How a Global Pandemic Changed the E-Grocery Industry Forever
As our world has been steadily shifting to digital, an unpredictable global pandemic has had a massive impact on the speed and extent to which the shift has taken place. From the beginning of lockdowns and quarantines in March 2020, nearly every aspect of our lives has changed and we have been forced to adapt our attitudes and lifestyles to survive. When everything shut down, even our most basic needs- food and water- shifted to online and, as a result, the online grocery market has skyrocketed. This has led to major behavior changes both in-person and online, and retailers, brands and manufacturers are being faced with the following questions:
- What changes have occurred in the online grocery industry?
- How have consumer behaviors changed during the pandemic?
- Which of these behaviors are expected to last into the post-pandemic world?
- How do I adapt my business to survive these changes and to thrive in the future?
- How is Amazon adapting to become a leader in online grocery?
E-Grocery DevelopmentOnline grocery shopping has been steadily increasing thanks to its convenience and ease of use and especially thanks to popular technology helpers like on-demand delivery and smart home and voice features that allow you to order items simply by saying what you need and then finding them on your doorstep mere hours later. For many consumers though, it was just a convenient option and not a necessity to order groceries online- until COVID-19 took the world by storm. Amazon, especially, has made big moves during the pandemic, acting quickly to improve the safety and convenience of grocery delivery. Between March 2020 and March 2021, Amazon increased the capacity of their grocery delivery service by more than 160%, increased grocery delivery windows across Amazon Fresh and Whole Foods markets and increased hiring for delivery services to meet the rising demand. Amazon also adjusted store hours to allow for more efficient fulfillment of online orders and even increased access, allowing for things like “unattended delivery,” to expand opportunities for how and when groceries can be delivered. The effects of the pandemic, including store and restaurant closures and regulations urging everyone to stay home and keep distance as much as possible, became drivers that rapidly accelerated the growth of online grocery shopping. In just one year, the online grocery market gained users and achieved sales that would have otherwise taken much longer to accomplish, and forecasts show this is a trend that will likely continue even after the pandemic subsides. The food and beverage category was by far the fastest-growing e-commerce category in the US in 2020, making it a huge opportunity for retailers and brands as they build their future e-commerce strategies. With perks like saving time, increased safety, ease of use and reduced costs for traveling by car or public transport, e-groceries have proven to be an attractive option for consumers aside from just necessary in times of COVID.
Consumer Behavior Shifts to ConsiderMany EU-5 consumers began shopping on a site for groceries that they have never before used and many of them intend to keep using these sites. Many consumers also reported switching to a grocery store that includes delivery or click-and-collect services. Consumers, however, are looking for more than just the safety and ease of online shopping. Our home has become our hub for everything: our entertainment center, our safe place and our restaurant. Our grocery and household buying has increased, but the health and financial uncertainties of 2020 have completely changed the way we consume. With many people working reduced hours or maybe even not working at all, the tendency to spend recklessly has decreased considerably and focus has shifted to spending on necessities first and foremost. Shoppers are looking to buy online from brands that prove to have good value and are reliable. The frequency of shopping has decreased, but the amount we purchase in one trip has increased, as a result of reducing trips out of the house. Spending has also decreased in all categories, except grocery, where it has increased. We have also seen a tendency towards “trading down,” meaning many consumers are opting for the less expensive versions of items. This time of hardship means consumers are also searching for inspiration and comfort in addition to everything else more than ever. More thought is going into fun and health at home, with increases in cooking from scratch and in-home entertainment. Consumers are also prioritizing product value, looking to spend less on more and also stocking up on products with a longer shelf life.
Post-Pandemic Considerations for the Grocery SectorRetailers and manufacturers must consider all of these consumer behavior changes while strategizing future plans. Consumers are looking for quality and convenience at reasonable prices. Manufacturers must put extra effort into how they communicate with and engage their shoppers as we navigate through this transition period and into a new normal. Companies need to consider how consumers are shopping and their values and optimize for the new post-pandemic shopper. There are four key factors that companies should take into account:
- The new consumer gets their information and does most of their shopping online- shifting marketing and advertising efforts primarily to online and optimizing the process of online shopping is key
- The new consumer is looking for brands they can trust- establishing a rapport with the shopper through providing an easy and reliable shopping experience from start to finish
- Consumers are shopping less frequently, but buying more per trip- ensuring availability and stock are sufficient as well as ease and speed of delivery will help build a reliable relationship with shoppers
- Paying attention to how consumers experience shopping- feedback is more important than necessary- looking at what your shoppers are searching for and how they are reacting to their shopping experience with your brand via a strong feedback loop will help companies identify issues and opportunities for improvement
Amazon Grocery AdaptationAs the world on e-grocery continues to evolve, Amazon is adjusting to keep up. This means, the company is reconfiguring logistics and strategies to keep up with the ever changing trends and unpredictable events of the pandemic. For one, Amazon discontinued Pantry- its original grocery service, launched in 2014, due to some inconveniences and barriers that interrupted the easy flow that shoppers today are craving. Instead, Amazon has integrated grocery delivery and pickup services back into its site, including free delivery with Prime membership. Amazon’s grocery services are now stronger than ever, allowing shoppers to pick from among quality produce, meat and seafood, dairy and eggs, frozen foods, household items and beverages and alcohol. With features like “shop by recipe” or “shop by aisle,” Amazon is providing their shoppers with the convenience of online grocery shopping without sacrificing the personalization of an in-store experience. Amazon provides an extraordinary level of customization, including order cancel and edit capabilities, Alexa integration and 24/7 customer service. 1-hour pickup or 2-hour delivery windows are also available in cities across the US. In addition, with Whole Foods Markets and Amazon Fresh physical stores popping up around the country, shoppers are given the reassurance of dealing with a physical grocery store rather than just an anonymous online provider. Amazon has proved time and time again to be the top contender in e-commerce, and it's no different when it comes to the grocery sector. The speed, personalization and adaptation to changing needs and behaviors have all helped Amazon stay ahead of the curve and make changes and improvements to only keep optimizing the customer experience. Amazon is blazing the trail for successful e-groceries, with order customization and quick and available deliveries. The Amazon e-grocery experience is proving to be one that will last long after the ability to fully shop in-store returns. Sources: