well both online and in-store?
- How can we communicate taste appeal and freshness digitally?
- Will a brand’s visibility improve or suffer in a “shelfless” shopping environment?
It may be some time before we can answer those questions confidently, but what’s certain is that digital branding looks to be more important than ever. Our president, Denise Zimmerman, elaborates:
“When it comes to digital marketing, the big winners are always those who understand the ongoing changes in consumer behavior and adapt their business models and marketing accordingly. Grocery is one of the last industries to find itself being upended by technology. Endcaps and shelf space are losing out to impactful digital content, and sales are being driven outside of the physical store. The truth is the world moves fast and if you haven’t been evolving with the ever-changing market, the time is now.”
It would be an overstatement to say we’ve reached the point of e-commerce or bust. Failure to invest in your brand’s digital presence is not a death sentence, but the day will soon come when growing online sales and growing market share are inextricably linked. So you might as well get a head start.