The growing ecommerce trend is quickly entering the food and beverage industry, which has been one of the few areas that hasn’t seen dramatic changes due to its presence. Several companies, such as Fresh Direct and Peapod, have taken the leap to deliver fresh and stable groceries directly to consumers, despite the challenges in costly temperature-controlled facilities and fleets. Now, retail giants including Wal-Mart and Target are testing same-day grocery delivery in small markets. A new model, considered part of the sharing economy we’ve seen flourish in companies like Lyft and Airbnb, allows grocery delivery service Instacart to avoid some of the painpoints faced by other services.
Instacart uses a decentralized business model. Customers use an app to enter a grocery order, which is then used by a personal shopper, driving his or her own car, to gather the items from a retail store and deliver the order to the customer. The model takes advantage of existing components – retail stores and workers who deliver goods in their own vehicles – to create an affordable, fast delivery model. Unlike some other peer-to-peer models that are intruding on the industries they are breaking into, Instacart is welcomed by customers and retailers alike; it provides a greater reach to more shoppers and customer service that poses minimal risks to health or property.
Regardless of the service, digital grocery ordering puts brand loyalty as the priority for food manufacturers. With online options to select previous purchases and suggested items, online grocery shoppers are far more likely to stick with what they know. AmazonFresh takes it a step further with Dash, a handheld device that can scan grocery item barcodes and order them through an associated AmazonFresh account. This ease of repeat purchases discourages the exploration of new brands.
The absence of a physical trip to the supermarket also takes away valuable impulse buys as shoppers cruise the aisles and check out at a register. What happens to trade promotion strategies as more retail grocery sales shift to the online platform? Promotional opportunities drastically change shape in a digital environment compared to a live retail store; there is much less real estate on a small screen to get visibility or exposure to products outside of a typical shopping routine. However, there are endless opportunities online to personalize trade promotion and share data across the value chain. Sorting or filtering functions enable users to view price per ounce or filter to view various product certifications, changing the game for promotions. App and website design will also be a crucial lever in determining how many views products obtain. Manufacturers that team up with these grocery delivery services and collaborate as supply chain partners have the opportunity to influence the evolution of grocery delivery as it transforms the food and beverage industry.