Just a few years ago, investments in digital grocery services such as online ordering, curbside pickups, and home deliveries were still considered speculative and experimental in a historically old-school industry.
Many big industry players and analysts were forecasting an eventual online grocery boom, but it wasn’t here yet.
Then 2020 happened, and the boom came all at once. A short-term necessity has become a permanent shift in customer behavior as hundreds of millions of consumers around the world have had a full year of experience with digital grocery shopping.
The question isn’t whether to go digital or how much to bet on it anymore. It’s a question of how quickly and effectively stores can use digital strategies and technologies to optimize e-commerce, curbside pickup, home delivery, and digital loyalty programs.
Many grocers, especially independent stores and chains, are still taking a low-tech approach to serving their digital customers. They’re still relying on manual picking and pickup processes to fulfill online orders in their stores, and they’re outsourcing a lot of the digital aspects of e-commerce to third parties such as Instacart.
To keep up with growing demand for online grocery ordering and deliver faster, more efficient, and more profitable service, many stores are realizing they need to go digital in their own right. Here are three areas where they need to be thinking about implementing new digital strategies and investing in the right solutions to enable them.
Taking Over and Automating Online Order Picking
Many stores who are offering grocery e-commerce with curbside pickup or home delivery are starting to look at doing the order picking and assembly themselves. Instead of having to share 10% of their sales because they’re relying on third parties such as InstaCart to handle both picking and delivery, they can slash that percentage in half by doing the picking on their own.
Stores across North America are investing in order and labor management technology to help them boost e-commerce fulfillment performance. For example, stores equip their staff with wearable Zebra mobile computers and barcode scanners to help them manage orders, direct them to correct pick locations, scan barcodes to verify correct picks, and automate the whole process for better efficiency.
By taking over the picking and order assembly process, and automating it where possible, stores can fulfill more orders faster, and they can do it accurately while maintaining more control and keeping more of their sales revenue in their pocket. It’s also a smart strategy to protect against potential moves by companies such as InstaCart into more of a competitive posture. After all, they’ve used their relationships with grocers to collect massive troves of data on customers’ purchasing behavior and trends, so at some point they could easily use that data to open their own online grocery business as a direct competitor.
Enabling Smarter and More Automated Grocery Fulfillment
In 2018, long before the COVID-19 pandemic, Kroger and British e-grocer Ocado signed an exclusive agreement to create automated fulfillment facilities for Kroger in the United States.
In Britain, Ocado uses dedicated warehouses and dark stores to pick and pack orders for leading grocers. It uses a network of robots to help automate the process, plus proprietary technology that optimizes delivery routes, customer service, and many other aspects of order fulfillment.
Kroger and Ocado teamed up to bring the same technology to the United States and create robot-run fulfillment centers for Kroger. They’re opening their first facilities this year, giving Kroger a distinct advantage over competing stores, who will need to look for their own ways to automate grocery fulfillment and potentially expand into dedicated distribution centers or dark stores to keep up with consumer home delivery demand.
It takes years and a staggering amount of money to do what Kroger and Ocado have done with robotics. But there are much easier and affordable wins available with more of a human touch, such as creating in-store picking areas with dedicated inventory of popular items so store staff can pick and fulfill curbside pickup orders faster and more efficiently.
Jordan Berke, a former e-commerce executive with Walmart China and founder of Tomorrow Retail Consulting, is advising grocers to expand fulfillment capacity and efficiency at their own stores by utilizing extra space and automation technologies.
Some grocers are also creating “dark” stores that aren’t open to the public but are set up to allow workers to use mobile technologies and order picking software to pick orders faster and more efficiently from a dedicated fulfillment center.
These are the kinds of strategies that independent grocers need to be thinking about in order to keep pace with customers and the biggest industry players.
Introducing Premium Digital Loyalty Programs or New Perks to Free Programs
Loyalty programs are nothing new in the grocery industry, but the days of just offering a basic discount card or points-based incentives are giving way to more sophisticated and premium options.
For example, Walmart has introduced a paid membership program called Walmart+ that offers free shipping, free home grocery delivery, and in-store self-checkouts via mobile scanning and payments. Amazon has extended its Prime membership program into its Whole Foods grocery stores, and Hy-Vee has created a new program called Hy-Vee Plus that includes a personal shopping service, free delivery, and a dedicated customer help line for paid members.
However, requiring fees isn’t necessary to build out a better loyalty program. New perks and benefits can be built into existing free membership programs, and they will likely become increasingly necessary in order to compete with customer-friendly offerings from paid programs through big grocery chains.
If your store can ensure that your loyalty program is fully integrated into any curbside pickup and delivery services you’re offering, and you can offer new benefits that help encourage more online ordering and keep customers coming back, it can be a big win in an increasingly digital grocery market.
Plotting Your Best Digital Grocery Moves
These are just a few ways that grocers are beginning to optimize their online ordering, curbside pickups, and home delivery. There are many other potential strategies, solutions, and innovations that stores can consider, but not every option fits each store or its customer base.
This is why it’s important to analyze your unique business situation, your current and future goals and customer service needs, and get a better understanding of what digital technologies and strategic moves are right for you.
At Data Cash Register, we’ve been helping many of our grocery clients explore these options and their digital future by providing expert advice and consultation. We keep them updated on the latest industry developments and the newest grocery technologies, and we provide recommendations and strategic guidance based on what’s best for their business.
If those insights would be helpful as you plot your next digital grocery moves, contact us now to schedule a discovery call at 1-888-429-4493 or email us at firstname.lastname@example.org to get started with a complimentary consultation and review of your digital business.