eCommerce strategies for grocers for the post-pandemic world.

Emporix Grocery eCommerce Playbook

Covid19 brought an incredible amount of change to the Grocery industry. Industry analysts have estimated that 5 years of business model evolution happened in 3 months as the Covid Pandemic changed everyone’s lives almost overnight. They also estimate that US online grocery sales in 2021 at more than $100 billion, making up 12.4% of the country’s eCommerce sales (Source: eMarketer).

grocery campaign linkedin ads (3)

Online grocery, buy-on-line and pick-up in-store, kerbside pickup became the new normal and grocers without an eCommerce capability were left scrambling to catch up. Many of these grocers jumped towards essential quick fixes, including using a marketplace model, such as Instacart, where an online service could be set up really quickly to enable home grocery deliveries. Others with older eCommerce systems realised that their platforms were not flexible enough to meet the demands of the new business models now required.

However, as the dust settles on the Pandemic, there are some key lessons that have been learned, and many grocers are now reviewing their eCommerce options rather more strategically than the emergency tactics implemented in the midst of a crisis.

In this playbook, we examine the different routes to grocery eCommerce, looking at the pro’s and con’s of each approach to help you to navigate the right path for your organization. There’s no one right answer, rather a combination of approaches that can be adapted to fit your unique business and circumstances.

Lessons learned from the Pandemic

Agility

One of the primary lessons learned from the pandemic is that agility is critically important. The Stop-Start – Stop again nature of the pandemic caused grocers to change their operating models multiple times in a matter of months. Offering kerbside pickup, previously a relatively niche customer service offer, suddenly became a key brand differentiator and arguably a must-have offering for customers that didn’t want to go into the store.

Agility is a funny thing though: There’s no one silver bullet that suddenly transforms a business to become “agile,” rather it’s a mindset embedded in the operating model, underpinned by technology. Agility is a combination of business culture and the organization’s underlying technology systems because many older systems fundamentally restrict a business’ ability to pivot rapidly when circumstances change.

So, one of the key learnings post-pandemic for grocers is that building a strategy based around agile concepts, where the methods of servicing customers are likely to change in the future, is key. This inevitably impacts technology strategy as well, putting choices about eCommerce platforms and Order Management capabilities into the spotlight.

“12 % of consumers have switched to different grocery stores to take advantage of home delivery or click-and-collect services, both accessible via online ordering.”
Source: McKinsey

eCommerce is now strategic

The second key learning is that for the majority of grocers, eCommerce has become strategic. As the pandemic crisis hit, it became clear that speed was imperative in bringing in an eCommerce capability.

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That left marketplace distribution channels as the only viable short-term option to stay relevant for many grocers. As a tactical quick-fix in the middle of the pandemic, it made a ton of sense. But after the dust has settled, it’s clear that grocery eCommerce is here to stay, and is now a strategic part of a grocer’s arsenal.

Providing a seamless customer experience across stores and online channels has become an important brand requirement. Margin is again increasingly in focus – achieving volume without margin is not the answer.

Strategic business functions aren’t usually outsourced, for good reason. If eCommerce looks like it’s a strategic part of your business going forward, then you need your own in-house eCommerce capability.

"E-commerce is now strategic...and strategic business functions aren't usually outsourced."

Faster delivery

Consumer expectations have been driven towards ever-faster delivery, especially in metro areas where same-day delivery is now a key component of online shopping. For grocery, timed delivery is also important, though focus on this has lessened slightly with more people working from home: during the pandemic simply getting a delivery slot at a time of scarcity was often seen as a victory by many consumers. One of the lessons learned is to let customers pick their delivery window upfront before starting to shop – assembling a basket of 40 items only to find that you can’t get a suitable delivery window in the checkout causes lots of frustration. But looking forward, we have to assume that customers will expect same-day or next-day delivery at a specified time. This comes with some significant operational implications.

Free shipping, free returns

At the same time, consumers have become used to free shipping and now expect it on many categories of goods. In grocery, a charge of few dollars per order, optional delivery tips or minimum order free shipping are all still commonplace, but for business planning purposes grocers should expect that shipping will become progressively free in the future for the majority of orders, or potentially paid for on subscription. Customers also expect an easy returns process and resent paying for shipping on returned goods. While returns are less of an issue in grocery than other segments, some product lines which many grocers sell, such as clothing, will inevitably be returned more frequently.

Omnichannel

The concept of omnichannel has been around a long time, but the Covid crisis really put a spotlight on the multitude of order management variants required to support an omnichannel model. Most eCommerce platforms don’t do this well out-of-the-box. For example, adding in Click and collect is relatively straightforward, but you might also want to specify a specific time slot for kerbside pickup. This really highlights that flexibility in order management processes is a critical capability if you anticipate that buying modes are likely to change. But omnichannel also carries the weight of customers expectations that promotions and loyalty schemes will work as well seamlessly between online and instore. A Wunderman Thompson survey found that 53% of Generation Z say that they would prefer to shop with a brand or a retailer that has both a physical store and an online store, while 39% believe that marketplaces don’t provide the best experience when it comes to access to brands, easy returns and customer service. [While Gen Z are still young (16-24) they’re worth keeping an eye on because they represent tomorrow’s shoppers, and have a different set of expectations].

Step 1

Discover

Outline your current processes

Before you begin any kind of migration, you first need to look at the features you’re currently depending on. How important are they? Are they truly fit for purpose, or are you simply leaning on them because you’ve become accustomed to using them?

At this stage, it’s a good idea to start listing all of your business processes and functions, including edge use cases and rank them in order of how valuable they are to your business. Not only will this help you uncover processes you no longer need, it will also be useful in terms of knowing what to prioritize when your phased migration begins.

You should approach this phase purely objectively, knowing that even those processes you think your business cannot survive without might be usurped by something better soon.

Define your future needs

Whether it’s buying a new phone or moving into a new home, nobody surveys the market looking for the status quo. They want added value, new features, more convenience. Your approach to replatforming should be exactly the same. Don’t let your future goals be constrained by the limitations of legacy systems.

Highlight pain points such as arduous manual processes or things that inhibit the user or customer experience. Think about some of the more menial tasks your staff currently undertake and how much value they could add to other areas of your business if such tasks were automated or more streamlined.

Step 2

Migration

Start planning your migration

Now that you have a greater understanding of where you are and where you need to be, you can start to properly evaluate potential composable platforms and technology partners.

Be realistic about your launch window for getting up and running on a new platform, but don’t be afraid to be ambitious either. Build a minimum viable product so that you can not only see the benefits within your team but prove them to stakeholders in order to pave the way for innovation.

With the right combination of partners and technology, your businesses can undergo a considerable transformation in a matter of months. We’ll call this your migration roadmap.

This is when you’ll need to think carefully about your data, including product catalogs, categories, products, and SKUs, as well as customer accounts, carts, orders, and shipping methods. You’ll also need to think about the business logic that ties everything together, as well as the kind of user experience you’d like to maintain during the transition.

You don’t want customers to receive notifications when importing historical orders, for instance. There will also be orders coming in during the migration process itself, so a so-called ‘delta’ migration will be a necessary final step to ensure nothing is left on the legacy platform you’re about to abandon.

Step 3

Create, customize and compose

This is where your developers, solution architects, and deployment specialists can start selecting and implementing features that help your business achieve its goals. This is a good time to start building additional partnerships with vendors and third-party specialists that can supplement what you’re doing in-house.

Want to implement a new checkout feature or live chat option that integrates seamlessly with customer records in your CRM? Start building the services to make it happen or tap into a third party that specializes in creating that particular feature. The great thing about composable commerce is that your business is never limited to one vendor, supplier, or specialist when it comes to making things happen and improving your customer experience.

Step 4

Test and roll-out

If you’re coming from a monolithic legacy platform, you’ll know how arduous the testing phase can be. In traditional setups, making a small change to a relatively trivial function could have untold repercussions across the entire ecosystem, forcing you to repeatedly test the entire platform over and over again.

With composable commerce, you can simply test each service as it’s rolled out, safe in the knowledge that if something isn’t working the way it should, it won’t have any serious impact on the rest of your services.

Create a ‘test pool’ environment where each service can be thoroughly tested before it’s rolled out, perhaps in one of your smaller markets first, streamlining deployments and keeping your business moving forward.

API-first development to key services

Sooner or later, to make the most of a composable commerce solution, you’re going to need to tap into partner relationships that can help with the API-first development of key services.

Before that happens, you need a composable digital commerce platform on which to lay the foundations for your business to evolve, one that is compatible with your own API-first and cloud-native approach.

When the time is right, you’ll have your pick of vendors and will need to be able to discern which ones are worth pursuing.One piece of advice is to always check whether a vendor is offering a free trial that lets you experience their service without limitations using well-described API endpoints. If a service is cloud-native and multi-tenant, it will have an easy way to spin up new tenants within seconds. Vendors that only pretend to be cloud-native and API-first have a hard time letting you test the service without a lot of complex effort.

Emporix specializes in helping businesses transition to composable commerce through its groundbreaking Digital Commerce Platform. Our Digital Commerce Platform is designed to easily manage advanced commerce in B2B and B2C, with a fully composable and future-proofed architecture.

An open modular API-first ecosystem will allow you to continuously improve your digital commerce presence and get all the cloud-native capabilities and microservices you need to ensure scalability across your entire digital ecosystem.

Emporix Grocery eCommerce Playbook