Shopper Marketing - September 2016 - 201


F

ONLINE GROCERY GOES MAINSTREAM

or years, marketers held onto the belief that online
grocery was primarily a niche business. But that
case is becoming increasingly difficult to make.
In a recent report on Amazon.com, Morgan Stanley
pointed out that while just 12% of U.S. consumers today purchase fresh groceries and 18% buy packaged
grocery products online, penetration rates in those same
categories were quadrupling and doubling, respectively.
The percentage of U.S. households who reported buying
groceries online in the past 30 days nearly doubled from
11% in 2013 to 21% at the end of 2015, according to a
March 2016 report from Brick Meets Click.
So why haven't more marketers jumped on board?
"For a long time, those dark early days and the spectacular
crash and burn of Webvan tainted online grocery as a lowmargin, high-risk business," says Brick Meets Click's chief
architect Bill Bishop. "The world really changed in 2015.
People saw Amazon aggressively expanding its [groceryrelated] programs; plus you had Instacart, supermarket
chains like Harris Teeter and ShopRite, and regional service providers like Peapod and FreshDirect all having some
success. Now, it seems everyone is looking at online grocery as a growth vehicle.
Still, that growth is accelerating much quicker than
most CPG marketers had anticipated, says retail food
industry consultant Michael Sansolo. "There's a lot of
catching up to do," he says. "Online grocery isn't just
an evolution. It's a revolutionary leap in the way people

shop, and the good companies
are going to figure out ways to
adapt to the behavior and succeed."
Shoppers are not only using
online grocery services more often but are spending more during each trip. According to the
March Brick Meets Click study
Bishop
of 12,000 U.S. consumers, one
in five shoppers has used online grocery/delivery service
in the past 90 days; those "active" shoppers spend 64%
of their overall grocery bill online during weeks that include a major online grocery trip. Per the Morgan Stanley
report, 17% of online grocery customers intend to raise
their spending levels over the next 12 months, compared
to 13% in the fourth quarter of fiscal year 2015.
These trends align with observations from experts in
the field. "Within the universe of retailers we work with,
we're seeing shoppers doing more big stock-up trips of
$150 total and 50 or more items in the cart," says Michelle
Cote, vice president of data & insights at MyWebGrocer.
"This is different [from behavior on] the pure plays like
Amazon, where you might buy a couple products and a
movie. Our clients' customers conduct fairly planned trips
and build baskets over multiple sessions. The basket is
heavy on replenishment items but it's also fairly comprehensive in terms of product categories across the board."

the internet - namely convenience. When the survey shoppers also vary with product category. Based on the
participants were asked to cite their main reason for us- survey data, some categories were viewed practically
ing an online grocery shopping/delivery service, the top ("I get the things I need as quickly as possible"), while
three responses were "products delivered to my door- others were more exploratory ("I treat shopping like a
step" (41%), "ease of purchase" (39%) and "24/7 access" game and see how much I can save"). The exploratory
(34%). Not far behind were "receiving free delivery" categories included many stock-up and pricier items
(29%), "finding a better value/bargain" (22%) and "don't in household (86%), beauty (63%), breakfast (56%) and
like waiting in lines" (21%).
baby (29%). In the speed-matters camp were largely perDepending on the individual circumstances, how- ishables - dairy (46%), deli (43%) and produce (37%) -
ever, these benefits may be seen in a different light. along with personal care (58%).
For example, some participants found online shopping
These two mindsets - "pragmatist" or "gamer" - are
to be a time-saver because they could quickly find the not mutually exclusive. For example, an online shopper
things they want; for others, the experience was
"For some shoppers, one click
the exact opposite. "For
those shoppers, one click
turns into five, and [soon] they're
turns into five, and the
buying a pet house for a dog
next thing they know
they don't own."
they're buying a pet
house for a dog they don't
Craig Elston, executive vice president of
own," notes Elston.
insight and strategy, The Integer Group
The attitudes of online
5


http://www.Amazon.com

Table of Contents for the Digital Edition of Shopper Marketing - September 2016

Contents
Shopper Marketing - September 2016 - Intro
Shopper Marketing - September 2016 - 1
Shopper Marketing - September 2016 - 2
Shopper Marketing - September 2016 - 3
Shopper Marketing - September 2016 - Contents
Shopper Marketing - September 2016 - 5
Shopper Marketing - September 2016 - 6
Shopper Marketing - September 2016 - 7
Shopper Marketing - September 2016 - 8
Shopper Marketing - September 2016 - 9
Shopper Marketing - September 2016 - 10
Shopper Marketing - September 2016 - 11
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