E-commerce in the grocery segment, an overview!

The latest size of the US grocery market is estimated to be in excess of $700 billion. Out of which, the share of E-Commerce is a mere 2%. Thanks to the inefficiencies and bottlenecks in the way this channel is operated, this restricts the value proposition for online customers, be its immediacy, assortment or price.  There is a humongous opportunity for the ecommerce industry to grow in the burgeoning grocery segment.Click-and-collect ProgramThe sales of grocers offering click-and-collect programs have risen from 15% to 23% from 2015 to 2016, according to the Progressive Grocer's 84th Annual Report of the Grocery Industry. Surprisingly, after surveying 125 US retail grocery executives, 77% still did not have such programs. The number of grocers offering wholesome omni channel programs rose from 9% to 12% last year.  Therefore, the study concluded that a social network is the key tool for customer engagement.  Although the trend is catching up in these markets, a lion's share of the US grocers still does not offer such programs.

Ecommerce has started to gain more access to the grocery business, offering greater convenience to customers. Further, to increase the business, the shoppers should be given the access to order online and pick up items in-store. This will allow retailers to offer utmost convenience to customers. It is here that the click-and-collect becomes economical, hassle free to operate than home delivery. What is more, click-and-collect offers a window of opportunity for customers to add incremental buying inside stores once they do come to collect the items they have ordered online.ChallengesThough the click-and-collect model has few great advantages, the retailers are facing few challenges too. Though the retailers are able to make their customers happy, but at the cost of pinching the bottom line in the immediate future, till a strategy is in place to make this concept work in a more profitable way.The grocery segment is facing competitions from online grocery delivery service providers, that are mushrooming like never before. Although, a sizeable population is still not got used to buying groceries online, the e-commerce sector will have to work really hard to establish supremacy in this segment.A recent survey report by the trade publication Internet Retailer said around 73% customers agreed that the decision to purchase products from the store stemmed from the fact that could avoid shipping costs, while around 30% said they did so to because they could not wait around for delivery. The online shopping for groceries will gain traction, going forward, if firms like Amazon will take up this business in a big way.The Food Marketing Institute and Nielsen’s research report said that online grocery spending would touch $100 billion by 2025 while the percentage of shoppers doing their grocery shopping online would double.   By 2025, 72% of all shoppers are expected to do 25% of their grocery shopping online.As big players including Wal-Mart and Kroger have stepped up their click-and-collect offerings, according to industry grapevine, this segment would witness exponential growth as customers expect more convenience, while grocery retailers will try to get used to online disruption.Many ecommerce firms are forging alliances with grocers as well as technology firms to push the growth of grocery through the ecommerce segment. A case in point is the tie up between Takeoff Technologies and KNAPP.New alliancesKNAPP is the Atlanta-based globally operated market leader in warehouse logistics and automation, offering one-stop, custom-designed intra-logistics solutions in a gamut of segments including e-commerce, healthcare, retail, apparel, food, and manufacturing.As per the deal, KNAPP will provide automated micro-fulfillment technology and robotics to Takeoff and to further develop the immediate in-store eGrocery channel.  The Takeoff business model provides a unique approach to the ecommerce order fulfillment of groceries – micro fulfillment centers co-located at the supermarket level for immediate grocery pickup. The modular technology takes less space, is highly responsive to meet order demand in real time and can delivery groceries quickly and inexpensively for customer pickup.